Baby-boomers, the generation born between 1946 and 1964, are widely considered to be the luckiest in history due to a variety of factors. This cohort, which numbers 270 million across the world’s wealthier countries, did not have to endure wars and many even had the chance to witness the Beatles perform live. They grew up during a time of strong economic growth, leading to many of them accumulating significant wealth over time.
Although not all baby-boomers are wealthy on their own, as a group they have amassed great wealth. Several factors have contributed to this accumulation, including falling interest rates, declining house building, and strong earnings. In the United States alone, American baby-boomers make up 20% of the population but own an astonishing 52% of the country’s net wealth, totaling $76 trillion.
As baby-boomers begin to retire, questions arise about what they will do with their wealth. This is not just a concern for industries catering to retirees such as cruise lines and golf clubs. The spending choices of baby-boomers will have a significant impact on global economic growth, inflation, and interest rates due to their substantial financial resources.
Surprisingly, baby-boomers are choosing to be quite frugal with their wealth. Instead of spending it all, they are focused on preserving or increasing it. This trend is not limited to America but is prevalent across the world’s richer countries. Rather than asking why baby-boomers are spending so much money, the real question for the economy in the coming years will be why they are spending so little on it.