Boomers Are Spending Money at a Much Higher Rate Than Gen Z — Here’s Why
Written by
Vance Cariaga
Edited by
Cory Dudak
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Baby boomers seem to be less spooked by financial worries than younger Americans, at least judging by their recent spending habits. An analysis of Bank of America credit and debit card expenditures in recent months found older households are spending money at a considerably higher rate than Gen Z and other younger generations.
Beginning in May 2023, average credit and debit card spending by boomers began to distance itself from younger cohorts, BofA noted in its June “Consumer Checkpoint” report. In fact, average spending by Gen Z, Gen X and millennials declined year-over-year during much of May, while spending by boomers rose around 2%.
There are a few reasons for the spending gap between boomers and other age groups. First and foremost, many boomers got a financial lift from the 8.7% Social Security cost-of-living adjustment (COLA) for 2023 — the highest in more than 40 years.
Because the 2023 COLA has outpaced the overall inflation rate this year, boomers have extra money to spend. Bank of America found that there “continues to be some positive impact from the COLA increase,” though it has “faded somewhat” vs. earlier in the year.
In addition, older households have “significantly more wealth” than younger households, which bolsters their discretionary spending power even further.
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Meanwhile, Gen Z and other younger generations are “more exposed” to higher housing costs, as well as the upcoming end of the federal student loan payment pause. Those payments are set to resume in October after being paused for more than three years, which means many Gen Zers will have even less money to spend.
Recent spending patterns aren’t all that separate boomers from Gen Z when it comes to finances. As GOBankingRates previously reported, a new survey from Charles Schwab found that the average net worth of baby boomers who feel wealthy is $692,000 — well above the Gen Z average of $414,000.
This indicates that boomers tend to put a much bigger emphasis on monetary wealth than Gen Zers. Consequently, fewer boomers (40% of respondents) said they actually feel wealthy, according to the Schwab survey, while 46% of Gen Z said they feel wealthy.
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