Regarding slang or 'popular' terms and words, I'd not be too quick to discount those era words and phrases 'if' it is appropriate for the character (ex: the old hippie that never outgrew the '60s) and to help demonstrate that stagnated growth/age.
p.s.: before I forget, it even works ridiculously... I know many people who intentionally speak in old West or old South terms, simply as a fun and silly part of their persona. So used appropriately, it can work.
But that was not what I was talking about at all or meant to imply. I wasn't discounting the use of slang that would be natural for the characters who are using it. My apologies if I was unclear.
I was talking about language that is totally inappropriate to the time/place where the story takes place, which readers may not notice at the time the book is published because they hear it all the time and it seems so natural to them, but a few decades later when that is not the case it feels artificial, dated, and sometimes just plain weird.
Now if the story take place during a time (like now) and a place (like here in California, for instance) when and where there
are still aging hippies who never outgrew the '60s, then it can hardly be
inappropriate to the time and place for such characters to speak that way. Or if there are characters of my age who were brought up on movies and television shows about the Old West (Saturday morning kids programming where I grew up was very largely shows with a Western setting!) who sometimes throw in accents or slang from that period (or that period as Hollywood envisioned it anyway) for humorous effect, then, too, it is hardly inappropriate for the setting for those
particular characters to speak in that particular way.
But it would not be appropriate if the setting were, say, ancient Rome. Nevertheless, as I say, if the book was written in the '60s a lot of the original readers would accept '60s slang without a second thought because to them it would seem so natural. But fast forward to1989 (or even more, to 2018) and readers are likely to be put off if Julius Caesar and Marc Antony sound like flower children.
It's like the old movies and television shows with historical settings where the costumers and make-up artists
thought they were sticking with the era of the story but just making the actors (especially the stars) a lot more attractive to viewers. Just fudging it a little to make everyone look good. Now that not only styles but aesthetic sensibilities have changed, not only are the anachronisms more obvious, but instead of looking more attractive the actors may actually look less so.
As writers we need to use language that is within the spirit of the times and places we are writing about. Of course that's a lot more easy if we are writing about our own time now or the times that we have lived through personally. (More, we can look at the different eras we've lived through, and by placing the age, etc. of the characters differentiate them, as you suggest, by sprinkling their dialogue with slang that fits with the decade when they were forming their ideas about the world and establishing their habits of speech.) But it's not really so hard
whenever the story takes place, because most language is fairly neutral: that is, it can work as a translation for earlier concepts because what it communicates is not so very different from the way people thought down through the ages. But a lot of slang (not all slang, but a great deal), being essentially faddish, embodies the sensibilities of its time and place and cannot really be separated from them. It brings the flavor of an era and all the particular thought patterns with it. So if we leave out the faddish slang much of our work is done for us. Then it comes down to identifying the terms we need to express values, world views, etc.
unique to the period we are writing about, and using those archaic terms where they add value, and only then, but never
so much that the readers get confused in a barrage of unfamiliar language.*
And, returning more directly to the topic of the thread, it's the same principle: use invented terms sparingly, and only when they add something particular to the readers' understanding of the story, characters, and/or setting, and not just as a shortcut for creating an exotic atmosphere.
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*There are, of course, exceptional writers who can successfully mimic the language of another era down to the last syllable and produce something extraordinary. Take E. R. Eddison, for instance. But even then, though they may produce great classics they will only appeal to a small slice of readers, because for the rest reading their work is such a great labor, and the rewards they offer don't happen to appeal enough in recompense.
