Experts warn that the American middle class will no longer be able to afford some luxury goods in the next five years due to inflation and rising costs. This is reported by the American financial portal “GoBankingRates”.
The report says the middle class today can still enjoy important aspects of life, such as homeownership with affordable mortgages, the ability to send their children to college with the help of student loans, health care, retirement and the occasional luxury item. However, there is growing concern that rising housing costs, tuition rates, healthcare costs and inflation could make life significantly more expensive for middle-class families over the next five years.
According to the report, these seven things could become unaffordable for the American middle class in the foreseeable future:
Inflation and coronavirus threaten traditional family vacations
Extended family trips abroad could soon be a thing of the past for the middle classes. The trend shows that traditional vacations are becoming rarer due to various circumstances, including the pandemic and rising inflation rates. This assessment reflects the current economic situation and suggests that these trips are becoming an almost unattainable luxury for many families, according to the report.
Financial experts warn of rising vehicle prices
Buying a new car will soon be unaffordable for the middle class. Steadily rising vehicle prices in recent years and the prospect of continued rising costs are making this aspect of daily life an increasing financial challenge. “Vehicle prices have risen dramatically over the past four years and are likely to become even more expensive,” says one financial expert.
Owning a home is increasingly unaffordable for the middle classes
Home ownership and real estate costs are also expected to continue rising in the coming years. Especially in regions with high demand, the middle class will find it very difficult to finance a house.
Healthcare costs continue to rise
Experts also point to rising healthcare costs. Spending has risen steadily for years and exceeds the overall inflation rate. Experts say there are no signs the trend can reverse.
Private school costs could overwhelm the middle class
Private school tuition continues to rise and could soon become a serious financial burden for middle-class families. The constant increase in these costs raises fears that they could soon represent more than the average income of a middle-class family.
Rising costs jeopardize retirement travel dreams
For many, the ability to travel and enjoy leisure activities in retirement is an important aspect of life planning. But rising costs and inflationary pressures affecting areas such as airfare, accommodation and food could mean these once realistic plans for the future become an unaffordable luxury.
Retirement investments under inflationary pressure
The current economic situation could fundamentally change the traditional understanding of “safe” investments for retirees. In the past, bonds and fixed income securities were considered reliable sources of income and safe havens for the portfolio in retirement. But now they face the challenge of keeping up with historically low interest rates and rising inflation. This situation could significantly reduce the purchasing power of middle-class retirees. Therefore, it is increasingly important to consider diversified investment strategies that not only promise growth but can also protect against inflation.