Older Americans control 70% of all wealth and are powering the economy — how to take advantage of this shift (and what to watch out for)

Those 55 and older hold more than 70% of the wealth in the country, according to Federal reserve data (2). They’re also responsible for almost half (45%) of consumer spending, according to Moody’s Analytics (1).

Older Americans are “driving the train,” Mark Zandi, chief economist at Moody’s Analytics, told Axios, thanks to “higher home prices and, more recently, surging stock prices” (1).

The gray-shaped economy is reshaping entire industries, from financial services to travel to healthcare. While this is creates new opportunities for those who can capitalize on it, it also creates new challenges.

Benefits of a gray economy

The U.S. population is aging, with the number of Americans aged 65+ projected to increase from 58 million in 2022 to 82 million by 2050, according to the U.S. Census Bureau. That’s an increase of 42%, growing to almost a quarter (23%) of the nation’s total population (3).

But today’s baby boomers are in a unique position.

“The elderly are mostly out of the job market and thus need not worry about being replaced by artificial intelligence. The majority own their homes, often debt-free,” writes Greg Ip, chief economics commentator of The Wall Street Journal (4). While younger generations might be worried about healthcare costs, those 65 and over have access to Medicare.

Additionally, those aged 70 and over control about 39% of all equities and mutual funds owned by households, according to Federal Reserve data (5).

As a result, older Americans control a massive share of the nation’s wealth. Those in their 60s have a median net worth of $274,654, according to data from Empower. While that decreases slightly each decade afterward, those in their 90s still retain a median net worth of $205,737. Compare that to someone in their 30s, with a median net worth of $23,093, or in their 40s, at $68,698 (6).

That means older Americans also have an outsized influence on the economy. For example, data from the Bureau of Labor Statistics reported that while job growth in many sectors has stagnated, nearly all job growth in January came from the healthcare sector (7).

This creates opportunities for older Americans, such as investing in aging-focused businesses or spending their money in sectors that cater to their needs. “The changing demographics help explain all kinds of new businesses and marketing trends: longevity startups, the boom in menopause companies, among them,” according to Axios (1).

Risks of a gray economy

New opportunities come with new risks. In an aging society with a declining birth rate, there will be fewer young people to support social safety nets. Americans — young and old alike — may need to plan for a future without those traditional safeguards.

It’s estimated that Social Security will no longer be able to pay out full benefits by 2033, which is when the trust fund reserves will be depleted. While retirement benefits will still be paid out, recipients will only receive 77% of their full benefit — unless, of course, some radical changes are made now.

An aging population and declining birth rate can lead to other economic headaches, such as labor shortages.

In Japan, for example, a rapidly aging population and declining birth rate has created a shortage of successors for small and mid-sized businesses (SMBs), which could result in the loss of 6.5 million jobs. About half of small business owners over age 70 were expected to find themselves without a successor in 2025 (7).

In the U.S., about 6 million SMBs will “face ownership transitions as baby boomers retire” by 2035, according to the McKinsey Institute for Economic Mobility. “Failed transitions could erase jobs and locally rooted pathways to economic mobility” (8).

An aging population could also face a shortage of caregivers, potential service shortages and a strain on the healthcare system. So, while older Americans may have unprecedented spending power and opportunities to invest in aging-focused sectors, they’ll need to balance this with potential risks.

Preparing for the future

If you’re over 55, you’re part of the most economically powerful generation in history (even if it doesn’t always feel like it). While this demographic controls a large percentage of the nation’s wealth, there’s still a stark divide between the haves and have nots.

“Over 19 million (45%) older adult households do not have the income needed to cover basic living costs based on cost-of-living data from the Elder Index,” according to a recent report from the National Council on Aging (NCOA) and LeadingAge LTSS Center @ UMass Boston. About 80% would be “unable to weather a major shock such as widowhood, serious illness or the need for long-term care” (9).