Older Americans are starting to spend this year after being waylaid by the pandemic for the past 2 years, reports The Wall Street Journal. Household spending had a steep drop at the beginning of the pandemic, and consumers aged 65 years and older have increased their spend the slowest of any age group. According to Visa’s “spending momentum” index, the rate for the older group was 6% lower than 45-64 years-old and 25-44 years-old from March 2020 through January of this year.
But in February, the 65-and-over crowd started spending more than their 45- to 64-year-old counterparts, and that’s because their wealth went up significantly over the last 2 years, as stock and housing values boomed. Now, older Americans who forewent things like travel, dining out, and shopping are flush with cash and ready to resume pre-pandemic activities, say wealth managers interviewed for the article. While geopolitical turmoil is causing a bit of hesitation, managers aren’t seeing many clients change their long-awaited plans.
Americans aged 65 or older make up almost 17% of the population, according to the 2020 Census—an increase of more than a third from the previous decade. With that population increase comes an increase in household wealth, including assets and real estate, which rose 38.1% for people over age 70 from 2020 through the fourth quarter of 2021.
Certain factors could hold back the accelerated spending, however. Baby boomers who took early retirement during the pandemic saw their incomes decrease. Others are watching to see how higher inflation and the war in Ukraine affect the market before diving back into spending. And this segment of the population typically spends less and saves more to begin with—the opposite of younger, less wealthy Americans, the article contends.
Still, the older Americans interviewed for the article are eager to make up for lost time. Said Mark DeOrio, who retired in 2018 and is now 67, “One more factor why we’re anxious to get going, particularly with travel, is quite honestly when you’re older you are aware of the fact you don’t know how much longer you have to be active.”