The impact of frugal baby-boomers on the global economy

The Surprising Habits of the Baby Boomer Generation: Saving Instead of Spending Despite their Wealth

In the West, the baby boomer generation is known for being the wealthiest generation ever. However, they are not using their money in the way one would expect. Instead of spending it on luxuries, they are saving it for various reasons such as longer retirements, potential old-age care costs, uncertainty about their future lifespan and the desire to pass on assets to their children. A recent report shows that Americans aged between 65 and 74 were spending more than their income in the mid-1990s but since 2015, they have become net savers overall. This trend is also seen in other wealthy countries like Canada and Japan, showing that this generation is not as extravagant as one might think.

The baby boomer generation has a net worth of $76 trillion in America alone, which equates to over $1 million per person. Their spending habits have influenced capital markets for decades, helping to lower interest rates as they save for retirement. Economists had predicted that once boomers retired, they would start spending and investing more, potentially causing a shift in the trend of decreasing interest rates. Some even feared that a massive sell-off of assets by retirees to fund their leisure activities could trigger a market crash.

It’s clear that the behavior of the baby boomer generation is crucial for the global economy, as their saving and spending decisions can impact capital markets worldwide. Despite their wealthy status, it seems that this generation is choosing to save their money rather than spending it lavishly, which has surprised many economists and analysts. Only time will tell if and when the spending habits of the baby boomers will shift and what the implications will be for the global economy.

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