6 Reasons the Middle Class Could Financially Struggle in 2025
Written by
Nicole Spector
Edited by
Molly Sullivan
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The middle class as we know it emerged in the post-World War II era. This cohort, sandwiched between the wealthy and the working class, makes up the biggest percentage of Americans, but that could be changing. Data from Pew Research Center shows the percentage of middle-class Americans has been decreasing over the past few decades.
Some experts argue that the middle class is in danger; others go so far as to say the middle class doesn’t even exist anymore, at least, not as we have long understood it. Regardless of just how bad of shape the middle class is in, it’s clear that there are significant hurdles it’s up against.
What are some key reasons the middle class could financially struggle in 2025? GOBankingRates spoke with financial experts to find out.
Rising Debt
By now, you probably are well aware that debt can be deadly, particularly if it’s of the high-interest variety that comes with credit card usage. Debt has long been an uncomfortable burden for the middle class to bear, and that burden will likely continue to play a role in the middle-class’ finances in 2025.
“In an analysis of more than 20 of the most widely used consumer financial products and services, the 2024 FinHealth Spend Report found that while consumer usage remained roughly unchanged, increasing debt balances and higher borrowing costs led to a dramatic increase in total spending on fees and interest, directly impacting families’ bottom line,” said Lisa Berdie, director, policy and research at Financial Health Network.
Wage Stagnation
Though the economy has been growing in 2024 and is poised to continue to grow in 2025, wages haven for middle-class folks haven’t necessarily grown with it.
“Over the past decade, real wages (adjusted for inflation) have grown by less than 0.5% annually, while the cost of living has increased much faster,” said Yuri Nosenko, wealth advisor at Imperial Fund Asset Management. “For instance, in 2024, inflation in the U.S. hovered around 3%-4%, but wage growth for middle-income earners was closer to 2%. This gap erodes purchasing power, forcing families to stretch their budgets for essentials like food, gas and utilities.”
Rising Housing Costs
Whether you rent, own or are looking to own, you probably already know this struggle: housing affordability. This will remain a critical challenge for many middle-class folks in 2025.
“Median home prices in many metropolitan areas have surged by 20%-25% over the past three years, and rents have followed a similar trajectory,” Nosenko said. “In states like Florida, the median home price exceeds $400,000, and rental prices for a modest apartment average $2,500 per month.”
Healthcare Expenses
Among the heaviest financial burdens the middle class bear is healthcare. The costs just keep going up. And it doesn’t yet look like they’ll be tamed in 2025.
“The average family health insurance premium rose to $23,968 annually in 2023, a 7% increase from 2022,” Nosenko said. “Out-of-pocket prescriptions and medical care expenses further exacerbate the strain, especially for those without employer-sponsored plans.”
Return To Office Work
Though COVID-19 hasn’t gone away (as of Nov. 20, 2024, people are still hospitalized with or dying from the virulent virus), many managers are calling employees back to working in the office after years of being remote. This move is bringing back steep commuting costs — along with child care costs — for many middle-class folks.
“The shift back to in-office work has introduced additional costs for middle-class families,” Nosenko said. “The average American spends over $200 monthly on commuting (fuel, parking or public transit), combined with increased spending on child care (often $1,000-$1,500 per child monthly).”
An Increase in Use of Digital Services
A lot of people don’t realize how much technology, including digital services, is costing us. These expenses really add up.
“As technology becomes essential for education, work and entertainment, families spend more on digital services,” Nosenko said. “The average household now spends $273 monthly on subscriptions, including streaming platforms, cloud storage, and online education tools — up from $199 in 2020.”
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