Baby boomers are the wealthiest generation in the United States, with spending power of over $2.5 trillion.
Previous generations made leaving an inheritance for their children a priority, even if it required them to live a frugal lifestyle and resist spending on things that might be considered unnecessary.
Today, more and more baby boomers are spending some of what would have been their kids’ inheritance on things like travel, cosmetic surgery and home improvements.
In fact, 56 percent of baby boomers want to spend some of their accumulated wealth instead of passing it on to their children, according to research conducted by life insurance company SunLife.
There’s even an acronym for this – SKI’ing – Spending the Kid’s Inheritance.
Other studies conducted over the years have yielded similar findings and show an increase in the percentage of boomers who want to lead a higher standard of living during retirement.
Moreover, surveys have found about 90 percent of boomers’ children to be okay with this and don’t believe their parents are selfish, as they accept it is their parent’s hard-earned income, which is theirs to spend.
Why Are Boomers Spending More?
There are many reasons and contributing factors to this trend. First, there is more for seniors to spend their money on nowadays.
From health aids to luxuries, there is so much more variety, so it is perhaps unsurprising that more and more boomers are tempted and willing to spend their wealth instead of passing it on.
The rise of e-commerce has made it much easier for boomers to make purchases online, and this convenience is directly resulting in seniors spending billions of dollars more every year.
While most businesses still shy away from directly targeting seniors online – and instead focus on millennials and other generations – some are cashing in on American boomers’ increased use of technology and willingness to spend money online.
Another reason is the advancement and growing popularity of financial products and arrangements, which allow boomers to unlock their wealth easily.
For example, reverse mortgages allow homeowners to draw on the value of their property and get paid a lump sum while still living in the home. This clearly makes it easier for boomers to spend their money in retirement instead of bequeathing it to their children.
Finally, the issue of inheritance, including taxes on wealth inherited and whether or not it is good for the economy, is becoming increasingly contentious.
These taxes are making more and more boomers decide against handing down large inheritances to their children and therefore resulting in them spending more money on themselves.
What Are Boomers Spending Their Money On?
With boomers spending tens of billions of dollars more per year – and still outspending millennials – let’s take a look at what boomers like to spend their money on and which industries, in particular, are benefitting.
Travel
Boomers love to travel, both domestically and abroad, spending about $130bn on leisure travel each year. The average boomer takes 4 to 5 vacations per year to stay entertained during retirement.
Popular travel destinations include Southern and Western Europe, parts of South America, and Asia. Cruises are especially popular among seniors.
All of this travel is great for hotels, restaurants, bars, tour guides, and other attractions, such as casinos, which have been raking in cash from boomers’ love for travel.
Home Renovations
The average baby boomer spends almost $6,000 on home renovations each year, considerably more than other generations.
While some renovations are intended to make their homes better suited to their health needs, most are simply done to improve aesthetics or to make their properties larger.
Health & Mobility Aids
Boomers are now spending more on health and mobility aids than ever before. Popular health aids include walking aids, such as canes and walkers, hearing aids, and stairlifts.
Many baby boomers also spend a large chunk of their income on nursing care and personal assistance.
A Quick Summary
- Baby boomers are the United States’ wealthiest generation, with their combined spending power exceeding $2.5 trillion.
- They are spending more and more of their children’s inheritance during their latter decades of retirement, opting to splurge on luxuries and health aids instead of bequeathing their wealth.
- Around 90 percent of boomers’ kids are okay with their parents’ spending. There are many reasons for this, including the stigmatization of handing down large estates.
- The advent of online shopping and the rise in the number of things for boomers to spend their money on encourages boomers to spend.
- The popularity of financial products and arrangements which allow seniors to draw on the value of their assets to get instant cash is another significant contributing factor to this trend.
- Leisure travel has benefitted from this, with seniors now taking around 4 to 5 holidays per year and spending over $120 billion on domestic and international vacations.
- Boomers also spend a sizeable chunk of their income on health and mobility aids and home renovations.