I don’t normally make predictions because the future is un-knowable and why try to predict something with low probability of success? However, I decided to take a swipe at making guesses in the personal finance arena this year and divide them into Low and High probability categories for fun. Here we go.
Low Probability Predictions
- Higher than normal inflation will persist in 2022. There is inflation momentum and it could continue in 2022. This means it will cost you more to buy goods and services compared to what it cost you in 2020.
- The Fed will raise interest rates in 2022. In response to inflation worries, the Fed will slowly (and with frequent warnings) raise interest rates. This means it will cost you more to borrow next year. On the other hand, you may see a slight rise in the interest your savings earn.
- The COVID-19 Pandemic will continue in 2022. The U.S. set a new seven-day average high for COVID-19 cases this week. This week’s high eclipsed the previous high set in January 2021. We’ll be wearing masks and practicing social distancing for at least the next year.
- Labor shortages in many industries will persist throughout the year. Watch for continued “Help Wanted” signs.
- Supply Chain interruptions will continue. Check out the Beer Game App to learn more about the challenges and intricacies of supply chain management.
High Probability Predictions
- There will be more than two million weddings in the United States in 2022 with an average total cost, including the rings, of $34,000. There will more marriages in Nevada than in any other state. (Source: Statista.com). Approximately four million people will have no idea how to pay for a big event like a wedding and take on debt to pay for one.
- On the other hand, there will be 750,000 divorces in 2022. There will be more divorces in Nevada than in any other state. (Source: Statista.com). More than 1.5 million people will realize divorce is expensive.
- Approximately 3,600,000 babies will be born in the United States in 2022. That means there will be more than fourteen million participants in 529 College Savings Plan (source: Education Data Initiative). Student debt will continue to rise.
- There will be more than 2.8 million deaths in the U.S. in 2022 according to the CDC. The leading cause will be COVID-19 related followed by heart disease and cancer. More than 60% of people who die won’t have wills.
- More than 1.8 million people will buy their first home in 2022 . The average age will be around thirty-four. One-third of the first timers will be un-married. The average price of a starter home will be approximately $234,000. Two million appliances will need to be replaced.
- Sixty-two will remain the preferred retirement age for U.S. workers. (Source for items 7-12: annuity.org)
- On the other hand, workers in the United Arab Emirates will retire at age 49 on average (lowest in the world). There won’t be a mass migration from the U.S. to UAE for this reason.
- However, the average Norwegian worker will retire at age 67 (highest in the world). There won’t be a mass migration from the U.S. to Norway for this reason.
- Women in the U.S. will have smaller retirement savings overall, with an average $57,000 saved, compared to men’s $118,000.
- Over half (55 percent) of workers will plan to work in retirement.
- The median retirement savings for all U.S. workers will be $97,000.
- According to the Social Security Administration, the average monthly Social Security Benefit will be $1,657 in 2022.
- The average monthly living expense for people over 65 in the U.S. will be $4,083 according to SoFi. You do the math using #’s 12-14. See the problem?
- The stock market will go up, down, and sideways. Most investors will worry.
- More than 1,000 “experts” will predict how you can be a big stock market winner in 2022. Most will be wrong. Ten will get lucky and the media will proclaim them investing gurus. The other 990 won’t mention they guessed wrong. The media will still proclaim them investing experts. (Source: my guess)
- Fear of Missing Out (FOMO) will ensure cryptocurrencies like Bitcoin and Ethereum have thousands of buyers and sellers. The IRS will continue to be interested. (Fun fact: what do Vladimir Putin and Burger King have in common? They both have a cryptocurrency named after them: PutinCoin and WhopperCoin.)
- When it comes to personal finance, human nature will continue to rule decisions. Investors will swing between fear and greed. The intelligent investor will recognize human nature and manage this bias as best as possible. It won’t always work.
These are my 2022 predictions. What about you? What do you predict will happen in the world of personal finance next year? Make comments here and we can all profit from our collective wisdom.
May your 2022 be healthy, joyful, and prosperous.