Was It Easier For Previous Generations To Build Wealth?

0:00Brian Preston:Morning decisions. How about a creamy mocha frappuccino drink? Or sweet vanilla? Smooth caramel maybe? Or white chocolate mocha? Whichever you choose, delicious coffee awaits. Find Starbucks frappuccino drinks wherever you buy your groceries. Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same premium wireless for$15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do at MintMobile.com slash switch. Upfront payment of$45 for three-month plan, equivalent to$15 per month required.

0:39Brian Preston:Intro rate first three months only, then full price plan options available. Taxes and fees extra. Default terms at MintMobile.com. Baby boomers, they had it so easy. At least that's what you hear on TikTok from people who seem to think it's impossible to build wealth today. But are they right? Brent, I am so excited because today we're going to do a full breakdown of the data, including income, home prices, interest rates, inflation, and even college costs to see if we can get a more complete picture of just how today's generation fares when we compare them to the baby boomers. And more importantly, what it means for your finances.

1:16So I'm Brian, he's Beau, and we're financial advisors here to run the numbers and settle this debate once and for all. And with that, let's dive right in.

1:31Brian Preston:All right, Brian. So what we're going to be doing today is we're going to compare the numbers from 1980 to right now in 2026. Now, I feel like there's an important disclaimer that we ought to put out there because we're going to look at how the different generations fared. You are not a baby boomer. I'm actually a young Gen Xer. A young Gen Xer. I am not a Generation Z. I'm a millennial. So we actually sit inside in between these two generations. So do not throw the daggers. Do not throw the arrows at us because all we're going to do today is we are going to explain what the numbers look like then, what the numbers look like now, and what you should do about it when you have that information.

2:10So since we're going to be sorting the data, I think it's important that we jump right in and share what are the dates of birth for these generations. For the baby boomer generation, this includes people who were born between 1946 and 1964. So if you were born right in the middle of that range, you'd be around 25 years old back in 1980.

2:29Brian Preston:Okay, perfect. 25-year-olds in 1980 relative to what we're going to assume are 25-year-olds starting out today in the year 2026. And so let's think about this categorically. Maybe the first place to start, first place to jump in is let's just talk about income. how much people are earning and what the earning power looked like. Well, if we look at the median household income back in 1980, it was$17 ,020 per year. But we recognize that that money back then is not worth the same as it was today. So if we bring that up to today's dollars, that's the equivalent of about$68 ,000 of salary in today's dollars.

3:06Well, and I love that we have that adjustment built in. But you're going to notice this is a trend that we'll do throughout this show. So we have to bring things forward so we can truly get into the data set here. And so when you compare that$68 ,000 to where we are today, household income today is$83 ,730. I was shocked because you hear about all these struggles. It's actually higher now than it would have been inflation adjusted for where people would be.

3:34Brian Preston:Yeah, that's the big takeaway. When we think about income in isolation, it's gone up even adjusted for inflation. It's over$15 ,000 higher than it was in 1980. So obviously, folks are making more money today than we're making in 1980. But I can already hear people saying, yeah, yeah, yeah, guys, but things are more expensive. Things cost more. For sure. So now let's talk about inflation. And we know that inflation is just simply the general increase in the prices of goods and services over time. Something cost X number of dollars in the past. and because of inflation, it costs X more dollars today for the same good or same service.

4:12Yeah, I think it's interesting. We actually pulled the data and we found out from 1980 all the way through 2025 that the cumulative price increase is around 290%. So if you annualize that, it works out to be 3.07 % inflation rate.

4:28Brian Preston:I think it's worthy of just pausing there for a moment. Even though we think about hyperinflationary periods and all this stuff, we're looking at almost a 50-year data set here. And the average rate of inflation over that 50 years, over different market cycles, different types of environments was about 3%, pretty consistent through time. Now we then said, okay, well, this means from a simple math perspective, the goods are, should be four times more expensive than they were in 1980. Now this is where all the people who just saw what we did with income, you're going to now be able to, we're going to be able to compare and contrast specific categories to see are things cheaper inflation adjusted or have they ran up in price much more than they should have even with taking an inflation into account.

5:13Brian Preston:So we're going to look at some consumer goods. Let's just start with a loaf of bread. If you look at the price, the cost of a loaf of bread in 1980, it was about 50 cents for a loaf of bread. Today, a loaf of bread costs about$1.81. So it went up 3.6 times. So we're pretty close right there to that four-time increase. It's actually a little less. So you see that bread's a little bit more affordable now than it was even back then, inflation adjusted. Sure. All right. So what about a gallon of gas? In 1980, a gallon of gas cost$1.22 per gallon. Today, it's a little over$4 a gallon. So gas, you would say, is 3.3 times more expensive.

5:50Which is interesting. Once again, a little less than you would anticipate. Now, all of you who are younger and you're like, wait a minute, this seems like they've got their thumb on for the boomers. Don't worry, guys, because this is what you're going to see is you're going to notice a trend because we're shooting you straight. Like I said, we are just objective observers, not even part of either one of these generations. Let me show you the other side of this where you are going to say, okay, now they're really kind of sharing what's going on. 1980, if you can believe it, a car was$7 ,557. Go watch our old prices, right?

6:23And it's just fascinating when you see Bob Barker showing these cars and you see how cheap it is. today, a car,$49 ,191. If you do the multiplier on that, it's six and a half times more expensive. Remember, it's only supposed to run up four times if we just did basic inflation. Cars have gotten significantly more expensive than they did back in the past.

6:47Brian Preston:When you even think in relative terms, in 1980, the price of a new car was around one-third the median household income. If you look at the price of a new car today, it's over half of the median household income because automobiles have certainly gotten more expensive. So then the question you may be saying is, okay, guys, I understand that, but inflation rates change over time, right? We look at the change of prices year over year, but sometimes we might be in high inflation periods and sometimes we might be in lower inflation periods. So I said, okay, well, let's look at the different periods.

7:19Brian Preston:We know that in 1980, inflation actually reached a high of 13.5%, which is, I would argue, a hyperinflationary environment. Well, and that's what's so unique about us using this case study or this periods of time is that they have a lot of similarities. Sure. And the fact that in the early 80s, we did have this weird period where inflation was in this hyper-accelerated state. Well, you know what? We just came through this pandemic where, once again, we had a heightened state of inflation. But it is interesting to note that inflation right now is 2.4%. However, we did just come through, like I said, post-inflation, mid-2022, when kind of all that was working its way through the system, we had inflation around 9%.

8:05So both of these periods have in common is that they had much higher inflation than historically what is normal.

8:12Brian Preston:But it is important to note that prices are higher now than they were then. But the baby boomer generation, they did face higher inflation when they were coming out, when they were starting their careers than what we've seen in recent years. That's not to minimize how painful 9 % inflation was, but it's more to level set that 13.5 % inflation is indeed worse than 9 % inflation. Just worth noting. I think a lot of people, they're going to say, okay, you guys just did some basic household expenses between the bread, the gas. okay, you threw me a bone with, yes, cars are significantly more expensive.

8:48Let's talk about the elephant in the room. How about housing? What has actually happened with home prices? I'd love to see an objective analysis of the data on that.

8:57Brian Preston:So again, if we look at the median home price in 1980, it was$64 ,600. If we bring that up to the price in today's dollars, that'd be the equivalent of about a$259 ,000 house was the median home price in 1980. Now, here's where you guys are going to see the separation to a degree. Look at the median home price today, over$405 ,000. Way different. Now, look, I tried to balance this out a little bit. Now, I thought it was interesting. If you think about how the world is changing through innovation, a house in 1980, the average square footage, a little under 1 ,600 square foot. The new houses being built now, the typical home is a little over 2 ,100 square feet, a little under 2 ,200.

9:41So the houses are bigger now. So the houses are bigger, but still, I would still argue that, and I would give that credit to support structures and other things that can build bigger homes for cheaper, but unfortunately it has not translated to cheaper prices because houses are definitively more expensive now.

9:57Brian Preston:So we can take these two points in time, the 1980 point in time, the 2026 point in time, but I think that's doing a little bit of a disservice to housing because if we actually look at the median increase in house prices in the United States, all the way from the 60s through now, what you can see is that it was a fairly steady line. It was kind of moving in what I would say is a realistic pace, a realistic increase. But there was, in fact, a very unique thing that happened post-pandemic. We saw a season where home prices rose exponentially in a very, very short period of time. Even though we saw a recovery post-2008, post-Great Recession, it was not to the same extent that we saw post-pandemic.

10:40Brian Preston:So house prices did go up more rapidly in recent memory than they have really over the last 50, 60, 70 years. Yeah, I won't, because I know we're going to have podcast listeners who don't unfortunately get to see this visual. You should go back and watch the visual of this business because if you look at the hockey stick that occurred right after 2020, it is amazing that housing prices went up in a lot of markets over 50 % within a three-year period. It's huge. That has created this weird, weird thing. This conversation would be completely different if we were running this affordability analysis in 2020, not only from the interest rate side of things, but also on the standpoint of what the purchase price is.

11:19So a lot of it, that's why we wanted to make sure we share this data with you because where we are right now is it has definitely elevated the purchase price for housing in the United States.

11:29Brian Preston:Yeah, it's interesting that you use the term affordability, because when we think about how affordable was a house in 1980 relative to how affordable it is now, if we assume the median household income, we know that in 1980, the house price to income ratio, meaning how many multiples of income would it take to buy a house in the United States is about 3.8. If we fast forward to now in 2026, that number has now risen to 4.8. The median price of a home today is 4.8 times the median income of a median income earning American. That number was only 3.8 in the 1980s. So we can definitively say two things.

12:10Housing prices have definitely risen dramatically relative to income. Housing prices have also increased much faster than overall inflation since 1980. So if you feel like buying a house has gotten harder, yeah, you're right. It has gotten harder.

12:26Brian Preston:Well, technically, yes, in terms of price, but there is another thing that factors into the equation, right? We have to think about when it comes to buying houses, most people are not able to pay cash for a house. They have to go out and borrow money to do so. So then we said, okay, well, what if we analyze where were interest rates in 1980 versus now? because obviously price is one metric and then borrowing ability or capacity is the other. In 1980, if we look at the average interest rate that was present for a mortgage in 1980, it was actually 13.74%. Again, this is a hyperinflationary time, mortgage rate super, super high.

13:06Brian Preston:That's pretty daunting. Yeah, and interest rates right now, 6.36. Now I will, when we come back and look at this data, I will say that moment in time in 1980, That's more of an outlier than I think it's a normal. We have a whole chart to show that. But it is interesting to say in 1980 specifically, 13, close to 14 % from mortgage rates. Currently, we're just under 6.4%. So one of the things that's been interesting over this time period is, again, if we look at the cost or the 30-year fixed mortgage rate in the U.S. from 1970 until now, you can see that right there in the 1980s is when it hit its all-time high, right there in the early 80s.

13:44Brian Preston:And really from 1980 or a little bit thereafter, all the way through post-pandemic 2021, we've sort of been in a pretty steadily falling interest rate environment. Now, obviously there have been fits and starts and ups and downs, but by and large, it's been moving to lower and lower and lower levels. They're bottoming out right around the 2020-2021 period. Yeah. If you think about that, it essentially created a win to your back if you were trying to think about affordability of housing is because as interest rates were going down over that 50-year period, the lower the interest rate, the lower the cost of your monthly payments was.

14:22And that's why it's probably such a stark contrast is that we went from mortgage rates, which were around 3 % to 4%, to then we spiked them up to 6 % to 7%, definitely had an impact on what was going on with housing prices.

14:36Brian Preston:So when we compare the two generations relatively, although houses were cheaper were less expensive in 1980. Borrowing was more expensive. It was a more difficult thing to do back then. So they always said, okay, houses are cheaper, but borrowing is more expensive. How much of wallet did housing occupy? So if we think, what is the median monthly payment then versus the median monthly payment now? Well, if we calculate that in 1980, the median monthly payment, if we just assume principal and interest on a 30-year fixed mortgage with the median down payment of 28 % down, which was the median down payment in 1980, it was a$542 per month mortgage payment, which represented about 38 % of median household income.

15:25Brian Preston:In today's dollars, that's the equivalent of about a$2 ,172 monthly mortgage payment. When we were digging through the data, the other thing that I thought was crazy is, Do you know what the average down payment was back then? 28%. That's right. And look, what I attributed that to is that more of the banks were self-sufficient, meaning that their underwriting process was substantially harder back then, and they required you to have much larger down payments to even consider qualified to buy this house is because there weren't as many programs where the federal government backstopped it in a lot of ways.

15:59If you then fast forward and look at what we've done now, it is interesting that the typical payment now is within a few dollars like 2165 now look we chose a moment in time 1980 like we said interest rates were substantially higher right then but it is as a percentage of income 31 percent of income and it's still the the down payment now you know if you look across all bodies of the the data it's around 19 percent because you know younger people are putting down lower amounts. Our rules take that into account. Older people are putting down larger amounts, but it's still 31 % of median monthly income.

16:37Brian Preston:So the takeaway here is homeowners today are actually spending a smaller percentage of their income on housing than homeowners were in 1980, but we would make the argument both of them are too high. Whether you're spending 38 % of your income on housing or 31 % of your income on housing, you're still running afoul of the money guy rule. Because when it comes to housing, when it comes to making sure that you don't buy too much house, we want you to follow the 3-5-25 rule. That's when you put your down payment, you only have to put down 3 % if it's your first home. We want you to make sure that you're in the home for at least five years, and we don't want your monthly payment, your principal interest, taxes, insurance to exceed 25 % of your monthly gross income.

17:23Brian Preston:Well, obviously on the median in 1980, they were exceeding that. And even today still, the median American is exceeding that. I want to talk about just the general homeownership then versus now, because I thought this was another one of those shock and awe or surprise moments when I was analyzing the data. The The homeownership rate in 1980 was 65.5%. Okay, American dream, buy a house, get in the home, 65.5 % of Americans. Now, here's what's so odd to me is that I'm old enough that I've seen enough administrations and come out. I remember this is bipartisan because President Clinton, when he was in office, he wanted to make homeownership a big part.

18:04He wanted to support the American dream. Fast forward, George W. Bush had all this home affordability. That was a big, you know, key issue for his presidency as well. Fast forward, and here we are in 2025. What is the home ownership rate in 2025? 65.5%. How in the world do you have all this involvement and all these things going on? And then the home ownership is pretty much level set for exactly where it was in 1980. Now, go deeper into the data. And all my young people, I hear you. I see you out there right now. You're watching this and go, wait a minute. You can't just say that the data is the same.

18:42You're exactly right from a generational standpoint. Here's where the shocking part is. The median age for first-time homebuyers in 1980, 29 years of age.

18:52Brian Preston:That's what I remember. That's what it sounds like. That's what you're supposed to say. Late 20s, buy your first house. Right before you start the messy middle or right as you're getting into the messy middle of growing your family, starting to have kids, you buy the house. American dream is alive and well. Fast forward to where we are right now. Medium first-time homebuyer, 40 years of age. That's a problem is because now you've got a disconnect from when people are getting in the messy middle, when they're getting to that first house. So even though the data is the same on homeownership percentages, I do think younger people are getting priced out to where they're having to make the home purchase decision at a latter age.

19:25So one of the questions you have is, okay, well, why?

19:28Brian Preston:Why are young people pushing this out? Is it something they're choosing to do? Are they being forced out there? So I said, okay, well, let's look at another cost that often impacts young people and disproportionately impacts younger generations relative to older generations. And this one makes me mad. And we said, let's look at the cost of higher education. So we went and pulled looking at public and private universities. If you just look at the annual tuition and fees in 1980 for a public university and a private university is about$800 and$3 ,600 per year. That's per year, by the way. Even if you bring them up into today's dollars, that would be average or median public tuition of about$3 ,200 in today's dollars.

20:11Brian Preston:And for a private school, about$14 ,500 in today's dollars is what it would cost to go to college. You go to a private school and in total pay$60 ,000 for your full education. Well, I think it's interesting. When I went to University of Georgia back in the early 90s, my annual tuition was around$3 ,000. So right in line with what we have here for the public universities. This is going to be the stuff that makes you mad. Because remember, guys, I love education. I always say it's the ladder of opportunity to make yourself a better version of itself. We're going to start asking ourselves, that is a true statement, that bettering yourself is good, but at what cost to your future self if you're having to pay a fortune for the education?