Baby boomers, the wealthiest generation in history, are saving their money instead of splurging. Despite the stereotype of wealthy retirees enjoying luxury cruises and expensive wine, the reality is that they are being unusually frugal. The elderly are concerned about the increasing length of their retirements, the potential need to pay for old-age care, the uncertainty of how long they will live, and the desire to leave assets for their children.
In Canada and Japan, this trend is also evident among wealthy retirees. In the United States, baby boomers alone have a combined net worth of $76 trillion or over $1 million per person. Their saving habits have influenced interest rates for years and economists expected that as boomers retired, they would start spending more, potentially causing a reversal in the trend of declining interest rates. However, data shows that many retirees are continuing to save rather than spend.
This trend is significant because retirees hold a substantial amount of wealth and their financial decisions have a significant impact on capital markets. The data suggests that many retirees are continuing to save rather than spend which may have less drastic impact on capital markets than previously anticipated.
