Older generation spending expected to outpace other adults in US: Report

New Delhi [India], June 8 (ANI): Real spending by older generations in the US is expected to rise by roughly 4 per cent in the coming years, compared to roughly 2 per cent by other adults. This shifting dynamic challenges the traditional economic viewpoint that ageing populations universally depress consumer demand and slow down economic growth.
According to an HSBC Global Investment Research report, older consumers are set to play a crucial role in determining the mix and pace of developed market consumption. The report noted that wealth accumulation and longer employment tenures are actively supporting the purchasing power of this cohort.
"There is a common understanding in economics that ageing populations are bad for growth: investment slows, public finances become more strained and consumption cools, too. This is largely due to reduced incomes of households once people retire, with spending falling as a result," the report stated.
However, the report highlighted that historical spending gaps are closing. In 2024, individuals aged 65 and older accounted for 22 per cent of total US consumer spending, up from 18 per cent in 2014. Nominal spending within this group grew by 6.3 per cent annually since 2014, outperforming the 4.2 per cent annual growth recorded by the remainder of the population.
"But that convention may need to change a bit. Firstly, in recent years the gap in terms of per capita consumer spending (only including out-of-pocket healthcare spending) by US over-65s has closed relative to the rest of the population and secondly, once we remove mortgage and rent payments, as well as pension and insurance contributions - non financial spending by over-65s is just shy of 90% of average spending, and higher than spending by 25-34 year olds," the report stated.
Increased workforce participation among older demographics remains a foundational driver of this elevated income level. Effective retirement ages across OECD (Organisation for Economic Co-operation and Development) nations show an upward trajectory compared to two decades ago.
The report noted that, "Compared to 20 years ago, many more older workers are staying in the workforce - a good thing from a fiscal perspective, but also in terms of keeping incomes elevated and supporting consumer spending from this demographic."
Financially, the over-65 demographic holds a significant wealth advantage over younger generations due to prolonged asset accumulation and rising stock prices. In the US, the multiple of financial assets held by those aged 65 to 74 compared to the 35 to 44 age bracket increased from 2.4 times in 1989 to approximately 4 times by 2022.
As per the report, "Older generations today are richer than ever - both in absolute terms and compared to the average in society. We can look at data from the US survey of consumer finances to show quite how much richer today's older generations are than younger ones - with financial asset wealth for 65-74 year olds being multiples higher than that of 35-44 year olds."
Looking ahead, this demographic shift will influence specific market sectors. While older adults disproportionately fund out-of-pocket healthcare, utilities, and home maintenance, their fastest-growing spending categories now include entertainment, public transportation, and furniture.
"This spending growth is likely to be fastest in the areas where it has been rising more quickly in recent years - leisure and entertainment, and home furnishings," the report said.
Despite robust consumer activity, the report cautioned that private wealth does not resolve state-level fiscal pressures. Universally accessible public services ensure that government expenses for pensions and healthcare continue to climb alongside shifting dependency ratios.
"The bad news, however, is that the wealth and spending set to come from this generation of spenders doesn't solve the growing fiscal crises facing governments. Given the universal access to state pensions, healthcare (in most developed economies) and social care, the costs to the public sector rise no matter how wealthy populations are without some sorts of means testing," the report warned. (ANI)