Well that’s a provocative headline. It was a question posed in a recent article in the Financial Review. The full headline was… “Baby Boomers are loaded. Why are they so stingy?” Now like most newspaper headlines they are designed to get a reaction and encourage people to read. And to be fair this article certainly didn’t make the case all baby boomers were rich, nor that they were all stingy. But it did highlight some really interesting points.
Firstly there are lots of baby boomers. And as they have been retiring this wave of boomers has major economic consequences. They are leaving the workforce depriving us of experience,skills and labour. But instead of working and building a nest egg there is also an expectation that once retired they will spend more than they earn and gradually reduce their savings. This would pump more money into the economy, potentially increasing inflation but also economic growth and the growth of wages for younger workers.
This hasn’t actually been happening. Recent evidence from around the world including Italy, Japan and the U.S.A indicates boomers are very often savers not spenders. Many die wealthier than when they retired.
