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The Effect of Inflation on Financial Wellbeing

Many Americans are experiencing the effect of inflation on financial well-being.

Another survey of more than 1000 US adults done earlier this year revealed that many Americans question their ability to meet their long-term financial goals. Just as it seemed as though the economy was recovering from the stress of the pandemic year inflation has reared its head. 

Nine out of ten Americans polled say they are concerned about inflation. Bear in mind that those under 45 years of age have not experienced rapid inflation before.  So, it’s been a bit of a shock. Even for older Americans, it’s been a long time since there has been this level of inflation. More than half of those polled feel that rising costs could have a big negative impact on their financial goals for the future.

Rapidly rising prices of basic and essential items mean Americans are left with less discretionary income, which is impacting their future financial goals. Inflation is also affecting the more immediate financial issues – the share of adults whose expenses exceed their income had jumped 3.7 points year-over-year, with lower-income adults suffering the most. 

The Effect of Inflation on Housing

Houses prices have increased by 20.9 percent in the last year.  This has led to many people abandoning their goals of purchasing a home. Now there is concern that the rising mortgage interest rates will lead to a housing market crash. The national year-over-year percent change from 2000 to the present with forecasts one year into the future shows that this is probably not the case. But the rapidly rising prices will slow down and there will likely be a correction back to 2020 prices within the next year or two.

Inflation and Healthcare Costs

Rising health-care inflation can have major consequences for current and future retirees, as medical expenses are expected to take up an ever-greater share of retirees’ income

The rapid inflation America is experiencing has resulted in Medicare Part B premium increases this year that are almost double the Consumer Price Index inflation rate. One way to stave off this threat to retirement security is to increase savings now so you have greater security in the future. [5]

Retirement Planning

“The best strategy is to consult your financial advisor about investments that will protect your purchasing power,” says Gary Isler, Senior VP Investments for David Lerner Associates. “This is definitely not the time to gamble with your savings and retirement funds. The sensible middle ground of investing will protect the value of your investments.”



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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