5 Things That Were Normal for Boomers, but Are Luxuries Now
For many baby boomers, certain financial milestones were realistic for middle-class households to achieve without draconian budgeting. Today, younger generations face a different reality, with many traditional markers of financial success being harder to achieve.
Here are five milestones that once felt routine but now feel more like luxuries.
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1. Homeownership
For boomers, buying a first home was more realistic because housing prices were generally more aligned with local wages. Today, Clay Cary, senior trends analyst at CouponFollow, suggested that the “discrepancy between housing affordability and wage growth” plays a key role in making it harder to buy a home.
Previous generations could save for a home just by adhering to a budget, while today, even many young earners must save up for years, watching home prices rise much faster than wages, and mortgage rates soar. Homeownership is moving faster than a regular paycheck can chase.
Additionally, Andrew Gosselin, a certified public accountant (CPA) at Save My Cent, sees younger homebuyers competing not only with other local families, “but with investors, foreign capital inflows and outflows, tax benefits and a lack of available housing."
2. Living on One Income
Many boomer households were handily able to purchase homes and raise families on a single income. While single-income households still exist today, Gosselin stressed that “it is no longer the standard practice.”
Cary said single-income homeownership is generally only feasible for younger generations in cities “where property prices have not skyrocketed in relation to local salaries."
3. Debt-Free Higher Education
Many boomers entered adulthood without decades of student loan payments hanging over them. Today's graduates often begin their careers carrying debt.
"Monthly student loan repayments can impede building an emergency fund, saving for retirement, buying a house or even starting a family,” Cary said.
It can take younger generations two decades or more to manage student debt. Ari Rastegar, founder and CEO of Rastegar Capital, commiserates.
"College has become so much more expensive,” he said. “Every dollar younger folks use to pay debt or interest is [a] dollar that's not being used to buy your first house or invest in stocks."
More than that, Gosselin pointed out that student loan debt also influences the way people make their career selections and can have other negative effects like reducing the amount of risk an they’re willing to take on in investments or business ventures “and may instill a level of financial conservatism that remains present even after the debt has been repaid."
4. A Guaranteed Retirement Income
One of the biggest financial shifts between generations is the move from pensions to self-funded retirement accounts. For many boomers, this has meant benefitting from two retirement accounts, and guaranteeing an income rather than worrying about the market fluctuations in an IRA or 401(k).
"Pension programs took most of the financial burden away from individuals,” Cary said.
On the other hand, Gosselin noted that those pensions “placed all of the burden for providing retirement income on employers,” which may not be as sustainable today.
That said, Rastegar calls the shift to “self-reliance” challenging and added, "I don't think financial literacy has kept pace with how quickly companies shifted the burden of savings onto the individual themselves."
5. A Middle-Class Lifestyle
Perhaps the biggest change is that many financial achievements that equaled being middle class are now tougher to achieve. Those who are still successful at it, Gosselin said, are those who “have learned how to successfully navigate a more complex financial system and gain access to the resources and opportunities necessary for participation in long-term wealth creation."
Rastegar is optimistic, however.
"Wealth creation opportunities are so abundant right now, more so than at any time in the history of humanity," he said.
He emphasized the value of long-term growth. If a young person can save $300 or $400 every year and put it in the S&P 500 or a Vanguard Index Fund, he said, “it would have an extra 30 years of compounding."
Final Take
All that said, every generation faces its own challenges and has its own benefits. Cary noted that younger Americans still benefit from unprecedented access to information, technology and flexible career paths. Many traditional milestones remain achievable, but they require intentional planning, adaptability and financial literacy in ways that weren't as necessary for earlier generations.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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