Building wealth in the 80s/90s/00s vs today

[Spondulix]

I'm sure this topic has come up before... So just face punch me and send links if you prefer :)

I'm basically wondering if it's harder to build wealth earlier than for someone who was in a similar job/financial situation 10-25 years ago. I would love to see a realistic budget adjusted for inflation. It just seems to me (through discussions with my parents, older colleagues and friends, etc) that what they had in retirement accounts or equity % in homes 20-30 years ago was a much better position than someone the same age now... Which means that they could afford more home, get into better neighborhoods, etc - basically better bang for the buck.

Now I realize I live in Los Angeles (where I may deserve a face punch for even bringing it up), but I don't think it's just me or just here. Reading lots of case studies, what we need to cover "necessities" is definitely more - high student loan payments, needing more electronics in the home (for work/school), health insurance premiums and costs, etc - in my field, most jobs have moved to contractor, where 20 years ago one would have never been buying gear/computers/supplies out of pocket.

It makes me envious that someone could buy their first house 25 years ago and have it be so awesome they would want to stay in it 25 years. I don't see many people (here or a lot of the country) being able to afford their "retirement" home as their first (or maybe even second) without it being a financial stretch.

I know that interest rates were ridiculously high in the 80s and obviously there were different challenges in each decade... But am I totally off in thinking that it's harder to get by now than how it used to be? My parents had a car loan, home loan, student loans and three kids - yet they managed to live on one modest salary and both retired a little early. I know it's doable for me, but I'm earning a high salary and have a high savings rate. I just don't see how a lot of other people are going to make it work...

[ShortInSeattle]

I went to college in the 90s. DH and I both got BA degrees and graduated with less than 40k in debt between us. (We did work part time while going to school and lived in a hovel to save money.)

I think that today's high cost of college is a barrier that we didn't have. It was expensive, but not shockingly so. Also, college wasn't expected of everyone back then, so the competition wasn't so fierce to get in. And a degree seemed to mean something - today it seems like high school diploma v2.0.

So I think that is a difference.

[surfhb]

I'm glad you posted this question because I was thinking the same. 

I grew up in Orange County and have been price out of home ownership while having an Income of $70k.   Meanwhile I see parents who raised kids with 1 income enjoy the fruits of their investments. 

Even though this site puts a light on needless spending I do believe times are harder now.   Incomes just haven't kept pace with expenses

Any other muschatcian feel the same?

[franklin w. dixon]

It is much, much more difficult today for a number of reasons.

1. Retirement is now your own responsibility in the first place. In 1980, 60% of workers had defined benefit pensions; today that number is 10%. Saving for retirement used to be unnecessary unless you specifically wanted to retire extra early because between pension and SS you were covered. Today that is no longer the case; it is possible to live on Social Security alone provided you own a home with reasonable property taxes, but its nothing like what existed 30 years ago.

2. Incomes which afford sufficient salaries to retire comfortably, early or otherwise, now require at least undergraduate education. The "early retirement"  or even "regular retirement" conversation can only begin when people have an income over a certain threshold, which can be debated but a fair guesstimate is around $30-$40,000/yr. In inflation adjusted dollars, the median income for high school graduates has declined from 32,300/yr to 28,000 since 1979. In order to earn a decent (let alone luxurious) income, it is mostly obligatory to get a 4-year degree. That means an enormous investment of money and time up front in a grotesque pay to play system where people buy scarce "ok" jobs for hundreds of thousands of dollars of debt.

3. Employment is much less secure. The United States never had a culture of lifelong employment like certain other rich countries, let alone the paradise of guaranteed employment like the old eastern bloc, but because the first world economies used to be more stable and unions more strong, it was still less common for people to find themselves repeatedly out of work. Today high savings rates look like a no brainer to us because the future is so insecure; that was not always the case.

4. The safest investments no longer yield real returns. Decades ago, it was possible to get rich (in an early retirement sense) by putting your money in ultra safe vehicles like certificates of deposit and treasury bonds. Today and for almost 10 years now, those yield negative or flat real returns. As a result, aspiring early retirees are obligated to invest in the far riskier stock market, which has a couple of consequences. One is that people anxiously work for longer to build up a bigger pile of money for fear of a market crash. A second is that asset prices are inflated by a flood of money from people who are only in the stock market for want of any other options. As a consequence of the second, prices adhere less strictly to values and the market becomes crash prone, exacerbating the first.

5. Your parents don't have any money. Boomers are now in the taxing business of taking care of their elderly parents. But the parents of boomers are the richest generation to have ever lived, and so their financial burden on their children is relatively light. When boomers themselves get old, their personal resources will not stretch as far as their parents' did. And few of them benefit from the old-age insurance of all recorded history: living with their younger relatives. So the generations following the boomers will end up taking care of them haphazardly and at enormous expense.

[Goldielocks]

I strongly felt this way a few months ago.  Some things are true--  housing has skyrocketed because of dual incomes ( more money available), student Loan debt (versus pay upfront or font go, but still get a living wage job), and of course child care costs ( for those two incomes).

Then I kept reading MMM.  Focusing on " It's not fair!" Is very self defeating.

Then I read about ERE, MMM and all those others with over 50% savings rate.

It is totally possible to live as well off now as before.  The problem us that any foolish mistake ( getting into home you can't afford or high SL on low Salary) are extremely unforgiving to resolve.

I also think back to before universal healthcare,my husband's grandfather's family lost their entire well off lifestyle when his sister ended up with polio and the small fortune was spent on her surgeries.  A friend has great aunt that had to flee communism in Europe,  leaving estates behind and working as a cook for the rest of their lives.

[deborah]

I disagree with Franklin e dixon and the previous writers. Each generation has different struggles. It is not easier, but different. Maybe I can give a few counter examples.

The house I bought (and all the people I knew bought) would not be considered by many people today - it was so small, only had one bathroom and had an outhouse toilet. If houses have grown to twice the size (they haven't, but they are a lot bigger), they probably should be twice the relative cost. Many people did up their houses, so it is difficult for today's generation to appreciate what the normal house looked like.

Electronics has decreased in price enormously, as have clothes, so they don't take up nearly as much of the budget. Travel - particularly plane travel - is just so much cheaper there are many places that it is cheaper for me to fly to today at full fare, than it was when I was first working - this is in actual $! With the internet, it has become much easier to find good deals, to become financially aware, and to know what investment options are out there. Bank deregulation has meant that it is very easy to get loans - credit cards didn't really exist, and as a woman, it was very difficult for me to get a loan.

There were a lot of people who didn't get pensions - you say 60% did - well at least 40% didn't in that case, and the baby boomers were the ones who were changed from pensions to your own responsibility, so very few of them are recipients of these schemes. For instance, many schemes precluded women, and if you changed employers, your pension went back to zero.

As a woman, I think that it is an awful lot easier today! But as we get older, we grow our frugality muscles, so it IS easier.

[Dan_at_Home]

Great idea for a forum topic.

In my opinion, right now is about the same as the 80s, 90s.  Some things are easier, some are harder, but in general in about balances out.

A couple of things to keep in mind:
Houses in what are now desirable areas often were not desirable areas 20-30 years ago when their prices were cheaper.  If you talk to older folks who bought those cheap houses, often the houses were located in the outskirts of the city at the time of purchase.  Often the city grows up around the houses over time.  Thus, what are you seeing now is not what it once was.  Look at historical aerial photos, often these cheap houses were surrounded by farms or forested areas.  The cheap prices reflected their true value, at that time.  Of course some people got lucky and the areas really really grew up, thus even more increasing the prices of their houses.

Another a big advantage nowadays is the Internet.  Information is so powerful.  It is now so much easier to do your own home repair or learn skills such as haircuting, pet grooming, the best ways to save money, shop for houses, pay bills, do xmas shopping etc.  Often in 80s it was really hard to verify correct information when it came to things like learning skills, before the Internet, the term "trade secret" really was that.  The 90s was the start of the Internet but you did not have video on youtube to learn skills as well.   

If you look back even further, i.e. 1950s to the 1920s, life was much much harder than it is today.  For example, in 1950 a household on average spent 1/3 of their paycheck to buy groceries to cook at home, eating out was much more rare, so were appliances, houses were much much smaller, families often only had 1 car, etc.  In the 1920s, a family spend 40% of their paycheck for food.  http://www.bls.gov/opub/mlr/2001/05/art3full.pdf 
Oh yeah, I heard stories even in the 60-70s health care was not too great, often people had a heart attack in the late 40s or 50s and died from it at their house.  The health care back then was basically someone going to your house to pick up the body to take it the morgue.  Also, the surgeries were much more dangerous.  Look at average life expectancy numbers.  Why do you think health insurance premiums used to be lower, it was because there was much less they could do to solve your health problems in the first place.

The jobs may have been slightly better in the 1980s and 1990s but not really by much.  IMO pensions are not necessarily a good thing.  With a pension you put money in for retirement but it is not in an account that you actually own and can take with you if switch jobs.  Instead all the assets are kept by the company.  The problem is after you retire, years later if the company has financial trouble, they can raid some of that money if they go into bankruptcy (look up American airlines as one example).  In contrast, the 401k belongs to the individual, and is transferable to an account that you own in your name, thus a responsible intelligent person would be safer keeping those assets in their own hands instead of some company. 

In my own life, I choose to not live in LA, but someone with more reasonable housing costs, and a couple years ago I bought my first house (a nice house with 3rd bedrooms, 1800 sq ft with a nice yard in a nice neighborhood) and paid off the mortgage early this year. This was done on just 1 salary and all the money for it was saved by me, there were no gifts or inheritance. 

The problem I think in modern times as to why you feel poor is two fold:
(1) Higher and higher living standards being pushed by industries
(2) The pervasive advertising which is constantly enforcing those standards.

This one of the reasons why I love this blog, it is that MMM questions the two points above and really re-grounds the readers to consider what really is important in life. 

So if you look in terms of historical perspective I would say that we are actually living in a Golden Age now with so many great things going for us.  If you are having trouble now, you have to study the blog postings.  Heck we even have people retiring in their 30s now.

[Dicey]

This question reminds me of a favorite saying. "The best time to plant a tree is twenty years ago. The next best time to plant a tree is today."

There will be different opportunities for you than there were for your parents or their parents. The key thing to do is cultivate a positive attitude, educate yourself about investing and wait for it - spend less than you earn. Same as it ever was.

[Louisville]

... means that they could afford more home, get into better neighborhoods, etc - basically better bang for the buck.

...cover "necessities" is definitely more - high student loan payments, needing more electronics in the home (for work/school), health insurance premiums and costs, etc ...

It makes me envious that someone could buy their first house 25 years ago and have it be so awesome they would want to stay in it 25 years. I

...My parents had a car loan, home loan, student loans and three kids ...

Maybe you want too much. More than is good for you.

While I agree that is probably is harder (or at least different) to get ahead these days, the whole basis of MMM is to realize the truth that, societally, we have a fucked up definition of what it means to "get ahead."

[jka468]

Yes, it is, for two main reasons. Housing costs are comparatively insane unless you want to live in the middle of nowhere or in flyover states, and the cost of college is absurd if you don't have parents who are going to pay for it.

[NewbieFrugalUK]

I think it possibly is tougher now, however, unless you have time machine option (do you? :) then focusing on this isn't going to help much! Goldielocks made the same point above. I imagine that people in the 80s with crazy high interest mortgages looked back at the 50s and thought the same thing. You live here, now. And yeah, life's not 'fair' but it's what we got!

[MrsPete]

The problem I think in modern times as to why you feel poor is two fold:
(1) Higher and higher living standards being pushed by industries
(2) The pervasive advertising which is constantly enforcing those standards.

It's not just industries -- it's that so much of society has bought into the idea of more, more, more.  Credit is easy to get.  Frugality is not "rewarded" in the same way as consumption.  It's easy to get the idea that "everyone else" has so much more than you do.

When I compare my college experience in the 80s and my daughter's college experience right now, yes, hers costs more -- but she and her girlfriends have so much more than we did, and that's a detail that those who wail, "It's college that's doing us in" miss.  We went out to eat maybe twice a semester -- almost every meal was the college cafeteria.  I started college with a manual typewriter.  We didn't even have a phone in our dorm room -- we went downstairs and used the pay phone.  Most of us didn't have cars.  Of course today's expereince costs more!  Tuition is more expensive today, but you have loads of options to keep your living expenses down.

Jobs were easier to find -- I've gotta give you that one.  And today's workplace has an "every man for himself" attitude that didn't exist when I started working.  Loyalty on both the side of the employee and the employer seems to be gone.

Houses though, no, it's been generations since people bought one house and stayed in it ... forever.  When I was first married, we bought a little ranch house out in the country for 71K, and we left it (rather than add on) because we were constantly on the road, and it was just too hard with small children.  My parents did buy their first house for 5K in the mid 1960s, but it was a crappy little two-bedroom in a bad neighborhood, and they didn't stay long in it.  My grandparents lived in a rented room in someone's house for the first two years of their marriage; during that time, they saved, and then they built a small farmhouse on family land ... and added on to it. None of those stories really sound like, "I bought my dream house at age 25", though that's kind of what you seem to think happened in the past.  I have noticed that my own kids sometimes miss obvious things about older generations; for example, not too long ago one of my girls said, "Do you mean Grandma didn't ALWAYS live in her house?"  When I pointed out that Grandma didn't live in that house when she was a toddler, she thought about it and remembered.

Pensions always seem to come up.  Keep in mind that pretty much every American HAS a pension, and most of us don't trust it.  It's called Social Security.  People who don't have pensions seem to see them as golden perfection ... they don't see the negatives, and those negatives are very real. 

Does today's generation have it rougher?  In some ways, yes.  In other ways, no.  I think my own children have it better than I did (but, then, I grew up poor in the 80s, whereas they're upper middle class-but-raised-frugal), and I think that if they can navigate their 20s successfully -- that is, get into good professional jobs, start saving money -- they're going to be better off than I am eventually.  But I think that kids who DON'T do well in their 20s will fight tooth and nail to "catch up".  I think the economic world is less "forgiving" for people who don't start well right out of the gate. 

[AgileTurtle]

I think we have it easier today but make it harder.
My house is big by 1980's standards. My house is gigantic by 1920/30 standards.
Interest rates on mortgages are tiny now.
Lot of children of factory workers have easy office jobs. There are easy office jobs.
Woman can find work about as easy as a man can now
Student loans suck, but anyone can go to college with them. College is no longer for upper middle class.

[Alex321]

I agree wholeheartedly with Dan and Mrs. Pete.

[franklin w. dixon]

Another a big advantage nowadays is the Internet.  Information is so powerful.  It is now so much easier to do your own home repair or learn skills such as haircuting, pet grooming, the best ways to save money, shop for houses, pay bills, do xmas shopping etc.  Often in 80s it was really hard to verify correct information when it came to things like learning skills, before the Internet, the term "trade secret" really was that.  The 90s was the start of the Internet but you did not have video on youtube to learn skills as well.   

In the hellscape dark ages before they invented youtube in 2007 they used to put that stuff in primitive "books" which you could read at the library or buy at a store.

[DollarBill]

I think today businesses and the Government are more strategic about ways to milk you out of your money. Especially if you continue living a status quo lifestyle. Like how a State might have no sales tax but you might pay more in property tax or they charge you a higher fee to cross the bridge into that State. Or how you go into one grocery store to because they have better prices on TP but you pay more for produce. Just yesterday I took my Mom to Chipotle for a burrito didn't really think anything of it until I saw the bill for $24. $4 for 2 cokes and $4.10 to add guacamole...REALLY?? Or how Gov and States add a subsidy to everything...it raises prices for people who can afford it.
   

[One Noisy Cat]

    To throw in something about the lack of pensions.  I worked for a small struggling company from 1987 to 1994.  Interesting work, good people. In 1989 they started a 401(k), no match although if they ever got profitable I am sure they would have.  My deductions could range from 4% to 15% on a salary of about 30K (also did the 2K in an IRA). When they went bankrupt, I IRA rollovered $19K and it is now $150K ($6K with 4%  withdraw) despite the worst face punch in a lifetime of face punches-early withdrawal of $5K in 1996.  Plus there was a tax deduction for 401K which I have no idea of the amount I saved on taxes.  Now if this company had a pension, how long would I have to work to be vested and how much would I get now for seven years work at $30k? I doubt if it would be $6K minimum.
     I think there is more responsibility now but there is more opportunity and information available. People may be saying the market is overvalue and it will experience a sharp decline.  It could easily. But in 1979 Business Week was not writing how there were great buying opportunities because of a decade long slump, it was "death of equities".
   

[Zikoris]

Can't really comment on what it was like before I was born, but think incredible wealth building opportunities exist now that never have before in human history. Particularly:

1. The internet. You can learn anything you want, start almost any kind of business (that you can then run from a beach hut in Thailand if you want), and manage all your own investments easily. This just did not exist in previous times - any one of those things required a significant amount of work.

2. The huge range of financial products available to individuals. Credit card rewards gaming/churning. Online discount brokerages. MMM Forums to ask questions in rather than pay a biased financial advisor.

I actually prefer not having a pension - they tend to screw over early retirees. I much prefer controlling my own investments.

[Tyler]

Building wealth today isn't any harder than before. Just different. The worst thing you can do is to expect to follow in the exact footsteps of your parents or grandparents. Following an old recipe with expired ingredients usually ends with a disappointing cake.

The most successful people throughout history look forward, not backward.

[Zikoris]

One huge advantage people have now is that it's pretty easy to live on a fraction of your income and save like crazy. Hell, my boyfriend and I travel a ton internationally (expensive places as well, not just third world countries!) and still save around 65% of our income, and that's on clerk and administrative assistant wages. When in human history has this ever been a possibility until now?

[Terrestrial]

I don't think it's that much more difficult.   In many ways, it's easier to build wealth today than in the 80's:

-Proliferation of online low-cost brokerage has made personal investing the simplest and most do-it-yourself friendly it has ever been.  You can open a vanguard account and pay virtually nothing to invest (less than 0.1% in fees for a mutual fund).  If you care to invest in individual stocks...all the publicly traded financial statements in the world are free and easy for anybody to pull up at any time to make your own decisions, and no more having to call your broker, pay his fat commissions, etc...online commissions are routinely less than $10.   So if we are talking about the primary 'wealth building tool' that we employ, it has never been more accessible or cost effective in history.

-I second those who said 'meh' on the pensions.  It's not like they are 'free' anyway...my wife still has one (public school teacher) and it takes 10% of her paycheck to fund her pension obligation (mandatory).  I'd rather have that 10% into a 401k plus the match money from the school district any day...I have calculated that we'd likely come out ahead at retirement age.  Pensions aren't calculated with particularly stellar rates of return for the participants, can serve to tie you to an employer, and aren't guaranteed if the employer/municipality goes belly up.  also you either have to take a haircut to the benefit to get the survivability option, or when the person dies so does their pension...with investment money it's still left to your wife/kids etc.  no thanks.

-Low tax rates...we are sitting in some of the lowest tax rates in history right now.  I had to consult a chart to verify this but marginal rates on a 100k income in the 80s were well over 30% for most of that period and closer to 50% for the first half of that decade.  Lower taxes = better for wealth building.

-As somebody else pointed out, technology enables many things.  It's now vastly easier to find a job in a new city by doing a quick online search than having to scour out of town newspaper ads, anybody can start any manner of businesses and advertise virtually for free with their own website, there are thriving exchanges like ebay and craigslist for easily selling goods, etc.  There are lots of jobs you can even do remotely now using the internet.  Better options = better for wealth building.


Now, are their parts of living that have gotten disproportionately more expensive and outpaced wage growth?  Certainly.  College is one example, housing could be another depending on where you live.  Healthcare certainly is one.  But I think it also feels harder because of a certain amount of lifestyle inflation as well, even within those categories.  Nobody says you can get the same experience your parents did, smart people adapt to changing times.

-College.  Yes tuition is generally more expensive.  So maybe instead of the 'traditional' experience some of our parents enjoyed, this means that you have to go to community college for 2 years, chose the college location wisely so you can live at home instead of in your own apartment/dorm, find out an alternative way to finance it such as military/GI bill, or just work harder.  I went to college by busting my hump to get a full scholarship and working 2 jobs.  I took summer classes to make sure I finished in 4 years and not the 5 or 6 I am seeing from so many of my co-workers college aged children.  It was hard at times, but that combined with a little help from my parents let me graduate without student loan debt, and I still managed to carve out some time to have fun as well.  Was that a more onerous journey than in my parents generation when my dad could save up enough from working in the summer to pay for his tuition for the following year...yeah I suppose so.  But you do what you have to do and it can be done...it depends how bad you want it. 

-Housing.  Some places do have quite high housing costs.  I guess I have 2 things to say about it:

1) to a large extent people can choose where they live.  If you don't make enough to swing it move to somewhere you do.  Not everywhere is crazy for housing, and if you live somewhere you think it is, all that means is that you don't make enough to be on the 'right' side of the supply demand equation from which housing is being priced.  Is Bay Area housing crazy because a crappy 1200SF SFR is a million bucks?  Maybe...maybe not.  It's the same house that's in Podunk, Kansas, except its a 100k house sitting on a 900k lot instead of a 10k lot.  The geography is constricted enough and there are enough households who make 250k+ to provide ample demand to support those prices.  The city I live in you can still buy a nice 3 bedroom single family in a middle class neighborhood for 150k or a small townhouse for a little over 100k....so in general I wouldn't say housing is 'unaffordable'...it's just not affordable for people making lower wages in higher demand areas. 

2)  Lifestyle expectations have been adjusted upward.  The house my parents owned for a loooong time (and when I was growing up in the 80s) was a small 1100 SF ranch with a carport.  I only had one sibling and didn't need to need share rooms but PLENTY of the people in our neighborhood did.  Nowadays it seems like it's 'expected' to have a 2000sf+ house with a 2 car garage and if every kid doesn't have their own bedroom then CPS will surely be called.

[netskyblue]

There's much more "stuff" these days that the average middle class family has.  Do they need it?  Of course not.  But it's stuff that didn't exist 20-30 years ago, and now has become ubiquitous.  Cell phone for every member of the household, home internet, Ipads, laptop computers (again, for every member of the household). 

When I was growing up in the late 80's/ early 90's, the "weird" family in the neighborhood didn't own a TV.  Plenty of us didn't have cable, but we did own one television set.  Wonder if the mustachians of today are branded as "those weird people down the street" for not having the usual consumer electronics.

But anyway, buying all that stuff, and keeping it up to par with what everybody else has, certainly costs more than it did years ago to "fit in" on a comparable level.

[Gone Fishing]

What people seem to forget is just how flipping cheap most consumables are today compared to 20-30-40 years ago.  Food, once one of the largest line items in a family's expenses, is now just 10% of my monthly budget, yet for most, all the savings get turned right back into more consumption in one way or another.  There is so much excess in many places, that one can supply most their material needs for very little cash outlay if they are willing to accept used goods.  We have adapted to the excess and that is the new norm. Devolve your needs and wants backwards 30-40 years and all sorts of opportunities to build wealth start to open up.           

[MoneyCat]

Life was much easier in the 1990s than it is today.  People worked fewer hours for more money (adjusting for inflation), pensions were something that existed, and housing was plentiful and affordable.  People in the USA today have it much harder than the previous generation.  That being said, there's no point to sitting around complaining about it, because it is what it is.  You just have to roll up your sleeves, cut back on every expense possible, and create a new "American Dream" by being as frugal as possible.

[RetiredAt63]

I could have written Mrs. Pete's reply.

Historical perspective:
When I graduated in 1972, jobs were scarce, which is why so many of us went on to post-grad degrees.  In 1975 I got my first CEGEP teaching job, with an M.Sc. - my starting salary was the equivalent of about $31,000 in today's dollars, and my first paycheck went to clothes suitable for work, I had literally nothing to wear except clothes that were OK for a lab.  Clothes were expensive.  Our first house, bought 2 years later, was not big.  We had a 20% down payment, we had saved hard, but could still only afford it because the PQ won their first election in Quebec, and the first 401 migration happened - our house was owned by people who had moved to Toronto and they lost money on the sale.  Modest 3 bedroom bungalow, badly finished basement, one bathroom (no-one had heard of ensuites), good sized kitchen (no one had heard of granite or quartz counter tops), good sized yard, no garage (Quebec winters, remember?).  Mortgages were 7-10%, except for one nasty period when they were up to 18%.  We paid ours off early.  Our apartment and later our house were basically furnished with cast-offs. Our first car was a wedding gift (a tank, Chevrolet Impala, I could get my bike in the trunk with no effort, my FIL bought it and my BIL fixed it up), the next several cars were second-hand.  That was before electronics and safety features, DH replaced the butterfly valve in the carburetor on that first car, and he was not mechanical, and there were no seat belts. 

For the techies: My first computer was an Olivetti M24, with a screamingly fast (8 MHz) Intel 8086 processor.  I am not being sarcastic, IBM went with the Intel 8088 which ran at 4.77 MHz. It cost the equivalent of $3600 (over 10% of my gross salary) and came with 2 floppy drives (5.25", not 8") instead of one!!!!  We later upgraded to a 10 MB hard drive, we were early adopters and living life in the computer fast lane.  Portable computers were introduced a few years later - they looked like portable sewing machines and weighed as much.  Our present cell phones and tablets would have been considered science fiction - maybe by 2100?

I think what happens is that people look at where their parents and grandparents are now, and not at where they were at the same age.  My father saw the electrification of rural Canada, and ended up comfortable with personal computers. 

Plus the culture has changed - fast food is everywhere, cheap consumer goods are everywhere, it is incredibly easy to spend money, credit is easy to get, and the ethos of saving for a rainy day has disappeared.

[iris lily]

I will repeat this from a similar thread:

I counted up today's cost of my graduate degree, a state university terminal master's degree. The cost in today's dollars is $18,000. That doesn't seem bad to me, it's only a little less than I paid for my last new car.

How people rack up $50,000 in student debt for the same damned degree is beyond my understanding. It' indicative of the entitlement mindset: I need a 2 BR apartment with cable and eating out 2X weekly and hair and nail and gym  appointments and etc.  No, no one "needs" that chit.

[FireYourJob]

one thing that is a fact of math, is since i started working 15 years ago, the S&P has returned around 4.5% per annum INCLUDING DIVIDENDS!

That's pathetic.  In the 80s and 90s, it was well over 2x that.  That has certainly made it harder for those that are long term investors. 

We also have significantly more national debt and have turbo charged the social safety nets.  What that means remains to be seen for those that work for a living and fund much of that redistribution.  Eventually the chickens will come home to roost as it's in no way sustainable but it may be in your children's or grandchildren's lifetime. 

The world is always changing but there are certainly problems from a budgetary perspective that we as a nation have never had to deal with and how that affects corporations bottom lines and their ability to grow (thereby increasing share price) will be something to keep a close eye on.

[NorCal]

Living in the heart of Silicon Valley, I feel your pain.  I've thought a lot about this over the past few years.  My view is certainly a California-centric view.

The conclusion I've come to is that things are different.  I don't know if it's better or worse on average, but some demographics have certainly won and other have lost.

I compare my parents generation (currently mid 60's) with my generation (mid thirties with young kids), and here's what I see:

Education:  My parents were both the first in their families to get college degrees.  They were able to get these degree's for INCREDIBLY affordable prices by today's standards.  This was also before colleges were based on the "college experience" with expensive dorms, cafeteria's and free gyms.  They ate ramen.  So they got a better value, but lost out on some of the perks (even if I didn't take advantage of it either).

In contrast, both my wife and I got graduate degrees to compete in the workplace.  Between us, we probably have $300-$400K in schooling.  We both got a much better education than our parents, but we certainly paid more for it.

Employment:  This is where our generation wins out.  At least for our household.  With two graduate degrees in Silicon Valley, we make more money than I imagined was possible.  We make nearly 3X what my parents make today at the peak of their careers.  And I expect our earnings will continue to go up over time.  Some of this has to do with different life choices, but I know for a fact that the employment options we have today weren't available 30 years ago.  Obviously, your situation will be different.  This also enables us to save 50%+ of our income, which our parents were not able to do.

Housing:  Our parents made out like bandits compared to our generation.  They bought their first tiny house in the Bay Area for about $20K in 1980.  No, that isn't a typo.  It's probably worth $400-$500K today.  In our neck of Silicon Valley, houses start at around $900K, and you have to spend at least $1.2M if you want a 1200sqft 3/2 in decent condition.  Even with ridiculously high incomes and a $250K down payment saved, we can't afford to buy (by my definition of affordability).

Investments:  Our parents generation also did incredibly well here.  They started investing when stocks were low (single digit PE's were the norm) and double digit interest rates were available.  Capital was scarce, so they could earn an excellent return on their money.  Assets are expensive these days, and future returns are pretty much guaranteed to be lower than they were in the 1985-2008 timeframe.

I guess I feel like our generation has a ton of opportunities that our parents generation didn't have.  Yet we have to work harder for them, and we will absolutely get less for our money in terms of housing and education.

[franklin w. dixon]

This thing that's like "Don't Complain! Stay Positive! Keep Dreamin Big!!" is ok as like, a matter of personal attitude towards life, but it's bizarre and incoherent in a conversation about macroeconomics. Do you also wander around oncology wards reminding the doctors to look on the bright side?

[sol]

I think America's economy has been in steady decline since WWII.  It's not just as matter of comparing the 80s to today, it's a matter of recognizing how the American economy has changed since 1945.

After WWII, America had the only surviving industrial capacity on Earth.  Basically everywhere else had either been bombed to rubble or had their population reduced so drastically that they couldn't produce much, and in that space America thrived.  We made stuff.  We paid crazy good wages to people with minimal education.

In retrospect, the Baby Boomer generation will consume approximately HALF of all of the world's non-renewable resources during their lifetime.  Their parents "earned" this phenomenal abundance of wealth by being born into the only country to survive a global war unscathed, and they milked it for everything it was worth.  These few million people defined global culture for five decades.  They controlled the US government and military and virtually all of the world's major corporations.  They started and finished a series of foreign conquests.  They have lived lives more rich and complex and rewarding than any human beings in history.

But their meteoric rise to the pinnacle of humanity was not due to their innate competence but to the winds of geopolitical change, and those winds still blow.  In another hundred years, maybe academics in China will look at the American global empire in much the same way that we now look at the Spanish global empire, as a product of a bygone age remembered mostly by the struggling remnants of a population that still longs for their former glory.  Population growth curves and the distribution of natural resources dictate that America's sun is setting. 

Our difficulty in "building wealth" in 2014 as compared to 1980 is just a proxy for generalized economic prosperity.  America has enjoyed an unnatural surplus of that prosperity since WWII, culminating in every American over the age of 12 having their own cell phone number while four billion human beings still don't have flush toilets.  We've ridden the wave of inequality to it's crashing conclusion, and now we must slowly ebb back into the ocean.  Jobs will never again be as abundant as they were in the past.  Our minimum wage will never rise as high as it was, and so our collective purchasing power will never return.  We will continue to spend money we don't have on programs that merely treat the symptoms of our failure, rather than addressing its causes.

And I'm not even that upset about it.  I expect wealth building in America to continue to get harder in the 2020s, just as it did in the 2000s and the 1990s and the 1980s and the 1970s.  But as that happens, it will get easier in other parts of the world (I expect all of the BRIC countries) and some of those 4 billion people will finally get their flush toilets, and then their automobiles and fancy chocolates, and finally cell phones for their kids or whatever other stupid consumer electronics device has come along by then.  Humanity will be better off, though American investors who couldn't diversify will lament their short-sightedness.

So embrace the change.  Accept progress in all it's forms, even if your own little fiefdom seems threatened.  Don't lament the coming reversion to the mean, but instead celebrate the unnatural exuberance of wealth we fortuitously enjoyed for a few brief decades.  If you want to be rich in the long term, bank what you can on the tail end of this gravy train and be sure to put the stash to work in ways that don't wholly depend on any one country remaining the Singular Superpower forever, because that has never happened before and I don't know that it's likely to happen now. 

There's a first time for everything, I guess.  Do you want to bet it all that this is it?

[Goldielocks]

This thing that's like "Don't Complain! Stay Positive! Keep Dreamin Big!!" is ok as like, a matter of personal attitude towards life, but it's bizarre and incoherent in a conversation about macroeconomics. Do you also wander around oncology wards reminding the doctors to look on the bright side?

It would be really horrible to have a pessimistic oncology doctor.

[Pigeon]

I think it's absolutely harder, and I don't think acknowledging that is some sort of sin of negativity.  It is what it is, and you move on and  do your best to save money.

My parents raised six kids on one professional salary, and saved enough to put all six of us through moderately priced colleges.  They were by nature frugal people.  My dad got an excellent pension.  I think it's a little disingenuous to say that people today have a pension called social security when it was common for people to have a company pension plus social security.

I agree with Mrs. Pete that college has gotten much fancier.  People bemoan that and point to colleges as being evil.  The reality is, though, that most students want those frills.  Some will pay less and go to cc or live at home, but for kids who are boarding, they look for fancy meal plans, excellent technology, plenty of recreation and abundant support services.  I work at a university and I see it all the time.

[franklin w. dixon]

I think America's economy has been in steady decline since WWII.  It's not just as matter of comparing the 80s to today, it's a matter of recognizing how the American economy has changed since 1945.

After WWII, America had the only surviving industrial capacity on Earth.  Basically everywhere else had either been bombed to rubble or had their population reduced so drastically that they couldn't produce much, and in that space America thrived.  We made stuff.  We paid crazy good wages to people with minimal education.

In retrospect, the Baby Boomer generation will consume approximately HALF of all of the world's non-renewable resources during their lifetime.  Their parents "earned" this phenomenal abundance of wealth by being born into the only country to survive a global war unscathed, and they milked it for everything it was worth.  These few million people defined global culture for five decades.  They controlled the US government and military and virtually all of the world's major corporations.  They started and finished a series of foreign conquests.  They have lived lives more rich and complex and rewarding than any human beings in history.

But their meteoric rise to the pinnacle of humanity was not due to their innate competence but to the winds of geopolitical change, and those winds still blow.  In another hundred years, maybe academics in China will look at the American global empire in much the same way that we now look at the Spanish global empire, as a product of a bygone age remembered mostly by the struggling remnants of a population that still longs for their former glory.  Population growth curves and the distribution of natural resources dictate that America's sun is setting. 

Our difficulty in "building wealth" in 2014 as compared to 1980 is just a proxy for generalized economic prosperity.  America has enjoyed an unnatural surplus of that prosperity since WWII, culminating in every American over the age of 12 having their own cell phone number while four billion human beings still don't have flush toilets.  We've ridden the wave of inequality to it's crashing conclusion, and now we must slowly ebb back into the ocean.  Jobs will never again be as abundant as they were in the past.  Our minimum wage will never rise as high as it was, and so our collective purchasing power will never return.  We will continue to spend money we don't have on programs that merely treat the symptoms of our failure, rather than addressing its causes.

And I'm not even that upset about it.  I expect wealth building in America to continue to get harder in the 2020s, just as it did in the 2000s and the 1990s and the 1980s and the 1970s.  But as that happens, it will get easier in other parts of the world (I expect all of the BRIC countries) and some of those 4 billion people will finally get their flush toilets, and then their automobiles and fancy chocolates, and finally cell phones for their kids or whatever other stupid consumer electronics device has come along by then.  Humanity will be better off, though American investors who couldn't diversify will lament their short-sightedness.

So embrace the change.  Accept progress in all it's forms, even if your own little fiefdom seems threatened.  Don't lament the coming reversion to the mean, but instead celebrate the unnatural exuberance of wealth we fortuitously enjoyed for a few brief decades.  If you want to be rich in the long term, bank what you can on the tail end of this gravy train and be sure to put the stash to work in ways that don't wholly depend on any one country remaining the Singular Superpower forever, because that has never happened before and I don't know that it's likely to happen now. 

There's a first time for everything, I guess.  Do you want to bet it all that this is it?

Yep. It turns out that in the end to everyone's surprise imperialism can't last forever and the labor theory of value was true all along.

[ioseftavi]

It is much, much more difficult today for a number of reasons.

1. Retirement is now your own responsibility in the first place. In 1980, 60% of workers had defined benefit pensions; today that number is 10%. Saving for retirement used to be unnecessary unless you specifically wanted to retire extra early because between pension and SS you were covered. Today that is no longer the case; it is possible to live on Social Security alone provided you own a home with reasonable property taxes, but its nothing like what existed 30 years ago.

2. Incomes which afford sufficient salaries to retire comfortably, early or otherwise, now require at least undergraduate education. The "early retirement"  or even "regular retirement" conversation can only begin when people have an income over a certain threshold, which can be debated but a fair guesstimate is around $30-$40,000/yr. In inflation adjusted dollars, the median income for high school graduates has declined from 32,300/yr to 28,000 since 1979. In order to earn a decent (let alone luxurious) income, it is mostly obligatory to get a 4-year degree. That means an enormous investment of money and time up front in a grotesque pay to play system where people buy scarce "ok" jobs for hundreds of thousands of dollars of debt.

3. Employment is much less secure. The United States never had a culture of lifelong employment like certain other rich countries, let alone the paradise of guaranteed employment like the old eastern bloc, but because the first world economies used to be more stable and unions more strong, it was still less common for people to find themselves repeatedly out of work. Today high savings rates look like a no brainer to us because the future is so insecure; that was not always the case.

4. The safest investments no longer yield real returns. Decades ago, it was possible to get rich (in an early retirement sense) by putting your money in ultra safe vehicles like certificates of deposit and treasury bonds. Today and for almost 10 years now, those yield negative or flat real returns. As a result, aspiring early retirees are obligated to invest in the far riskier stock market, which has a couple of consequences. One is that people anxiously work for longer to build up a bigger pile of money for fear of a market crash. A second is that asset prices are inflated by a flood of money from people who are only in the stock market for want of any other options. As a consequence of the second, prices adhere less strictly to values and the market becomes crash prone, exacerbating the first.

5. Your parents don't have any money. Boomers are now in the taxing business of taking care of their elderly parents. But the parents of boomers are the richest generation to have ever lived, and so their financial burden on their children is relatively light. When boomers themselves get old, their personal resources will not stretch as far as their parents' did. And few of them benefit from the old-age insurance of all recorded history: living with their younger relatives. So the generations following the boomers will end up taking care of them haphazardly and at enormous expense.

I would agree with this wholeheartedly, very good points by Franklin. 

Please note - I don't think this means that my generation is screwed, and I don't think that other generations were without their challenges.  I don't think the above points are an excuse to wallow around in self-pity and give up any semblance of personal accountability. 

But I think a rational person, without an agenda, would look at the overall landscape today and conclude that it's tougher today for the reasons mentioned.  Particularly the first three points on Franklin's list.  Not impossible - but tougher, yes.

[MrsPete]

I think we have it easier today but make it harder.

You know, I think that may be the whole point in a nutshell. 

We have more options for an easier life today, but we purposefully choose more, more, more and drive ourselves nuts in search of optimal and perfect, never stopping to realize that it's more than past generations had. 

[brooklynguy]

Sol, I don't think it's that easy to read the writing on the wall and extrapolate from the recent past what will happen in the near future.  I prefer to be cautiously optimistic about Buffet's prediction that America's best years lie ahead, but I am not counting on it.  However, even if we change the theme from "America is in decline" to "the future is uncertain", the moral of the story is the same:  diversify.

By the way, thanks for the thought and care you put into all of your posts.  They are a pleasure to read.

[Iron Mike Sharpe]

I think we have it easier today but make it harder.

You know, I think that may be the whole point in a nutshell. 

We have more options for an easier life today, but we purposefully choose more, more, more and drive ourselves nuts in search of optimal and perfect, never stopping to realize that it's more than past generations had.

Agreed.  As MMM points out in his postings, and as the rest of can attest to in the forums, it is very easy to live a full life on less in this country. 

[golden1]

It's kind of a toss up, I think. 

On the one hand, in the 80's/90's, college was cheap, and if you didn't/couldn't go the college route, you could get a decent job in manufacturing that would pay a living wage with benefits.  Also, the health insurance I got in my 20's upon graduating college (1995) was cheap and the copay was $5.  Interest rates were higher so yes you could stash your money in safer investments, but on the down side, home mortgage interest was higher.  My first home loan had a rate of 8%. 

Today, the internet opens up a lot of opportunities that just weren't there before.  House prices are higher but interest rates super low which compensates somewhat.  The global economy means lower prices on many goods, but of course, it cost Americans manufacturing jobs. 

[RetiredAt63]

Um, maybe we are looking at too short a time frame here?

My father was born in 1915 in western Canada.  He was orphaned at 3 (with thousands of others) because of the Spanish Flu.  He was 14 in 1929 (we all know what happened that year).  He was 24 when WWII started.  He was refused enlistment 3 times because he was in an essential civilian occupation (= engineer).  He was on the first convoy through the Mediterranean (his ship didn't get hit but the one next to it did) and ended up in Bahrain at an oil refinery, didn't get back to Canada until 1947, and there were no jobs (well there were, and the veterans had gotten them in 1945).  He worked hard and saved and had a good life and thought he had been lucky.

My mother had rheumatic fever when she was 7, two heart valves damaged for life (no antibiotics, remember?).  She HAD to quit her job when she got married in 1949.

My great-uncle fought in the Boer war - if you want a fairly modern war with atrocities, this one was it.  He had very severe PTSD, they just didn't call it that back then.

When I look at what my generation has had to deal with, and those younger than myself, I think we have all had it super easy. 

[Spondulix]

Really enjoying the responses. I actually wasn't lamenting that I don't have what my parents did - in the 80s, they had a car loan at nearly 20% and their first house was an 8% loan. I knew I was missing part of the picture, so this is really interesting. There's a few things that are resonanting to me -

1. The idea that what my generation's expectations are probably higher than our parents. We pay more for college expecting to get a better job right out of school, expect our first home to be nicer, bigger, etc. Maybe there's a mentality that we have to pay our way to get ahead - as opposed to taking a step back, being patient, and working up.

2. We have more opportunities to save money (thanks to the Internet - whether it's trading, DIY, or shopping) but the flip side is that those things take time. We may be stretching ourselves thin now by trying to save/cut corners researching everywhere vs just having good spending habits (which is where MMM comes in)

[Chuck]

1. Retirement is now your own responsibility in the first place. In 1980, 60% of workers had defined benefit pensions; today that number is 10%.

This is not true. No more than 4 in 10 have ever had a pension. http://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html

2. Incomes which afford sufficient salaries to retire comfortably, early or otherwise, now require at least undergraduate education.

This is not true. See: MMM's 50 jobs making 50k without a degree.

3. Employment is much less secure. The United States never had a culture of lifelong employment like certain other rich countries...

so why are you bemoaning that companies have high turnover. You're aware, particularly in the professional class, that this is a result of people leaving voluntarily to pursue higher wages, right?

4. The safest investments no longer yield real returns. Decades ago, it was possible to get rich (in an early retirement sense) by putting your money in ultra safe vehicles like certificates of deposit and treasury bonds.

No, it wasn't. Back when Treasuries were returning 11%, inflation was almost the same. The same wealth creation vehicle exists today that existed then: Equities. Equities made much, MUCH safer thanks to indexing, a fairly recent invention.

5. Your parents don't have any money.

They never did. Ever. People have always sucked at saving for retirement, and the elderly have always been at risk of poverty.


For my part, I think saving today is much easier than at any other time because INFORMATION is so much easier to come by. There are literally dozens of sites like this one (though none quite so badass) that inform the willing. Indexing, Tax-defferal, Frugality, Tax-loss Harvesting and Tax Efficiency... everything you need to learn to make yourself wealthier is at your fingertips and one weekend reading binge away.

I love living in the time we are living. There is so much opportunity and so much knowledge at our disposal. The only thing that irks me is the number of people trying to bitch about it.

[Spondulix]

The housing thing - I think with NorCal said sort of sums where I'm coming from:

Housing:  Our parents made out like bandits compared to our generation.  They bought their first tiny house in the Bay Area for about $20K in 1980.  No, that isn't a typo.  It's probably worth $400-$500K today.  In our neck of Silicon Valley, houses start at around $900K, and you have to spend at least $1.2M if you want a 1200sqft 3/2 in decent condition.  Even with ridiculously high incomes and a $250K down payment saved, we can't afford to buy (by my definition of affordability).

I was at a home this weekend that was purchased in the 80s for $80k and now is worth $2 million. That's what prompted me to write the post. I know that's not the norm, but the fact is that I can't get into affordable housing (that has the potential for good returns over time) unless I live about 30 miles from my job - which would be about 2-3 hours of my day. I'm bringing that up as fact and not in an emotional way (I choose to live here, and I have a home that will eventually get me to FI). But, that is a challenge that exists in metropolitan areas that wasn't as severe 20 years ago. There's also a competition with international buyers that didn't exist in past decades.

It's really easy to suggest "just don't live in a metropolitan area," but that wasn't the solution 30 years ago. Plus, there are jobs (like mine) that really only exist in those markets. It would be a huge loss in an investment (6 years of school and student loans) to just walk away from that and start over for 1/3 the salary. Personally, I'm probably going to FIRE by cashing in and moving somewhere like CO down the road, but I'm lucky to be in a position to do that.

I'm surprised no one brought up the 2000s and how easy it was to buy a house before the bubble (as a means of things being easier). A co-worker told me about how he was approved for a house on a minimum wage salary! He was offered a loan that would be highly risky now, but because he took that risk (and managed to make it work financially) he managed to get into a neighborhood at 25 that I still can't afford at 34. Perhaps that's where some of this misaligned view comes from - comparing to people who aren't a lot older, but who definitely had more at a younger age because of poor regulation. Someone else told me they bought investment properties when things got lenient (but before prices got astronomical). They had to weather through the storm of the collapse, but are in a great position now because of it.

[sol]

thanks for the thought and care you put into all of your posts.  They are a pleasure to read.

My wife thinks I'm an idiot when I spend 20 minutes writing a wall of text like that to anonymous strangers, for no real reason other than that I like to hear myself type.  Then again, she usually relays that criticism to me while playing Candy Crush, so I guess we each have our foibles.

My great-uncle fought in the Boer war...
When I look at what my generation has had to deal with, and those younger than myself, I think we have all had it super easy. 

My grandfather used to say the same thing, that my generation had it too easy, except he would then follow up with something about how jealous he was of our luck.  When I took my first research job in Antarctica, which might as well have been Mars to him, he told me about his trip across the Pacific in the bowels of a troop transport to spearhead the land invasion of Japan.  An invasion that never happened, thanks to atom bombs.

So luck is a many-faceted thing.  I still think that the American economy of today is harder to navigate than that of my parents and grandparents.  I also realize that the world I live in, as a whole, is vastly superior in almost every way.  It's just that getting rich in the USA with only a high school diploma isn't one of them.

[Zikoris]

So luck is a many-faceted thing.  I still think that the American economy of today is harder to navigate than that of my parents and grandparents.  I also realize that the world I live in, as a whole, is vastly superior in almost every way.  It's just that getting rich in the USA with only a high school diploma isn't one of them.

I don't know about that. Maybe not "rich" depending what that means to you, but you can certainly build a 'stash and retire early with a high school education level job if you're frugal and make smart choices. I might decide to pursue higher education one day after I retire for fun, but I'm equally likely not to.

[sol]

you can certainly build a 'stash and retire early with a high school education level job if you're frugal and make smart choices.

Of course you can, there are tons of folks here doing just that.  But doing so sure was easier back when the minimum wage was over $10/hour everywhere in the nation, or when unions still propped up wages for domestic blue collar manufacturing jobs.

[Daisy]

I'm not sure how to answer this without sounding like a cranky "old" 45 year old. Life today is great. Access to technology, many investment options not available even in the early 90s, lots of information and sharing of information on the internet. I've probably saved a bunch on taxes by reading this blog. Also, being able to access my records online means I can fine-tune my tax payments throughout the year.

I also come from the perspective of having parents who immigrated to the US and had to start over at the age of 30 due to a communist revolution in their country, and grandparents that had to immigrate twice in their lives as well. My grandparents left their home country, had to cross an ocean for about three weeks (or was it three months?) to get to the Americas, never got to see their family again, never had any luxuries. They lived through WW1, Great Depression, WWII, revolution, language change, etc. They all lived in one tiny apartment when they moved to the US until they got their lives settled. Talk about underemployment...they mastered that.

Any issues I have in my life pale in comparison to what they went through. It doesn't mean I don't complain, but I always try to re-check myself and return to gratitude when I do.

[Spondulix]

Daisy you don't sound cranky and I think you bring up a very good point. For a lot of Gen Y, we really have not experienced or seen hardship in our lifetime (until Sept 11 and beyond). A lot of Gen Y is probably removed from their roots (beyond immediate family). I lived at a distance from my grandparents (who were immigrants or 1st gen US). But, both my parents grew up on farms with many siblings where they were expected to work from a young age, so I am lucky to have perspective from their views and experiences. But I don't think I'm the norm.

The flip side is that I do see Millenials getting significant support from parents - I don't think this happened much in Gen X, no? Usually where I see it (that I know about) is parents gifting homes or money for a down payment. That's never made sense to me, cause isn't that basically money coming out of a parent's savings or retirement? My parents have said they wished they could have helped more with student loans or down payment, but it's more important to all of us that they can survive down the road! So I wonder how much of the Gen Y lifestyle is being inflated - not that it matters what the people around us are doing, but I do sometimes scratch my head and ask, "how did they get there?" Cause the numbers just don't add up.

[franklin w. dixon]

1. Retirement is now your own responsibility in the first place. In 1980, 60% of workers had defined benefit pensions; today that number is 10%.

This is not true. No more than 4 in 10 have ever had a pension. http://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html

2. Incomes which afford sufficient salaries to retire comfortably, early or otherwise, now require at least undergraduate education.

This is not true. See: MMM's 50 jobs making 50k without a degree.

3. Employment is much less secure. The United States never had a culture of lifelong employment like certain other rich countries...

so why are you bemoaning that companies have high turnover. You're aware, particularly in the professional class, that this is a result of people leaving voluntarily to pursue higher wages, right?

4. The safest investments no longer yield real returns. Decades ago, it was possible to get rich (in an early retirement sense) by putting your money in ultra safe vehicles like certificates of deposit and treasury bonds.

No, it wasn't. Back when Treasuries were returning 11%, inflation was almost the same. The same wealth creation vehicle exists today that existed then: Equities. Equities made much, MUCH safer thanks to indexing, a fairly recent invention.

5. Your parents don't have any money.

They never did. Ever. People have always sucked at saving for retirement, and the elderly have always been at risk of poverty.


For my part, I think saving today is much easier than at any other time because INFORMATION is so much easier to come by. There are literally dozens of sites like this one (though none quite so badass) that inform the willing. Indexing, Tax-defferal, Frugality, Tax-loss Harvesting and Tax Efficiency... everything you need to learn to make yourself wealthier is at your fingertips and one weekend reading binge away.

I love living in the time we are living. There is so much opportunity and so much knowledge at our disposal. The only thing that irks me is the number of people trying to bitch about it.

I don't know if it's really worth responding to someone who either cannot read or is deliberately being disingenuous, but in order (1) you are misreading a number for private employees when I was talking about all workers (2) I don't give a single crap that some home appraiser or w/e makes 60k because I'm talking about all jobs in the whole economy because this is a macroeconomic question not "guhh is is possible for one person to get a good job without a college degree??" (3) Because the change has been for the worse over time, which was the question! (4) Please spend 3 seconds on google next time before you embarrass yourself by being condescending while also being 100% factually incorrect



(5) Again, you are just flatly, factually incorrect. The present elderly are the richest generation to have ever lived and their wealth is unlikely to be repeated http://www.bloomberg.com/news/2014-11-12/silent-generation-wins-life-lottery-as-richest-u-s-age-group.html

[market timer]

For the average American, it's probably a bit harder today. Perhaps more importantly, the average GenXer or millennial grew up in an era of abundance, and reality has really failed to live up to expectations. With Boomers and their parents, it seems the rising standard of living came as a welcome surprise.

For the top 5% of income earners, things are better than they have ever been. As others have noted, there are challenges with affordable housing, education, and health care. However, these can be overcome if one is flexible, and early retirement is one way of adapting to the complex minefield of means-testing. It is now possible to retire after less than 10 years of work in a high-paying profession. I don't believe Boomers or their parents had that kind of income potential.

[acanthurus]

My Dad was drafted during Vietnam along with three friends from his home town. Two didn't make it back.

It's easy to look back at the 80's and say "Wow! You could make 15+ percent in bonds, the stock market went straight up, college was cheap, and houses were affordable!"

That was the case for my Dad. Not so much his two friends.

We live in good times.