Over the past year or two, high inflation mixed with stagnant wages, rampant layoffs, AI, and poor jobs availability has led to quality of life declining for many middle-class and lower households. Per AP: Here's why everyone's talking about a 'K-shaped' economy
How have you and & your household experienced this? Have you changed your shopping habits, travel, eating out, etc.? Conversely, have you been able to take advantage of it in any particular way?
I know many of you are retired now. How does that play into it? Limited income, portfolio growth, not having to worry about the job market… what, if anything, has changed for you in that regard?
Sorry to report I’m one of the winners. I do see my kids struggling .
Simply put, the upper part of the K refers to higher-income Americans seeing their incomes and wealth rise while the bottom part points to lower-income households struggling with weaker income gains and steep prices.
I basically work as hard as I can at my 2nd job. I’ve resigned myself to the fact that I’m at a point where I can’t realistically reduce my expenditures much - I’m almost as lean in spending as can be - so I can only make more money, not scrimp and spare.
Fun? Very little. I’ve watched movies in the theater maybe only 5 times in the last 8 years.
Surviving on normal incomes seems very hard these day. We try to assist without helping too much. For me, as the article suggests, my income is at an all time high. (I don’t give tump credit, just a coincidence)
I’m retired, well off, no kids, and enjoying the upper part of the upward leg of the K. While I recognize others are having problems, they’re pretty invisible in my daily life. Everyone I know as a peer friend or acquaintance is in the same boat as I am.
Which is probably about how it looks to most of the people who have a hand on the levers that control the economy. “What me us worry?” seems to be their mantra.
I really wonder how it will end because the total trajectory is a bad one.
I’m single, retired, and own my own home, so mortgage rates don’t affect me. I live on Social Security, savings, and investments, but there is only so much I have saved. My SS payment covers most of my monthly expenses, but I have curtailed any travel and eating out to reduce my spending. I used to go on vacations to Hawaii or Europe once in a while, but those are out of the question now.
Food is costing me much more than it did 10 or even 5 years ago, and instead of shopping at the local grocery store, I drive 30 minutes to Walmart to save money. I use Amazon a lot more now than I used to because I can often find what I need at reduced prices, and I don’t have to drive around looking for it with gas prices going up.
I don’t like shopping at Walmart, but it reduces my weekly grocery bill by at least 20% compared to the local grocery stores. I now only occasionally eat out to save money, which means I cook all my meals myself. Inflation is slowly eating away at my savings, but if the stock market keeps going up, that will help me in the long run.
Unfortunately, with our current government, it’s hard to see how a horrid crash isn’t coming at some point. I like my 401k growth too, but wish there were a way to shield it from the steep decline to come.
No. My wife and I are in the fortunate position of having zero debt save for our mortgage. I felt bad during COVID when people would ask how we’re doing and I’d have to answer, “Honestly? Great.” That isn’t to say we’re exactly carefree. I expect a reduction in workforce at my company this spring that will affect hundreds. As far as my area is concerned, I expect we’re going to layoff some recruiters, parts of learning, and perhaps our wellness team and one person from benefits will retire and the position won’t be filled.
I won’t say we’re entirely unaffected. We’ve bought some items a few months ago because we expected prices to go up due to tariffs. I’m typing this on a pretty nice computer that I probably wouldn’t have purchased without Trump’s trade war. I have a strategic reserve of maple syrup as well.
Mrs. H and I own our own lower middle class home, free and clear, so that’s a plus. Jobs are hard to come by around here unless you’re fit for backbreaking labor. Mine is not such a job, thank Og, but the work is shit and so is the pay, so there’s that. Prices are definitely going up, and rural utilities such as ours can be sky high. Our water bill is about three times what we paid when we lived in a city of 130k people, for example.
Also, not to brag, but Mrs. H and I are going to be coming into some significant (by our standards) money in the coming years. High five figures. Enough to fix up the house, take a dream vacation, and prudently save the rest.
I have a relatively high paying job, no kids, and own a house that I bought in late 2008 when they were (relatively) cheap. I have a fixed-rate mortgage on the house with a low interest rate, so I have a low house payment locked in and am unaffected by increases in rent, home prices, and interest rates. And California’s Prop 13 is probably keeping my property taxes low, although insurance rates have gone up.
So I guess things are getting better somewhat for me, as my income increases at least a bit each year but my house payment mostly doesn’t, and that more than enough to offset increases in other expenses. But that hasn’t really affected my lifestyle much, I’ve never been much of a big spender. Mostly it means I have more money to put towards retirement savings. Maybe the occasional nice vacation and nice meal.
We are doing great. We own both our homes outright, no debt, and our savings has been blowing up. Yes, stuff is more expensive, but we still sock away a large amount each month. It’s odd to think back to my very poor upbringings and once an adult, living paycheck to paycheck until my early 30s. We are very lucky to be where we are today.
I don’t understand this economy. My IRA has increased in current-dollar value by 15% this year, while overall inflation was about 2.8% (based on the Social Security COLA for next year). The “value” of our house keeps going up and up. Aside from SS our income is fixed (pension) except for the slight increase in minimum required withdrawals from the IRA. The biggest expense is fixed (the mortgage); the biggest non-monthly expenses are insurance for 2 old cars, homeowners insurance, and property taxes, and all of those are going up faster than inflation. But taking all that into account, my monthly discretionary income is, well, embarrassingly large.
So the economy seems to be doing okay, for now, but there is one group of people who clearly think the bottom is going to fall out soon, and that’s the people who buy and own gold. The price of gold has gone up by over one third ($3k to $4.2k) in about 9 months, and shows no sign of stopping. Anyone buying gold at these prices must be convinced that serious trouble is coming very soon.
Anyway, we seem to be doing fine in this economy. I guess we’re higher in the money tree than I thought – our total income has gone up only a very little, not nearly keeping up with inflation, but we have money to spend. We don’t spend as much as we used to, but that’s more because we’re getting older and are less interested in going out. Our ages seem to be in that sweet spot before costs of senior care take up all that slack and then some. If we had kids and grandkids, I expect they would be appreciating anything we could do for them.
I don’t really know how to characterize our financial situation and haven’t for a long time. We’re 42, our combined income is in the upper middle class bracket, and we live well below our means. We spend most of our money on very high non-negotiable expenses and most of the rest on retirement and other savings and investments. Our health insurance just shot up 30% which is really not helping the cash flow situation. We have a medically expensive child and I’m not cheap, either.
We own a manufactured home but we would like to buy a condo, which we cannot currently afford, because we can’t afford a mortgage payment. We drive used Hondas and we’re trying to save money to buy the next Honda in full. We are not where I would like to be for retirement and if we had to spend our investments on a house, we’d be behind in retirement. So I don’t see homeownership happening for us anytime soon. This is not bad, but sort of not optimal.
This year our investments have grown 30%. But our grocery bills and everything are also going up. I look at things like Amazon and Etsy and it’s markedly more expensive, to the point I’m being more careful about what I buy. I’m not really sure yet how all of this is going to affect us on a practical level. I’m only now starting to see it, and I don’t have any spending data to analyze at this point.
Then there’s the fact that, for some reason, people in our family keep giving us money. I’m not complaining, it’s just reality. We invest the vast majority of it. But we would be struggling a lot more if that weren’t the case. It’s because of random-ass windfalls that we might retire someday.
In general I would characterize us as upper middle class income, middle class lifestyle/capacity, which is really not bad. But as someone who came from cycles of poverty, I feel like I’m just as worried as I ever was. Should you really have to choose between medical care and retirement? Because those are the kind of choices we’re facing right now. I don’t understand how I could handle an unexpected $5k expense without batting an eye but I’m not sure how much longer we can afford medical care.
I’m sorry if this is confusing but it confuses me.
We’re doing pretty well. Our mortgage is paid off, and though we’ve seen a big increase in insurance costs, nothing too terrible. I waited until 70 to retire, so our Social Security covers most of our expenses, and the rest is covered by earnings from our investments. We hardly drive, so we’re not affected by fluctuating gas prices, and we hardly eat out, (not from saving money, from liking our own food better) so we aren’t affected by that either.
We have great Medigap coverage, so our health expenses are a known value, unchanging month to month. That helps.
I’m very glad I’m retired, and I’m glad that my oldest grandkid is 9, so there is plenty of time for things to settle down before he has to worry about which major to take in college.
Most of my investments are in income producing stock funds. I haven’t made nearly as much as the market, but I’m reasonably well protected from downturns - which I agree are inevitable. Except for RMD I have no reason to sell anything that falls.
We’d do another cruise but we’re too busy, and it seems a pain. Anyhow, one of my kids is moving to Belgium, and that will offer a good base to roam through Europe.
Married with kids, but they’re in middle school, so their money goes to video games, snacks, and random Boy Scout stuff.
As far as our economic situation goes, I can’t say I’m seeing it get better, but it’s more a situation where everything seems to cost more, and so far, no raises yet (the review cycle is about to complete, so I’ll find out soon enough). But it’s not anywhere near crushing or onerous, just annoying to be at the grocery store and note that lots of stuff costs 2x-3x what they used to, in say… 2018 or 2019. My wife’s kind of a fiend for trying to game the in-store digital coupon and promotions at our preferred store, so we tend to shop according to what’s on sale/got a coupon/etc. and it’s not nearly as obnoxious as paying full retail.
I think in our case we’re seeing obvious benefits from our investments, but basic expenses are growing ever-higher at the same time. It’s not exactly a wash because our income isn’t going up, so it’s likely a case of less money to save and invest in the future.