Millennials will need nearly $190,000 annually to survive 2060
Millennials should be on the lookout for higher costs in the future. The recent runaway inflation post-pandemic did not make things cheaper. To cool inflation, the Federal Reserve raised its 11th benchmark rate in 2022 through 2023 with the hopes of rate cuts mid to late 2024. However, this is just the precursor. By 2060, prices are anticipated to go supernova.
While some are still grasping higher costs (today), the weakening US dollar, and layoffs; the worst is yet to come. Especially, if you aren’t planning on it (for tomorrow). The majority (two-thirds) of Americans, will live past 80 years old. Every dollar today needs to find a better home to grow. Bigger health issues still loom, considering wealth inequality, lack of affordable housing, and the 2040 retirement crisis. Ultimately, it will cost the average American more to maintain a standard household. How much more?
Based on the Bureau of Labor and Statistics 2022 survey, the average US household spent $72,967 (up 9.0 percent from 2021). The bulk of which, 62.9 percent went to Housing, Transportation, and Food (see Table #2).
However, based on the rate of inflation at 2.55 percent by 2060, our median expenses will explode or implode to $190,000 per year. That’s a whopping $15,833 per month. Even if we cut that lifestyle down by 25%, you would still need $11,875 per month. That’s a lot considering most are retiring with less than $250,000 in savings.
Just to be 100 percent clear; Annual Expenses Will Be over $189,748 by 2060
Most Americans have no clue how much they are spending annually. This leads to overspending to the tune of $7,500 annually. It’s no wonder why savings tanked in 2023 and debt increased by 25 percent. Americans are spending nearly 80 cents of every dollar earned. At this rate, we need to make real Budgeting sexy again because the Loud Budgeting trend won’t be enough.
If you know your annual expenses, check out your estimated future costs (see Table #1)
Table of Contents
Table #1. Average US Household Expenditures by 2060
| Income By Socio-economic Class | If Your Annual Expense in 2023… | *By 2060, It might Inflate to… |
| Near Poverty Line | $35,000 | $87,886 |
| Working Poor | $45,000 | $112,996 |
| **Lower Middle | $67,500 | $169,494 |
| Messy Middle | $84,000 | $210,926 |
| Upper Middle | $90,000 | $225,992 |
| Upper Income | $117,500 | $295,045 |
** Over 50 percent of Americans classify themselves as Middle Class
By this time, you should be wondering what TF is Inflation.
Most people are always wondering what Inflation means. As a person who barely received an A- in micro- and macro-economics from a university; I can barely tell you what it means.
But a Google search led me to Investopedia which says that “Inflation is a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.”
Let me translate – the more a society matures and wants specific items; the more those items can be sold for, especially if demand is more than the supply available. Let’s say you live in DC and want to buy the 3-bedroom home that just popped up on the market for $600,000. By the way, that’s a $4,000 monthly mortgage payment at 7.113 percent. If everyone else wants this expensive liability, especially if it is in limited supply and refurbished with all the HGTV stuff; guess what, it triggers a bidding war that might push the price to $750,000. The price is directly related to Supply/Demand.
I know it’s messed up but that’s how that works. kinda sorta? But let’s dive into some more numbers.
Table #2. Average US Household Expenditures for Select Expenses for 2022
| Categories | Average Monthly Cost | Average Annual Cost | Prior Year Percent Change |
| Food at Home | $475.25 | $5,703 | +8.4% |
| Food away from Home | $303.25 | $3,639 | +20.1% |
| Housing | $2,024.83 | $24,298 | +7.4% |
| Apparel and Services | $162.08 | $1,945 | +10.9% |
| Transportation | $1,024.58 | $12,295 | +12.2% |
| Healthcare | $487.50 | $5,850 | +7.3% |
| Entertainment | $288.17 | $3,458 | -3.1% |
| Personal Care | $72.17 | $866 | +12.3% |
| Education | $111.25 | $1,335 | +8.9% |
| Alcoholic Beverages | $48.58 | $583 | +5.2% |
| Smoking | $30.92 | $371 | +8.8% |
| Savings and Long Term Investments | $685.25 | $8,223 | +11.1% |
So TNFG, what are the Inflation Estimates?
Well, it’s not that good.
Based on the numbers the average 35-44-year-old spent a staggering $86,049 (up from $79,712 in 2021) which means that most millennials are creeping up on that $100,000 average household spending fast.
So with those numbers and using my trusty inflation calculator set at 2.5 percent for 37 years, here’s the crystal ball prediction (see Table #3).
Table #3. Average US Household Expenditures by 2060
| Select Expense Categories | *Future Average Monthly Cost | Future Average Annual Cost |
| Food at Home | $1,235 | $14,830 |
| Food away from Home | $788 | $9,463 |
| Housing | $5,266 | $63,186 |
| Apparel and Services | $421 | $5,058 |
| Transportation | $2,665 | $31,973 |
| Healthcare | $1,269 | $15,213 |
| Entertainment | $749 | $8,992 |
| Personal Care | $187 | $2,252 |
| Alcohol | $127 | $1,516 |
| Smoking | $81 | $965 |
How to Fight Inflation Through 2060?
To be quite honest you can’t fight inflation head-on.
Though the government uses various forms of quantitative easing and investor shift with equities that do best during these times, the average person is left to figure it out on their own.
The picture to the right chronicles easy steps to get your financial affairs in order.
The best strategy is still the same:
- Decrease unnecessary consumption,
- Make more money/Bring in more income, and
- Invest in vehicles that make you more than the rate of inflation.
No, I’m not talking about cars when I say vehicles. I mean assets, equities, and cash flow. You need to start setting up how your household operates today.
Secondly, remember that over 60 percent of 1. Housing, 2. Transportation, and 3. Food. Yeah, you should cap that at 38 percent. Skip the Pumpkin Spice Latte; you need to reallocate quickly. Total housing cost should be no more than 25 percent. Transportation costs should be no more than 8 percent and Food no more than 5 percent. All of this is from the gross income.
It’s never gotten cheaper in history, so make sure you are up on the financial game. And cut wasteful spending, I can’t say it enough. And final tip, your savings/investing rate should never fall below 28 percent. While it doesn’t mean that you will start this way. This is something worth shooting for.
How to Improve by 2060?
First and foremost, create a plan for your home. Start budgeting to invest for the future:
- Use tax-efficient assets if you have access such as 401k, 403b, or 457b at work. Double-check your allocations because if it’s not nearly +9 percent, it might be a problem.
- Set money goals per month where you make more than you are spending. Nothing is better than increasing your cash flow.
- Buy a home and stay in your home as long as possible. Those who sell every 4 years are generally losing in value. And stay with your current vehicle as long as possible. Bonus, if you upgrade your car; go Hybrid EV for tax breaks.
- Focus on being financially secure versus trying to hedge education costs. You will be a better service to your kids as a not-broke parent.
Voila. If you’ve done this correctly, you should be well on your way to becoming a millionaire by retirement and on par with inflation.
The average American household is making $94,003 before taxes in 2022. You have to make at least $244,451 by 2060 to remain competitive. It’s not easy but at least you have a destination. Even if these estimates are dead wrong, I’m 100 percent positive that costs will go up.
The big lesson is that this is just information. What you do with it matters. Most people don’t do anything with it. It’s going to be an interesting gamble. On the other hand, my wife and I are shooting to be multi-millionaires (by 2026) and debt-free by 2036. At least that will help lower unnecessary costs while giving us room to do more of what we love.
The finish line is not going to move. So you may as well start running.
L. Delva-Gonzalez
About Author
