Benjamin Thompson Kirk is a real estate expert who supports clients across the United States, Canada and the United Kingdom. This article will look at the negative impact inflation is having on the long-term goals of many Americans in 2022.
According to Country Financial’s Security Index, rising prices and a changing economy are causing many US citizens to question their ability to meet long-term financial targets. In the poll, which involved more than 1,000 US adults, more than half of respondents cited swelling costs as having a “big negative impact” on goals like buying a home or saving for a comfortable retirement.
In April 2022, US mortgage interest rates soared to 5% for a 30-year mortgage, reaching their highest rates since February 2011. Statistics published by Freddie Mac, a government-backed mortgage company, revealed a steep increase in April 2022, rising sharply from 4.2% in March 2022 and 3.1% at the end of 2021.
The mortgage interest rate increase arose after US inflation jumped to 8.5% over the preceding 12 months, climbing to its highest point in 40 years.
Troy Frerichs is Country Financial’s vice president of investment services. He was unsurprised by worries about growing expenses, explaining that everyone is concerned about inflation. However, there is a stark contrast between quarter 4 of 2021 and quarter 1 of 2022. While America came out of 2021 in great shape economically, one quarter into 2022, the survey reveals there is growing unease amongst Americans regarding their ability to reach financial milestones. About 9 out of 10 survey participants said they were concerned about inflation, with 6 out of 10 admitting that they were “very concerned,” representing a 48% increase on quarter 4 of 2021.
As Troy Frerichs points out, Americans were dealing with a little bit of inflation at the end of 2021. However, it seems far more impactful in quarter 1 of 2022 due to a combination of different factors. As 2022 rolled on, there were multiple threats to the US economy, with rising interest rates stoking recession fears, and stock market volatility and surging inflation all taking a toll.
The Country Financial survey suggests that many US adults are beginning to think that big financial goals may be slipping beyond their reach, with paying off debt, saving for retirement, and buying a home all seen as the most challenging goals currently according to the survey findings. Other concerns that feature prominently include buying a car, starting or raising a family, investing in the stock market, and travelling.
Troy Frerichs advocates taking a long-term view on most things, indicating that while it is normal to notice higher prices at the gas station or grocery store, people without a long-term plan are more likely to respond emotionally. It is crucial for Americans to consider not just how rising costs affect their monthly budget but also how these increased costs could impact their financial plans overall.
It is crucial to create a budget, establishing both short-term and long-term financial goals. Enlisting the help of a financial advisor could be a prudent move for many. For those who have already created a financial plan, it is essential to revisit these objectives periodically and track their progress – particularly in the wake of a major life event that could impact finances.
