Why the Rising Cost of Living Has Become Americans’ Biggest Monetary Burden

Americans now identify the rising cost of living as their main financial concern, making it a frequent topic in discussions between registered investment advisers (RIAs) and clients. This article provides general information and does not offer individualized advice or specific recommendations.

Cost of Living as a Dominant Financial Concern

Recent surveys indicate that most Americans view the cost of living as their top financial concern, noting that rising prices for essentials limit their ability to save or achieve long-term goals. Many clients believe official inflation figures do not fully reflect their daily financial challenges.

A key issue is that income growth has not kept pace with the rising costs of basic needs. Even as inflation slows, high expenses for housing, food, transportation, childcare, and health care often leave clients struggling to make financial progress. These ongoing pressures influence how RIAs approach planning and manage client expectations.

Where Clients Experience the Squeeze

Clients often highlight several categories where rising costs are most noticeable in their daily lives:

• Housing: Higher home prices, mortgage rates, property taxes, and rents increase the portion of income spent on shelter, reducing flexibility in other budget areas.
• Groceries and household essentials: Many families report significant increases in grocery bills, leading to trade-offs or changes in shopping habits.
• Childcare and education: Rising childcare costs, extracurricular fees, and education expenses can significantly impact cash flow for clients with children.
• Insurance: Premiums, deductibles, copays, and out-of-pocket medical costs remain unpredictable and concerning, especially for clients approaching retirement.
• Debt: Higher interest rates raise the cost of credit card balances and other variable-rate debt, compounding the strain from increased living expenses.

Because many of these expenses are non-discretionary, clients often feel they have little room to cut back without significant lifestyle changes. This can make financial planning more challenging and highlights the need for supportive guidance to address these pressures. Clients describe a range of adaptations in conversations with advisers. Some are reducing discretionary spending, such as dining out, travel, and entertainment, to free up budget room. Others delay major purchases or prioritize debt repayment ahead of other goals. Many attempt to increase income—whether through overtime, side work, job changes, or career advancement—to keep pace with rising expenses.

These adaptations can affect broader financial plans. For example, reducing retirement contributions to cover higher expenses may require revisiting long-term projections and identifying ways to address any gaps. Clients who rely on increased credit for short-term relief may need support to reduce debt and rebuild liquidity as their situation improves.

The RIA’s Role in a High–Cost‑of‑Living Environment

For RIAs, addressing the cost-of-living challenge highlights several core planning principles that help clients respond effectively to changing conditions:

• Track income, fixed and variable expenses, and seasonal or irregular outlays to pinpoint possible adjustments.
• Maintain an adequate cash reserve to buffer against unexpected cost increases or income disruptions.
• Help clients balance short-term pressures and long-term goals by evaluating debt, savings, and investment scenarios.
• Align investment risk to clients’ ability and willingness to handle volatility, especially with tighter budgets.

Although advisers cannot control external costs, they can support clients by creating adaptable decision-making frameworks. Regular progress reviews and open communication ensure clients receive guidance as they adjust to rising costs.

Key Considerations and Limitations

RIAs should address cost-of-living issues with balance, recognizing that economic and market conditions are uncertain and may change. Assumptions about future prices or returns should be reviewed regularly.

Experiences with the cost of living vary widely by household. This underscores the need for personalized planning, as one-size-fits-all solutions do not address unique needs or pressures.

Disclosure

This material is provided for informational and educational purposes only and is not intended as, and should not be construed as, investment, tax, or legal advice. It is not a recommendation to buy or sell any security, strategy, or product, and it does not take into account the particular investment objectives, financial situation, or needs of any specific person.

The views and information expressed here are general in nature and are based on sources believed to be reliable as of the date of publication; however, their accuracy and completeness cannot be guaranteed and may change without notice. Any forward‑looking statements or estimates are inherently speculative and are subject to change based on various factors, including changes in economic or market conditions. Actual outcomes and results may differ materially from any expectations or projections discussed.

All investments involve risk, including the possible loss of principal. Past performance, economic trends, or market conditions are not indicative of, and do not guarantee, future results. Before making any investment or financial decision, individuals should consider their own circumstances and consult with a qualified investment, tax, or legal professional.

Sources
https://www.navigatorresearch.org/in-time-for-the-holidays-americans-say-costs-are-going-up-on-everything/
https://studyfinds.org/9-in-10-americans-believe-cost-of-living-crisis/
https://www.lisep.org/content/cost-of-a-basic-american-life-continued-to-rise-in-2024-outpacing-wages-and-headline-inflation-according-to-lisep/
https://www.cfp.net/industry-insights/reports-and-statistics/consumer-surveys/cfp-board-survey-reveals-cost-of-living-is-a-worry-for-9-in-10-americans
https://www.census.gov/newsroom/press-releases/2025/acs-1-year-estimates.html
https://www.cbsnews.com/news/affordability-2025-inflation-food-prices-housing-child-care-health-costs/
https://www.talker.news/2026/02/05/9-in-10-americans-believe-u-s-in-full-blown-cost-of-living-crisis/
https://www.tcf.org/content/report/survey-the-affordability-crisis-is-here-and-its-hitting-the-working-class-the-hardest/
https://www.urban.org/data-tools/american-affordability-tracker
https://www.bls.gov/news.release/cpi.nr0.htm
https://www.morganlewis.com/-/media/files/publication/morgan-lewis-title/white-paper/2021/the-secs-new-marketing-rule-key-takeaways-for-advisers.pdf
https://www.troutman.com/insights/the-secs-new-marketing-rule-practically-speaking-general-prohibitions/
https://www.klgates.com/The-SECs-Modernized-Marketing-Rule-for-Investment-Advisers-1-20-2021

‍