A large new study released this week reveals inflation continues to sting in America, with significant numbers of U.S. adults saying elevated prices in the grocery aisles, at the gas pump and elsewhere are having a large impact on their finances.
Meanwhile, among people who don’t own a home, the majority say homeownership will never be affordable—not now, not ever.
At the same time, some financial trends, behaviors and concerns among Americans have shifted in a positive direction since last year’s survey. When the new survey was conducted in early January, people reported feeling more optimistic that the United States will avoid recession and they’re exhibiting greater financial discipline, reversing a 5-year decline.
These are among the topline findings from Northwestern Mutual’s newly released 2025 Planning & Progress Study, the company’s proprietary research series that explores Americans’ attitudes, behaviors and perspectives across a broad set of issues impacting their long-term financial security.
No. 1 financial concern: Inflation
Northwestern Mutual’s 2025 Planning & Progress Study finds that half (51%) of U.S. adults believe inflation will increase in 2025, more than double the 25% who expect inflation to decrease and the 24% who expect it to stay the same.
Furthermore, two-thirds (65%) of U.S. adults say inflation is the dominant concern that could impact their finances this year, and more than four in 10 (44%) rank inflation as the No. 1 obstacle to achieving financial security.
For the second year in a row, more than half (52%) of Americans believe their household income is growing slower than inflation. That’s more than four times greater than the 11% who say their income is growing faster than inflation, while three in 10 (28%) believe their income is on pace with inflation.
Inflation is impacting everyone, including the wealthy. Only 1 in 5 (19%) millionaires in America—with more than $1 million in investable assets—say their income is growing faster than inflation. One in four (40%) millionaires say it’s growing slower and 38% say it’s growing the same as inflation.
Feeling the sting
Inflation is hitting people everywhere—from the grocery aisle, to the gas pump, to their childcare expenses and more.
A large majority (84%) of Americans say they have experienced elevated grocery costs in the last three months. Nearly seven in 10 (68%) experienced elevated utility costs, while 60% experienced elevated gas costs, 52% experienced elevated housing expenses and 15% experienced elevated childcare expenses. When considering responses solely from Gen Z and Millennial parents, the childcare price sting percentage jumps to 36%.
Among those who have experienced elevated costs, many say they are having a “large impact” on their finances.
“Houses, kids, groceries and gas: all of these higher prices are having an outsized impact on people’s budgets, and most Americans believe these challenges will grow in 2025,” said John Roberts, chief field officer at Northwestern Mutual. “Economists often talk about how inflation is ‘sticky,’ meaning it takes time to reverse a broad economic cycle. Our study findings show that inflation is sticky at the individual level too—it remains top of mind for people, and they get reminded of it often in their daily lives. Americans can adapt, but it requires financial planning and acting intentionally now, to enjoy today without sacrificing tomorrow’s goals.”
Millennial medical debt on rise
For the first time in the history of the Northwestern Mutual Planning & Progress Study, when Millennials were asked for their top sources of debt, college debt did not appear in their top three. Instead, a new financial foe has emerged: medical debt.
Across all Americans the primary source of non-mortgage debt by far is credit cards, accounting for more than double the No. 2 source (car loans) and nearly quadruple the No. 3 source (medical debt). Notably, medical debt replaced personal student debt in the top three this year with every generation except for Gen Z ranking it as a bigger source of debt than personal education loans.
The study also found that for the second year in a row, 64% of adults say they prioritize paying down debt versus 36% who prioritize saving. This continues a 3-year trend whereby U.S adults are focusing on debt with greater urgency than saving.
“For Millennials especially it’s interesting to see medical debt bypass personal education loans as a top source of debt,” said Roberts. “A wide range of factors are at play. More Millennials are at an age when they’ve been paying down college debt but are starting to accrue medical debt. We’ve also seen growing urgency toward paying down debt in recent years—including student loans. And of course, many may have benefitted from recent college loan forgiveness initiatives. The emergence of medical debt demonstrates the importance of insurance as part of a holistic financial plan for financial security. A pronounced illness or injury can have a sudden and significant impact on a person’s financial life—including younger generations. Disability insurance can help to ensure a person’s most important asset—their earning power—remains protected in a time of adversity.”
Home ownership feels out of reach for many
Among Americans who are not currently homeowners, over half (53%) say that owning a home will never be financially affordable—now or in the future.
Among generations, non-homeowner Millennials (58%) are the most likely to say that owning a home is not an affordable goal, followed by Boomers+ (52%), and Gen X (51%). Non-homeowner Gen Z’ers (49%) indicate the most optimism that, someday, they’ll be able to afford a home.
When digging into the reasons why non-homeowners feel that owning a home is not an affordable goal, however, the study reveals that Gen Z and Millennials have some financial obstacles to overcome. Given the current interest rate environment and the competitive housing market, the youngest U.S. adults feel priced out of owning a home.
“When it comes to whether people believe they can afford to own a home, age is a big factor,” said Roberts. “Gen Zer’s are still young and have more time on their side to get to a place where home ownership feels attainable. So, while it may feel out of reach now, they are hopeful that could change. Older people who have gone longer without owning a home are understandably going to feel less optimistic. For Americans of all ages, the best answer for financial worries starts with a conversation about planning and action. A comprehensive financial plan can be the key—helping people open doors to home ownership, retirement and other priorities in life.”
A more detailed analysis of the initial findings from Northwestern Mutual’s 2025 Planning & Progress Study can be found here, along with study methodology.
