Are We Actually Worse Off Than Our Parents?

A Real Look at Cash Flow & Lifestyle: 1960s/70s vs Today

Why this question keeps coming up

Many people feel like they’re earning more than their parents did—but somehow have less breathing room. That tension is real, and the data backs up parts of it.

The truth is not as simple as “better” or “worse.” Financial life today is a mix of meaningful progress and new pressure points that didn’t exist in the same way decades ago.

Income: Higher than Previous Generations

If you look strictly at income, Americans today are better off than households in the 1960s and 1970s.

• Median household income has risen significantly after adjusting for inflation

• Middle-class incomes increased roughly 50–60% from 1970 to recent years (Pew Research)

• Dual-income households are now the norm, boosting total household earnings

What this means:

• Households generally have more dollars coming in than prior generations

• On paper, purchasing power has improved

But income alone doesn’t determine how life feels financially.

Housing: The Largest Structural Shift

Housing is the single biggest reason people feel worse off today.

In 1960:

• Median home price was about 2x household income

Today:

• Median home price is closer to 5x household income

Other important shifts:

• Down payments are harder to save for

• Rent has increased faster than income in many areas

• First-time homebuyers are older than previous generations

What this means:

• A much larger portion of income goes to housing

• Less flexibility for saving, investing, or lifestyle choices

Cost of Living: What Got Cheaper vs. More Expensive

Not everything is more expensive. In fact, many everyday goods are cheaper relative to income.

Cheaper (relative to income):

• Food (as a percentage of income)

• Clothing

• Technology and electronics

More expensive:

• Housing

• Healthcare

• College education

What this means:

• Daily spending may feel manageable

• Long-term, high-impact expenses create financial strain

Lifestyle Expectations: Then vs. Now

Part of the difference is not just prices, it’s what’s considered “normal.”

Typical household in the 1960s:

• Smaller homes

• One car (often)

• Limited subscription or recurring expenses

Typical household today:

• Larger homes

• Multiple vehicles

• Ongoing expenses (streaming, software, memberships, childcare)

On top of those major expenses, people are now more likely to go out to eat, buy meat regularly, fly on planes, and take multiple vacations each year. These experiences—now considered routine by many—were once reserved for special occasions just a few decades ago.

What this means:

• Modern lifestyles are more expensive partly because of what we’ve grown used to

• Some costs are optional, and others are structural (especially childcare)

Financial Stability: More Uncertainty Today

Even beyond income and expenses, the financial system itself has changed.

Since the 1970s:

• Pensions have largely disappeared

• Responsibility for retirement shifted to individuals (401(k), IRA)

• Job stability has decreased

• Income volatility has increased

What this means:

• Households must self-manage more risk, from investing for retirement to protecting against income loss and market downturns.

• Without actively managing these, it’s easier for finances to feel tighter than in previous generations, even with higher incomes

• Financial planning is more complex and ongoing, requiring regular adjustments instead of a one-time plan

So Are We Better or Worse Off?

The honest answer is both.

Better off in:

• Income (inflation-adjusted)

• Access to goods and services

• Technology and convenience

• Overall standard of living

Worse off in:

• Housing affordability

• Cost of raising children

• Financial predictability

• Cost of major life milestones

Why It Feels Harder

Even though income is higher, pressure is concentrated in a few critical areas.

• Housing consumes a larger share of income

• Childcare can rival a second mortgage

• Healthcare costs are unpredictable

• Big decisions carry more financial risk

When the largest expenses increase faster than income, it creates a persistent feeling of being squeezed. In some cases, this pressure is driven by structural costs like housing and childcare. In others, it reflects lifestyle choices such as larger mortgages or higher car payments than previous generations would have considered standard.

What This Means for Financial Planning

This shift is exactly why traditional advice often feels outdated.

• Housing choices have an outsized impact on long-term wealth

• Cash flow planning is more important than ever

• Retirement needs to be actively planned for as opposed to relying on a pension

Financial planning today needs to focus on structuring your life in a way that supports sustainable cash flow both now and in retirement.

Final Thought

Previous generations benefited from lower housing costs and more predictable financial systems. Today’s households have higher incomes and more opportunities, but higher housing, healthcare, and childcare costs - combined with greater spending on lifestyle and day-to-day conveniences - can stretch many budgets.

Understanding that balance, and sometimes sacrificing portions of your daily spending in order to save for the big ticket items, is the first step to building a plan that actually works in today’s reality.