Things the middle class won’t be able to afford in the next 5 years

The middle class is shrinking, and achieving that status today is no longer what it was 50 years ago, as the rising cost of living and inflation continue to wreak havoc. For this reason, some experts believe that The purchasing power of the middle class will further reduce in the near future.

From now on, we see how the pillars of the “American Dream” that were previously achieved through effort and entrepreneurial attitude, such as buying a house or a new vehicle, have become unattainable luxuries for the majority.

Being middle class the aspiration is higher than the reality

A recent Washington Post analysis based on Federal Reserve data found that Just over a third of adults in the United States have the financial stability they need To comply with what they themselves define as “being middle class”. This suggests that the popular image of the middle class is “more aspirational than reality for most Americans.”

To determine what the middle class is, the Pew Research Center’s definitions are often used, which describes this segment as those who make two- to two-thirds of the average income of an American family ($74,580 in 2022). Earn between third and double. That means To be middle class you need an annual income between approximately US$50,000 and US$150,000, But, according to the Post poll, most Americans believe the middle class actually starts at a slightly higher income, $75,000.

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The next 5 years will be difficult

The survey also found that Americans associate at least six characteristics with being middle class: a steady job, the ability to save for the future, being able to afford a $1,000 emergency expense without going into debt, having a loan on time without worries. To repay, to stay healthy. Get insurance and retire comfortably. The bad news is that many of these benefits may be impossible to achieve in the next 5 yearsAccording to experts, personal finance platform GoBankingRates reported.

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Huff believes it will soon become harder to afford a home, send kids to college or save for retirement. “Even the simplest joys like vacations or buying nice things can become a huge challenge.”

Traveling will be a luxury, especially for retirees

David Kemmerer, CEO of a company that advises clients on tax matters in the insurance business, said family trips, especially trips abroad and to exotic locations, will be one of the privileges that the middle class will not be able to afford in the next five years. .Cryptocurrency.

It will be especially difficult for retirees to afford travel, said Mike Kozonen, owner of Principal Preservation Services, a company that focuses on financial advice for retirees. He described inflationary pressures that affect everything from the cost of airfare to housing and food.

“This change may require adjustments to retirement planning, emphasizing the need to create a more robust savings strategy to accommodate higher vacation and travel costs,” Kozonen said.

Despite having a house and a new car, challenges remain

“Honestly, the way things are going, getting a mortgage or buying a home may be something the middle class won’t be able to afford in five years,” Carter Seuth, CEO of debt and loan consultancy Credit Summit, told GoBankingRates.

Especially in some high-demand areas, he explained, it’s still quite difficult to get an offer accepted on a home unless you make an offer well above the asking price, waiving key elements of the inspection. , or do not offer cash., just to mention a few situations that are harmful to the buyer.

A new car will also soon be out of reach for the middle class, said Melanie Musson, finance expert at insurance quote comparison platform Clearsurance. “Vehicle prices have increased dramatically over the past four years and are likely to become more expensive in the future,” he said. “Safety features, autonomous technology and electric vehicle batteries are all contributing to rising prices.”

A Wall Street Journal report last week warned that, although inflation is providing relief to Americans, “Almost everything related to owning a car has become expensive, Between insurance, taxes, repairs, parking and tolls, the real cost of owning a vehicle exceeded the consumer price index in January.

Private schools and healthcare

According to Jake Hill, CEO of Debthammer, a company that provides loan broker services, if inflation and high demand continue on their current trajectory, the middle class will not be able to afford private school tuition in the next five years.

“Tuition fees ofPrivate schools are continuously increasing by years,” he said and warned that “it is very likely that they will exceed the income of the middle class in the near future.” Hill analyzed the full picture of a middle-class family’s expenses, including the rising cost of housing Cost is also included.

Experts say another important area to focus on is health care costs, especially long-term. “These expenses have increased steadily, outpacing general inflation rates for years, and There are no signs of this trend reversing.” said Kozonen, who believes that many middle-class families may find themselves unprepared for the financial pressures of long-term care for themselves or their aging parents.

“My work with clients has highlighted the importance of integrating health care planning into a comprehensive retirement strategy,” he explains. “Without proper planning, affordability of needed long-term care services can become a significant challenge, potentially depleting retirement savings prematurely.”

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