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Remember the good ol’ 1980s?
When hair was big, tunes were catchy, and your parents could afford a house by the time they were around 25?
Fast forward to today.
The median age of first-time homeownership has crept up to 36 years old (2022), and that same house?
It will cost you a lot more.
The dollar doesn’t stretch as far, houses feel like a millionaire’s game, and you might be wondering:
Why the hell aren’t I ‘succeeding’?
Today, we dive deep to find out why many of us feel like we’re running an economic marathon with weights tied to our ankles.
Disclaimer: This post aims to provide perspectives on generational economic shifts and is not intended to be financial advice in any way. Always consult with a financial professional before making any financial decisions.
Reason 01: A slow down in wage growth
Let’s hit you with some cold, hard numbers: from the post-World War II era up until the 1970s, when wages grew 91 %.
Now compare this to more recent times.
From 1973 to 2013, the hourly wage for a typical employee rose a tiny 9%.
Quite the difference, right?
In the 1980s, the median household income was around $21,020 . Sounds low?
When adjusted for inflation, that’s about $78,000 in today’s dollars.
Meanwhile, as of 2022, the median household income in 2022 was $74,580.
But here’s the biggest catch: costs in many essential areas, like housing, education, and healthcare, have risen at a pace that far outstrips income growth.
Keep these figures in mind as you read on.
Reason 02: The great housing hurdle
Ah, the dream of homeownership.
A white picket fence, a dog named Spot, and maybe a treehouse for the kids.
For our parents, this dream was attainable, almost an expected rite of passage.
Today?
For many, it feels more like a distant dream.
Why?
Let’s dive into the numbers: In the 1980s, the median U.S. home price was about $63,000.
If we whip out the inflation calculator, that translates to roughly $234,000 in 2023 money.
But reality check: the median home price in the third quarter of 2023 was just over $430,000.
So incomes are very similar for most people, but house prices have almost doubled?
Correct.
It’s no wonder that homeownership, once a cornerstone of the American Dream, now feels out of reach for many.
Reason 03: Rising education costs
Alright, time for a trip down memory lane—specifically, the academic halls of yesteryears.
In 1980, as posted by Forbes, a year of tuition at a four-year college full-time would have cost you $10,231 a year in today’s money. This includes tuition fees, room and board.
Not cheap for sure.
But here’s where the plot thickens: in 2022, the figure in 2020 was $28,775.
It has almost tripled!
And keep in mind, that we have adjusted for inflation.
And let’s not even dive into the realm of Ivy League colleges, where the numbers are enough to induce heart palpitations.
What’s the result of all this?
A generation saddled with student loan debt.
This impacts everything from home purchases to starting families.
While our parents’ generation might have worked those summer jobs and come out with a degree and minimal debt, today’s grads are often shackled by their loans, making it harder to gain financial traction post-graduation.
Reason 04: Healthcare costs
Navigating the murky waters of healthcare can feel like a Herculean task.
It’s not just about getting the right diagnosis and treatment; it’s also about weathering the financial storm that accompanies medical care.
And this storm has been intensifying over the decades.
As noted in a CNBC post, back in the 1984, the average American household spent about $2,500 per person on healthcare every year.
Sounds expensive for 1980?
This figure has already been adjusted for inflation.
Now, let’s fast forward to 2019: The average annual premium for family coverage has shot up to $5,000 per person.
So, it has doubled even after accounting for inflation.
That’s an explosion.
But you get it with your company?
Employers have also been cutting the level of healthcare coverage offered to young workers.
In short, while our parents might have grumbled about medical bills back in the day, today’s healthcare costs are an entirely different beast, devouring a significant chunk of our incomes.
It’s not all bad, though
Amidst the economic tightropes and challenges, there’s a silver lining that’s too bright to ignore. Here are some of the undeniable boons of our time:
- The Internet Revolution: We’re living in the digital age, where the world is quite literally at our fingertips. The Internet has democratized information, meaning we have access to a wealth of knowledge that our parents could only dream of. From free online courses to expansive digital libraries, the barriers to learning have significantly diminished.
- Global Opportunities: Thanks to digital platforms, geographical borders are becoming less of a barrier. Whether it’s remote work, freelancing, or e-commerce, the global marketplace allows us to tap into opportunities well beyond our immediate surroundings.
- Connectivity & Community: Social media and various online communities have made it easier to connect, collaborate, and share with like-minded individuals from all over the world. This connectedness can lead to collaborations, partnerships, and shared resources that were harder to come by in the past.
- Technological Advancements: From healthcare innovations to energy-efficient solutions, technological advancements are constantly improving our quality of life. These innovations not only make life more convenient but often more sustainable and interconnected.
- Shift Towards Passion & Purpose: Unlike the often singular career paths of the past, today’s world is more accommodating to those who wish to pursue their passions, change careers, or embark on entrepreneurial ventures. There’s a growing emphasis on finding purpose and fulfillment in what we do.
So while the economic challenges of our time are real, we’re also equipped with tools and opportunities that previous generations might have deemed magical.
By leveraging these assets and approaching challenges with a problem-solving mindset, we’re not just surviving; we have the potential to thrive in unprecedented ways.
The bottom line
The hurdles are higher, from inflated house prices and education costs to the bite of healthcare bills and the crawl of wage growth.
The challenges are real, but so is our capacity for innovation, adaptability, and resilience.
Rather than getting bogged down by comparisons to the past, it’s time to focus on crafting our own blueprint for success.
It’s about recognizing the hurdles, leveraging modern tools and knowledge, and forging a unique path in today’s complex world.
In the words of an old adage, “It’s not the cards you’re dealt, but how you play them.”
We might be playing in a tougher game, but with the right strategies and mindset, we’re far from folding.
Have you found strategies or solutions that work for you in this new economic landscape?
Share them in the comments below – your insights could be the game-changer for someone else!