Could the Spending Power of Older Adults Save the Economy?

Here at AARP , we have been banging the drum for years on the subject of the spending power of the 50-plus, working to ensure that brands understand how important it is to speak to the demographic that routinely moves markets in all sorts of consumer categories.

Now, citing data recently out from the federal government, The Wall Street Journal ’s Gwynn Guilford reports, Americans over 65 may save the whole economy. Or at least significantly soften the blow of any recession on the horizon.

It turns out, Americans over 65 are not only spending money in greater numbers, their economic might is particularly resilient to the forces of inflation, rising interest rates, unemployment and many of the other ills we’ve seen drag down the post-pandemic recovery. They have less debt, which makes them more impervious to rate hikes; more likely to be settled in homes they own outright, which shields them from rising housing costs; and more likely to be retired, so less vulnerable to layoffs and wage erosion from inflation.

And, as my colleagues and I have noted many times, there are a whole lot of them.

According to the U.S. Census Bureau, close to 18% of the population was 65 or older as of August, the highest on record and up substantially from even a decade ago.

The same figures showed Americans 65 and older accounted for 22% of spending last year, again the highest since records have been kept.

As Maureen Green, 66, a real estate agent in Cape Cod, told the Journal: “All my life it was, save for this, save for that. Now there’s money in the bank and I’m spending in ways that bring me closer to friends and family than I did before.”

That combination of savings, and the ability to spend comfortably that it now brings, is serving as a key bulwark against the economic downturn that many have been steadfastly predicting for three years now.

Those over 70 hold nearly 26% of all household wealth, according to the Federal Reserve, with Baby Boomers having amassed $77 trillion in total wealth.

Ed Yardeni, the President and Chief Investment Strategist of Yardeni Research, reflecting on these numbers, put it quite succinctly to the Journal:  “There’s a $77 trillion-wide hole in the theory that consumers’ running out of pandemic savings will sink the economy.”

Read the full article in The Wall Street Journal.