It is difficult to predict the future, but some trends suggest that the middle class may face increasing challenges in affording certain goods and services in the next five years. Here are 19 things that the middle class may find increasingly difficult to afford:
Housing
Housing prices have been rising steadily in recent years, outpacing wage growth. This trend is likely to continue, making it more difficult for middle-class families to afford a home or rent an apartment.
Education
Higher education costs have been skyrocketing for decades, and this trend is not expected to slow down. This could make it difficult for middle-class families to afford to send their children to college. Rising inflation and high demand for private education threaten to make these schools increasingly unaffordable for middle-class families within the next five years.
Healthcare
The cost of healthcare has also been rising steadily, which is likely to continue to rise rather than decrease. This could make it difficult for middle-class families to afford health insurance and medical care.
Retirement
Many middle-class families are already struggling to save for retirement. With rising living costs and stagnant wages, this challenge will likely become even more difficult in the next five years.
Childcare
The cost of childcare has also been rising steadily, making it difficult for middle-class families to afford to work outside the home. This means that some families are reducing their work hours or increasingly calling on grandparents to support their children.
Transportation
The cost of transportation, including gasoline, public transportation, and car maintenance, will likely continue to rise in the next five years. In addition to fuel prices, tolls on roads and bridges create additional burdens, especially for frequent commuters.
Food
Food prices have steadily increased, outpacing wage growth for many middle-class families. According to the Bureau of Labor Statistics, the Consumer Price Index for food increased by 6.4% in 2023 compared to an average wage increase of just 4.5%.
Utilities
From electricity and gas to water and waste disposal, the price of essential services is climbing, adding strain to already stretched budgets. The cost of utilities will likely continue to rise in the next five years due to geopolitical tensions, supply chain disruptions, and fluctuating weather patterns impacting fuel prices influencing electricity and gas costs.
Technology
The cost of technology, such as smartphones, computers, and internet access, is likely to continue to rise in the next few years because of the ongoing global chip shortage and other supply chain disruptions that are driving up the cost of raw materials and manufacturing, leading to higher final product prices. Meanwhile, middle-class people will be in a better position than some, even though they will need help to afford the latest technology in the current climate.
Entertainment
The cost of entertainment, such as movies, concerts, and theme parks, is rising and continuing to show upward trends. Because of these costs, families will be more likely to stay home and play games together or take advantage of free parks and local events as entertainment.
Extended Family Trips
A shadow looms over the tradition of extended family trips, especially overseas adventures, warns David Kemmerer, CEO of CoinLedger. He predicts these experiences will become increasingly out of reach for middle-class families in the coming years. Kemmer said, “With middle-class budgets stretched more than ever, money once available for trips will likely be diverted towards necessities like housing.”
New Cars
New car prices have been steadily increasing, outpacing wage growth. With rising interest rates and longer loan terms, the average car loan term has been stretching, meaning monthly payments remain high even when spread over more years. While car prices rise, middle-class wages aren’t keeping pace. This leaves less disposable income for families to cover car payments alongside other expenses.
Leisure and Travel in Retirement
Many people on the verge of retirement will have visions of weekends away, days out with friends, and several vacations a year. However, the cost of travel, including flights, accommodations, and activities, has been steadily increasing due to various factors like rising fuel prices, inflation, and increased demand.
‘Safe’ Investments for Retirees
Bonds and fixed-income products were considered cornerstones of retirement portfolios, offering stability and reliable income. However, the current economic landscape throws a wrench in this equation. With interest rates hovering near historic lows and inflation rising, the actual returns generated by these “safe” options may struggle to keep pace with the rising cost of living.
Home Improvements
Essential expenses like housing, food, and transportation are increasing, leaving less discretionary income for home improvements. In addition, higher borrowing costs make home improvement projects less affordable, delaying renovations and repairs.
Emergency Funds
While living expenses rise, wages for many middle-class jobs have yet to keep pace, limiting their ability to save for emergencies. To make things worse, higher expenses may force people to dip into their emergency funds, leaving them less prepared for unexpected financial difficulties.
Luxury Purchases
Middle-class people can often afford to buy items for their home or their wardrobes without worrying about money too much. However, with the cost of living crisis causing a decrease in flexible cash, treats are few and far between. Inflationary pressures further erode purchasing power, making even moderate luxuries feel more expensive.
Eating Out
For some middle-class people, even the costs of eating out are becoming too much. The cost of food ingredients has been steadily rising due to various factors like supply chain disruptions, climate change, and geopolitical tensions. This translates to higher restaurant menu prices and more families enjoying meals at home.
Cleaning Services
Middle-class people have used in-home services to lighten their load during a busy week, from cleaners to gardeners and laundry services. However, the rising cost of living and labor shortages are pushing up wages for cleaners and similar services, making them unaffordable for many families.
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