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. People are feeling more optimistic that the United States will avoid recession and they’re reporting greater financial discipline, reversing a five-year decline. And for Millennials, the burden of college debt appears to be receding – but a new financial foe is taking its place: medical debt.
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.
Inflation is the #1 financial concern and Americans say their household incomes are not keeping up
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 #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 ten (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.
| Expectations for
inflation in 2025 |
U.S.
Adults |
Household
income vs. inflation |
U.S.
Adults |
Top concerns
regarding factors that could impact finances in 2025 |
U.S.
Adults |
||
| Increase | 51 % | Growing slower | 52 % | Inflation | 65 % | ||
| Decrease | 25 % | On pace | 28 % | Taxes | 37 % | ||
| Stay the same | 24 % | Growing faster | 11 % | Housing costs | 32 % | ||
| Not sure | 9 % | Interest rates | 27 % | ||||
| Potential recession | 21 % |
| Greatest obstacles to achieving financial
security |
U.S. Adults |
| Inflation | 44 % |
| Lack of savings | 25 % |
| The economy | 22 % |
| Personal debt | 22 % |
| Taxes | 22 % |
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 ten (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.
| Elevated costs | Large impact on finances |
| Childcare expenses | 48 % |
| Housing expenses | 45 % |
| Groceries | 43 % |
| Utilities (water, electric, phone, internet, etc.) | 34 % |
| Gas | 33 % |
“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.”
Major Millennial milestone: Medical debt surpasses college loans in list of top sources of debt
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 #2 source (car loans) and nearly quadruple the #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.
| Main Sources of Debt | U.S. Adults | Gen Z | Millennials | Gen X | Boomers+ |
| Credit card bills | 31 % | 22 % | 35 % | 35 % | 30 % |
| Car loan | 13 % | 10 % | 13 % | 14 % | 13 % |
| Medical debt | 8 % | 8 % | 11 % | 8 % | 6 % |
| Personal education loans | 7 % | 16 % | 10 % | 5 % | 1 % |
| Educational expenses
for children/family members |
4 % | 5 % | 5 % | 6 % | 2 % |
| Caring for loved ones | 4 % | 5 % | 5 % | 6 % | 2 % |
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 three-year trend whereby U.S adults are focusing on debt with greater urgency than saving.
| U.S Adults | 2022 | 2023 | 2024 | 2025 |
| Prioritize saving
money |
43 % | 39 % | 36 % | 36 % |
| Prioritize paying
down debt |
57 % | 61 % | 64 % | 64 % |
“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.”
Americans’ non-mortgage personal debt in 2025 came down from last year. Among those who carry personal debt, the average amount people owe is $21,500 – down from $22,713 in 2024 and a 19% decrease from 2020 debt levels.
| Americans’ Personal Debt, Exclusive of Mortgages | |
| 2025 | $21,500 |
| 2024 | $22,713 |
| 2023 | $21,800 |
| 2022 | $22,354 |
| 2021 | $23,325 |
| 2020 | $26,621 |
‘Spend Z’
Despite concerns about college loans and credit card debt, Gen Z stands out among generations for their plans to spend in 2025.
The majority of U.S. adults expect to spend the same (34%) or more (29%) on non-essential discretionary purchases this year compared to last year, with one-third (34%) expecting to spend less.
Gen Z, however, has bigger spending plans in mind – 40% expect to spend more in 2025 than they did in 2024, well ahead of other generations.
| Discretionary spending
in 2025 vs. 2024 |
U.S. Adults | Gen Z | Millennials | Gen X | Boomers+ |
| More | 29 % | 40 % | 34 % | 26 % | 19 % |
| The same | 34 % | 26 % | 27 % | 34 % | 44 % |
| Less | 34 % | 29 % | 33 % | 37 % | 33 % |
| Unsure | 3 % | 5 % | 6 % | 3 % | 4 % |
The good news, however, is that Gen Z is also the most likely generation to report that their income is growing faster or on par with inflation.
| Is your household
income growing faster, slower or is it on pace with inflation? |
U.S. Adults | Gen Z | Millennials | Gen X | Boomers+ |
| Faster | 11 % | 17 % | 14 % | 10 % | 5 % |
| Slower | 52 % | 40 % | 50 % | 56 % | 59 % |
| On pace | 28 % | 28 % | 27 % | 27 % | 31 % |
| Not sure | 9 % | 15 % | 9 % | 7 % | 5 % |
“Spending money and enjoying life can feel great if it’s part of a financial plan,” said Roberts. “But spending money without planning for risks or for the future can create even more anxiety in people’s lives. This is where a trusted financial advisor can make a real difference. Advisors help clients identify their blind spots and opportunities and instill them with confidence – knowing they are making good decisions for today and tomorrow.”
Home ownership feels out of reach for many Americans, and younger generations feel priced out
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 go
