Gen Z and Millennials Are Struggling But Baby Boomers Are Living It Up
While younger Americans are living paycheck to paycheck, baby boomers are splurging like there's no tomorrow. The Bank of America's internal data shows a "significant gap" in spending between the older and the younger generations.
Baby boomers are ramping up their expenditure, whereas Gen X, Gen Z, and millenials are cutting back as they struggle with the high cost of living that includes housing costs and student loan debt repayments.
"It's fairly unusual," said David Tinsley, senior economist at the Bank of America Institute, told CNN.
The publication reported that the overall household expenditure dipped by 0.2% year on year and as per the bank's data card, the generational data showed a varied picture.
Fatter Social Security Paychecks
Older Americans are increasing their spending as they benefit from a spike in Social Security payments. Starting in January, the Social Security recipients got an 8.7% cost-of-living adjustment, the biggest increase since 1981. Bank of America spending shows a significant rise in spending by households that received the cost-of-living boost.
The bank also noticed that the surge is happening in high-income households, which are less likely to be affected by the spike in Social Security payments.
"That can’t be the whole story," Tinsley said.
The Bank of America says that the older generation is spending on travel, including hotels, airfare, and also cruises, especially after the pandemic.
Why Are Millenials And Gen Z Suffering?
The younger Americans have student loan repayment looming over them after the return of the loan repayments was confirmed by the Biden administration. The bipartisan debt ceiling deal included the provision that restricted the extension of the pause on federal student loan repayments.
The suspension is expected to end by August. This is bad news, especially for the younger borrowers. Americans are currently sitting on $1.6 trillion of student debt and the vast majority of the borrowers are below the age of 49.
For millions of Americans, this return of the repayment means less money left to spend on entertainment and vacations.
Baby Boomers Are Living It Up
One of the main reasons why this is happening is due to the sheer number of baby boomers in America. There are way more consumers over 60 than they were about a decade ago.
The large post-war generation born between 1945 to 1964 has been the driving force behind the economy for over seven decades now.
Here are some ways baby boomers are spending their money, as per Financial buzz
Housing still tops the list as baby boomers continue to take care of property taxes, repairs, and maintenance.
It isn't just on baby boomers' list as every generation loves to spend on food.
Fitness is a major priority for this generation. They work out especially to avoid any serious health conditions.
Travel is a popular way of spending money and as they are mostly retired they can go on a vacation any time of the year.
Americans love coffee and there's no reason why this generation should be any different.
This generation gifts a lot! They like to honor milestones like birthdays and graduations.
Well, yes baby boomers are pretty decent at tech and they spend a significant amount of money in buying new gadgets.
Like other areas of health, seniors do spend a lot on supplements and once they feel that the supplements work for them, they keep rebuying.