We have all begun to feel the impact of inflation on our wallets. Politicians and economists are now arguing over the causes of inflation and the impact on consumers and the economy. According to the Bureau of Labor Statistics, prices for consumer goods rose 0.9% between May and June, the largest one-month jump in prices since June 2008. So, beyond retail prices, how is inflation influencing your wallet? Two high costs you may not have considered are health care insurance and college tuition.
Inflation and Health Care
A study by the Peterson Center on Healthcare and the Kaiser Family Foundation (KFF) reported that healthcare spending in the U.S. during 2019 was nearly $3.8 trillion, or $11,582 per person. By 2028, these costs are expected to climb to $6.2 trillion—roughly $18,000 per person.
Rising Health Insurance Premiums
For those with employer-provided healthcare, average annual premiums for family coverage rose 37% from $15,545 in 2015 to $21,342 in 2020. Meanwhile, average unsubsidized family premiums for the Affordable Care Act (ACA) from 2015 through 2020 rose 97%, from $8,724 to $17,244.67
Rising Costs of Medicare and Medicaid
Government programs such as Medicare and Medicaid have augmented overall demand for medical services—resulting in higher prices. In addition, increases in chronic conditions such as diabetes and heart disease, especially among seniors, have directly impacted increases in medical care costs. Chronic diseases constitute 85% of healthcare costs, and more than half of all Americans have a chronic illness.
Inflation and College Tuition
College tuition costs have been rising for the past two decades. In addition to high tuition prices, paying for housing, food, transportation, books, and other school-related fees can add thousands of dollars to college expenses.
Tuition Increases
According to a recent article in U.S. News, since 2001 the average tuition and fees at private National Universities have jumped 144%. In addition, out-of-state tuition and fees at public National Universities have risen 165%, and in-state tuition and fees at public National Universities have grown 212%.
A few factors may be contributing to these rising costs: a decrease in state funding, an increase in demand, and an increase in federal aid. Institutional expenditures such as student services, administrative support, operations, and maintenance have also risen.
Financial Strategy to Mitigate Inflation
So what can you do to mitigate some of these rising costs?
Get professional help. Professional financial planners will use their expertise to make sure you consider all possibilities.
Assess your current plan and goals. Work with a professional to review your successes and future goals.
Create a specialized plan. Build a plan that addresses the increases in healthcare or college tuition costs.
Incorporate changes. Update your current plan with your new strategies to mitigate inflation costs.
Implement Strategy. Start making changes with the help of your financial advisor.
Monitor and Update. Check your progress often and make changes as needed.
Ready to start planning for a brighter future? Call today at (408) 840-4030, or contact our team online.