Older Americans Help Drive Consumer Spending Power

America has the highest percentage of older people in at least a century.

And that fact, The Wall Street Journal reported Sunday (Oct. 8) may have helped consumer spending to stay strong even as the Federal Reserve hikes interest rates.

As that report notes, the U.S. senior population was 17.7% as of August, the highest on record stretching back to 1920, and up nearly 5% since 2010. 

And these older Americans are financially well off and have less need to borrow, since many of them aren’t going to be buying a house. It’s made the elderly a strong spending block, the WSJ said, with consumers 65 and up making up 22% of spending last year, according to data from the U.S. Labor Department.

“These are the consumers that will matter over the coming year,” said Susan Sterne, chief economist at Economic Analysis Associates. 

“Our large share of older consumers provides a consumption base in times like today when job growth slows, interest rates rise and student-debt loan repayments begin again.” 

PYMNTS remarked on this trend in June, noting that even as their earning power diminishes, baby boomers and seniors are still the generation most able to make ends meet. 

“Born before 1964, members of this demographic are largely considering reducing their working hours or easing into retirement — if they are not there already,” that report said.

“But instead of having to reduce their financial lifestyle, as many would expect, baby boomers and seniors are proving more economically secure across age cohorts — even compared to their higher-earning Generation X and millennial counterparts.”

The PYMNTS Intelligence LendingClub collaboration “New Reality Check: The Paycheck-To-Paycheck Report” found that baby boomers and seniors are the most financially secure generation. 

Just 49% of this group lives paycheck to paycheck, which means this is the only demographic with less than half its consumers struggling to make ends meet.

And despite baby boomers’ and seniors’ reputation for trailing other generations when it comes to digital activities and transactions, this group had demonstrated a growing interest in retail subscriptions this year while others pulled back, PYMNTS wrote last month.

“Despite general macroeconomic headwinds, the share of baby boomers and seniors subscribing to a retail subscription rose from 9.4% to 9.8% between February and April this year,” that report said, citing research from “Subscription Commerce Readiness Report: The Loyalty Factor,” a PYMNTS and sticky.io collaboration.