I came across an interesting chart in the Australian news, that looks at the total spend per capita across age demographics, where those under 60 on average spending less year on year, and those over increasingly spending more- For instance, while those 25-29 are spending 7% less, those over 75 are spending 3% more.
This has been positioned as some failure of the economy, but it is the way it is meant to go, at least in Australia, as this is why people have been putting (forced) into their superannuation, so they can live a better life after retirement. But, while the article doesn't get into it, I think that there are a couple other things that this chart indicates.
Firstly, the age group of 75+ are entering into the last phase of their life. For a relevant example for me, my in-laws are 77 and in recent weeks, have decided to sell their apartment and by a smaller, more expensive one in the city. This means that they are taking money out of their savings and investments to cover the difference. But, not only that, the reason for the move and change to more expensive, is that they will go to a serviced apartment, with on-site nurse and a restaurant where they can get meals if they don't want or are unable to cook in the future.
While "total spend" might tell something, it doesn't tell what the money is being spent on, nor does it tell what the money isn't being spent on. For instance, in another article in the same news service, they were talking about how young people (mid-twenties) aren't willing to pay 400+ dollars for a festival ticket, although many still are.
The 24-year-old said the ticket prices alone have been “getting so out of hand”, and once you factor in travel to the festival, accommodation, food and outfits, “it all adds up and gets quite expensive”.
If we consider what people are reducing their spending on in their total spend, it would be more interesting perhaps, because it is most likely that the consumer spending is significantly different. I assume that those over 75 aren't spending too much on their outfits for festivals, and more on adult diapers.
The second thing that I find interesting is that even during a cost of living crisis, their spending is increasing, which means that the money is flowing back into the economy in some way. However, what is more interesting than this, is that these people are 75+, which means that unless there is a major breakthrough in medicine, based on the average age of mortality in Australia of about 84 years, within the next decade, all of their holdings are going to be flowing into the economy, as it passes down the chain to their children.
The first line that will likely see the money flow to them are the ones who are currently on the cusp of going positive in spending themselves, as they are in the 50-59 brackets. This means that in the next decade, they will be approaching their own retirement and it will coincide with a cash injection from their parents. Because of the changing consumer behavior, even these people who would be considered "old" by Generation-Z, are far more consumer-driven than their parents. This means that it is likely that a lot of what the current 75+ range have worked for and saved, will leak into consumer spending, rather than generative investing activities.
How I see the future on its current trajectory, is that while people are complaining about how easy the previous generations had it to create wealth, when that flows into the economy again, it is largely going to be wasted. Of course, it isn't going to be totally wasted, because those who are financially savvy will invest what they get into the businesses that will attract consumers, and double down on what they have received to generate even more wealth for themselves and their families. This means that the wealth gap will become even greater between population within the same age demographic, due to economic behavior and subsequent activity.
For a lot of people in the younger generations, they are just going to see any inheritance they get as "free money" and instead of using it wisely, they will spend it quickly to improve their standard of living now. In the past, the behavior was different, where people would save and generate now in order to have a better standard of living later, which drove the conditions for those in the 75+ age groups to be able to behave as they do now.
The economy is of course a shambles, but it isn't because of the way the young and the old spend their money alone. It is because the economy is set up by design to concentrate wealth into fewer hands over time. And unless this changes, which isn't likely, for an individual to improve their conditions, they have to use their resources well.
An inheritance isn't free money, it is an opportunity.
For some, it will be an opportunity to improve their quality of life through entertainment activities and spending more on consumer items like cars. For others, it will be seen as an opportunity to invest and grow. And for all, there will be the opportunity to provide goods and services that are in demand by either group.
Taraz
[ Gen1: Hive ]