Spending Power Shifts to Older Americans
Americans aged 55 and older now account for 45.3% of all consumer spending, the highest level in 28 years. The data point is sparking debate about the declining economic power of the middle class and the significant demographic shifts influencing the U.S. economy.
This concentration of wealth is stark when broken down by generation. Baby Boomers, born between 1946 and 1964, hold over half of all household wealth in the U.S., amounting to $83.3 trillion. In contrast, Millennials and Gen Z combined hold just 10.5% of the nation's wealth, despite being the largest population cohort. The economic landscape for the American middle class has transformed significantly over the past five decades. The share of adults living in middle-class households has decreased from 61% in 1971 to 50% in 2021. During this same period, the portion of aggregate household income held by the middle class fell from 62% in 1970 to 42% in 2020. This shift is rooted in long-term demographic trends, including declining birth rates and increasing life expectancy. Projections indicate that by 2034, older adults will outnumber children for the first time in U.S. history. This growing senior population is not only expanding but also controls three-quarters of all wealth in the country, giving them significant influence over consumer spending. Industries are adapting to cater to this powerful demographic. Sectors seeing amplified demand include healthcare, luxury travel, and technology that supports "aging in place." Older adults are also a significant force in entrepreneurship, with 25% of all new entrepreneurs in 2018 being between the ages of 55 and 64. Spending habits vary distinctly by age. Older households typically allocate a larger share of their budget to healthcare, which has seen higher inflation rates than other sectors. In contrast, younger households tend to spend more on transportation and education. The economic impact of Americans aged 50 and older is substantial, representing what would be the world's third-largest economy if they were their own country. In 2018, this group's spending and labor supported 88.6 million jobs, and they were responsible for 56 cents of every dollar spent. Beyond their direct consumer spending, older adults also contribute significantly through unpaid activities. These contributions, including caregiving and volunteering, are valued at an estimated $745 billion. Looking ahead, the number of Americans aged 80 and over is projected to grow from 13.6 million in 2024 to 18.1 million by 2030. This growth will continue to fuel demand in sectors like age-restricted communities, independent living facilities, and medical office buildings.
