Jun 21, 2024
Some say youth is wasted on the young. But is wealth wasted on the old?
From 1992 to 2022, the average age of a millionaire increased from 57 to 61, according to a Business Insider analysis of data from both years’ Survey of Consumer Finances (SCF), which is conducted by the Federal Reserve.
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As of 2022, 80.3% of millionaires are above the age of 50.
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Between older people’s longer lifespans and younger people facing housing and affordability crises, it seems people under 50 are having a harder time building up their wealth.
“First-generation people who are not on the wealth train are having a harder time getting on," Chuck Collins, the director of the program on inequality and a co-editor of Inequality.org at the left-leaning Institute for Policy Studies, told Business Insider.
Inheritance slowdown
One of the consequences of an aging millionaire population is that the pace of intergenerational wealth transfers has slowed.
“The millionaires are aging, and they're not passing that wealth down the generational line, or they're passing it on much later in life," Collins said. “Even the recipients are old.”
Collins said that we’re starting to see 90-year-olds transferring their wealth to 60-year-olds, rather than 60-year-olds doing the same for 30-year-olds. He calls the phenomenon the “King Charles effect,” alluding to the current British monarch, Charles III, who waited until the ripe age of 73 before ascending to the throne.
“It's very different to inherit a couple million dollars when you're in your 20s than it is in your 60s,” he said. “You've already made a lot of decisions in your life.”
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Stimulates the economy
Meanwhile, America’s older millionaires aren’t exactly misers.
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Seniors were responsible for 22% of all spending in 2022, according to the most recent SCF. Several media outlets reported on the older demographic’s free-flowing spending on cruises, restaurants and travel — and how this helped the economy recover post-pandemic.
Plus, the older, wealthier citizens are contributing to the tax base. The most recent SCF says that the average net worth for people ages 65 to 74 is $1,794,600.
“We are collecting a good portion of our tax revenue from these folks,” Garrett Watson, a senior policy analyst at the Tax Foundation, told Business Insider. “That obviously underscores the progressivity of the system.”
Watson added that there are still several tax provisions that help these older millionaires hang on to their wealth. But between their spending power and tax contributions, they are generating a lot of money for the country.
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Sabina Wex is a writer and podcast producer in Toronto. Her work has appeared in Business Insider, Fast Company, CBC and more.
