What the Economist Got Right About Boomers’ Spending and Savings Habits

I pointed out the shortcomings of the Economist’s piece on “Stingy Boomers” (their term, not mine) in a recent post. But the article ends by identifying the “deeper forces at play” in older adults’ spending and saving habits — and that section includes some worthwhile insight.

Here’s my take on the Economist’s three-part explanation:

1. “Bequest Motives”

I agree that many Boomers are saving money to help their adult children and their families. But the challenges Boomers’ children face are steeper than hinted at in the piece. They are the first “triple mortgage” generation, with obligations to pay off their student debt, make home mortgage payments, and save for their children’s ever-costlier education.

And the word “bequest” isn’t quite right. Many Boomers don’t look at it as a bequest — they see it as being involved in their kids’ and grandkids’ lives. Instead of passing on wealth after death, Boomers are getting involved today, when it is needed most, and while they’re still around to see the results.

2. The Pandemic

The piece is spot-on here: Older adults still go out to dinner and travel less often than younger generations. We’re the last ones to throw inhibition to the winds and say “Let’s get back out there.”

It’s not just COVID-19 — there’s long COVID, RSV and the flu to consider. I know from my experience, a cruise with 1,000 or more fellow travelers still doesn’t look very appealing.

So yes, many Boomers are spending less on these types of entertainment, “accumulating wealth almost by accident.”

3. “Longevity Risk”

The Economist describes Boomers’ “fears” about the cost of care — especially long-term care — in their later years.

But it’s not just fear — experience has shown Boomers how this stage of life can play out. They’ve seen their parents granted unexpected longevity for which they were unprepared, and watched how care costs, the loss of mobility or cognitive issues can quickly deplete a savings account.

One medical event, one fall, or one diagnosis can change everything. Knowing this, Boomers have a keen awareness of the risk of not having enough money — even those who have saved conscientiously for their later years.

As I said in my previous post, many Boomers are showing appropriate caution as they try to ensure their wealth span and health span matches their life span. That’s not being stingy, that’s being prudent.