Question

Discuss some insurance options (life, car, home, umbrella) that you would consider given that you are in your 30s, married with two (2) children, have a home with a mortgage, two pieces of rental property, and two cars (both with small loans still on the cars).  Again please take this information and develop some insurance strategies

Answer 1

Examine the typical American family’s monthly budget, line by line, and a larger story emerges about how the middle class has evolved.

What it means to be middle class hasn’t changed much — there’s a steady job, the ability to comfortably raise a family if you choose to, a home to call your own, an annual vacation. But what it takes to achieve all that has become more challenging.

The costs of housing, health care and education are consuming ever larger shares of household budgets, and have risen faster than incomes. Today’s middle-class families are working longer, managing new kinds of stress and shouldering greater financial risks than previous generations did. They’re also making different kinds of tradeoffs.

Most people believe that they belong somewhere in the middle class, but its boundaries and markers are subject to interpretation.

Based on income alone, about half of all adults in the United States fall in this category, according to a 2018 report from the Pew Research Center, a nonpartisan research group. It defined being middle class as having an annual household income from about two-thirds to double the national median, which translates to roughly $48,000 to $145,000 for a family of three (in 2018 dollars).

Four families, from Sheboygan, Wis., to San Francisco, gave us a glimpse at their monthly budgets. Their stories help illustrate how a middle-class existence has fundamentally shifted over a generation.

For Lauren and Trevor Koch of Sheboygan, making their finances work on one salary was a struggle. Mr. Koch, a chef earning $51,000, often worked 50 hours or more a week. Ms. Koch decided to give up her job as a restaurant server after the couple had the first of their two children. Given the high cost of child care, she felt her time was better spent at home.

Life got trickier when Mr. Koch lost his job as a chef at the end of February. Now he cares for the children in the morning, while Ms. Koch works part time at a shop that sells CBD, or cannabidiol, products. When she gets home at 1 p.m., he leaves for his job as a line cook, where he is paid hourly and works until 11 p.m. Neither of them receives paid time off or health insurance.

“We have such high levels of stress from juggling our schedules,” Ms. Koch said. Collectively, they earn slightly more than before, she said, but it’s unclear if their hours will dwindle during the winter months.

As family incomes have become more volatile, academic experts said, the trend has contributed to greater feelings of financial insecurity. For many people who experience a drop in income, whatever the reason, the declines tend to be greater than in the past, according to an analysis by Jacob Hacker, the director of Yale University’s Institution for Social and Policy Studies.

“The gap between Richie Rich and Joe Citizen is a lot larger than it used to be,” Professor Hacker wrote in “The Great Risk Shift,” “but so too is the gap between Joe Citizen in a good year and Joe Citizen in a bad year.”

That’s just one indicator of the deeper structural problems reshaping the middle class, he said. Employers and government institutions keep shifting responsibility to workers, forcing them to navigate more threats to their financial well-being. Pensions have been largely replaced by 401(k) plans. Comprehensive health coverage has given way to high-deductible plans. Paid family leave is uncommon.

So families make tradeoffs. Even when Mr. Koch had a salaried job with benefits as a chef, he and his wife couldn’t afford to save for retirement. Their biggest expenses were rent, food and debt payments, and they were just scraping by. At $80 a month, their health care premiums seemed reasonable, until they needed a doctor: Both had deductibles of $3,000.

Such a fragile existence is threatened even further when major investments meant to cement a middle-class life — getting a college degree, buying a home — backfire. Mr. and Ms. Koch both have more than $70,000 in loan debt for college educations they never completed, meaning a good chunk of their money is effectively gone every month before they have spent anything at all.

If their finances were stronger, Ms. Koch said, they would seek help handling life’s stresses and complexities. “Therapy is probably the first thing we would add into our lives,” she said.

Melanie Espinosa, 30, and her fiancé, Brett Townsend, 33, of Layton, Utah, have mastered a morning routine: She is up at 6:45 getting ready for work. He rouses and dresses their two toddler daughters about 15 minutes later and gets them a snack. They buckle the girls into their carseats by 8 and head to preschool. They’ll have breakfast there.

Ms. Espinosa, a purchasing specialist at a transit technology company, and Mr. Townsend, an internet sales manager at a car dealership, together earn about $90,000 a year. And yet their income never seems to go as far as they need it to.

Ms. Espinosa said they would like to save for a down payment on a home and for the girls’ college educations. But that isn’t possible right now.

“We are in survival mode,” she said. “We can mostly break even.”

Even with two paychecks, middle-class status has become more elusive. The soaring costs of those three big-ticket items — housing, health care and college — have made it more difficult for some people to achieve certain milestones.

The struggle is not unique to the United States. In April, the Organization for Economic Cooperation and Development reported that pressures on the middle class around the world have increased since the 1980s. What sets middle-class Americans apart, the study found, is that they are struggling under several burdens — low income growth, rising costs, declining job security — while those in many other countries face just one or two.

Spending patterns have also shifted drastically over the past century. American households spend significantly more of their budgets on housing and less on items like food than they did in previous decades.

Housing accounted for 23 percent of the average household’s total expenditures in 1901, 27 percent in 1950, and nearly 33 percent in 2018, according to data from the United States Consumer Expenditure Survey. Those squarely in the middle of the income distribution spent slightly more, or 34.5 percent. (The data doesn’t account for homes today being larger and having more amenities.)

“Young families with kids are really getting slammed on all sides,” said Jenny Schuetz, a fellow at the Brookings Institution who studies housing policy. “They are more likely to have some student debt, and child care has gotten more expensive. So if you are trying to pay off student debt, pay for child care and rent, it will be tough to save for a down payment.”

Child care is a substantial expense for Ms. Espinosa and Mr. Townsend — and it just swelled. They were paying about $800 a month, a relative bargain because they relied on someone who watched children in her home. But they had to find a replacement quickly when their caregiver stopped working recently. Two spots at a Montessori school were available, but they’re now paying $1,200 for that — nearly as much as their rent.

The girls are thriving, Ms. Espinosa said, but the extra cost will probably push the prospect of owning a home further into the future.

The couple’s only debt is from Ms. Espinosa’s student loans, now just under $16,000, and car payments on their six- and 11-year-old Hondas.

Ms. Espinosa said she had always thought being middle class meant living a humble life, without having to constantly worry about which bills were coming up.

“We have a good income for where we are,” she added. “But for some reason every single month it seems like, ‘Oh, something came up or we didn’t make enough.’ It’s just a constant battle.”