Western baby boomers are the richest generation in history, but that doesn't mean they spend money like that. As we've been reporting this week, older people are instead hoarding money, driven by an increasingly long retirement period, the risk of having to pay for care in old age, the inevitable uncertainty of how long they will live, and the desire to leave assets to their children (see Finance and Economics section). In the mid-1990s, Americans aged 65 to 74 spent 10% more than they earned, but since 2015, this age group has become net savers overall. Similar situations can be found throughout the rich world, from Canada to Japan. This generation, sometimes associated with luxury cruises and Château Margaux, is actually unusually stingy.
This is important because retirees are so numerous and so wealthy that their actions could move capital markets. The American Baby Boomer generation, defined as people born between 1946 and 1964, has a net worth of $76 trillion, or more than $1 million per person. For decades, their retirement savings have contributed to lower interest rates, which in the long run should move the world toward a balance between saving and investing. However, economists have speculated that this trend will reverse as Baby Boomers reach the end of their careers and loosen their purse strings. Some have worried that retirees selling off assets en masse to splurge could trigger a collapse in asset markets.
