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Insight of the Day: Inflation is scrambling Americans' perceptions of middle class life

Many Americans who earn good salaries still feel economically insecure and unable to achieve traditional markers of a middle-class lifestyle.

Key Points:

  • Inflation is the Culprit: Rising costs of living are eroding purchasing power and causing deep financial anxiety for middle-income earners.

  • Savings, Vacations, and Retirement are Sacrificed:  Many are cutting back on non-essential spending, dipping into savings, and feeling uncertain about their ability to retire comfortably.

  • Owning a Home Feels Out of Reach:  Skyrocketing housing costs and high mortgage rates are making homeownership a distant dream, especially for first-time buyers.

Expert Opinions:

  • Eoin Sheehan (Redfield & Wilton): Inflation is distorting perceptions of the economy, causing people to ignore positive indicators like strong job growth and rising wages.

  • Chris Collins (Northwestern Mutual): Financial anxiety is largely due to "financial shock fatigue" and a lack of financial planning. Running the numbers often reveals a more achievable path to financial goals than people initially assume.

The Takeaway

While some economic challenges are very real (especially in the housing market), a combination of inflation and negativity bias is skewing the perception of financial security for many middle-class Americans. Careful planning and a focus on long-term goals can help combat these anxieties.

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