A Tsunami of Seniors: How Record Numbers of Retirees are Swamping the Economy

A record 4.2 million Americans will hit 65 in 2025. Many people in that age bracket are retiring or considering it. This tsunami of seniors can have major impacts on the economy. However, not everyone is retiring. Some people are still working because they enjoy it, while others are working because they have to make ends meet. These are some of the ways the influx of retirees can change the economy.

Financial Services May Benefit

Retirees tend to get more defensive with their money and shift from building wealth to preserving their nest eggs. Financial service providers can benefit from this shift as more people turn to them for help. Some people may want help with their retirement planning, while others may want a financial advisor to manage their portfolio for them.

The Assisted Living Industry Is Another Winner

As people get older, they will need help with performing day-to-day activities. Assisted living facilities cater to this individuals. While 65-year-olds may not need these services yet, more people in this cohort will need these services in the next 10-20 years.

The assisted living industry may reach its peak in the next 20 years. Declining fertility rates won’t affect the industry quite yet, and the largest generation in history is continuing to get older.

Consumer Spending May Drop

Global populations are skewing toward older individuals. As more people turn 65, consumer spending is likely to go down. These people can’t spend as frivolously as people who are in their 20s and 30s. They will have tighter budgets and look for ways to cut expenses. As a result, consumer spending may take a hit as more people age out of the workforce.

Non-essential industries may get hurt the most by this trend. Luxury brands don’t have the same appeal to people when they are retired and want to preserve every last dollar. 

Taxes May Go Up for Younger Workers

Older people are living longer, and younger people aren’t having as many kids. Those two trends will come at a head as more people turn 65 and leave the workforce. Retirees aren’t getting replaced by as many workers, and governments may have to resort to higher taxation to fund operations. This may not happen right away, but the government will either have to make big cuts to federal spending or tax more people at higher rates. 

The Hits Keep on Coming for the Auto Industry

An influx in retirees is another bad sign for automobile companies. These companies have already faced pressure due to high car prices, a successful used car market, and cars being more durable. Tariffs have captured headlines as companies fear higher prices for new cars, but an increase in retirees creates additional problems.

Retirees don’t have to travel as often since they no longer have to make the 9-to-5 commute. Therefore, they may opt for public transportation. Furthermore, some retirees won’t be able to drive anymore in 10-15 years. Their reflexes may not be as sharp, and it can be dangerous for some of them to get behind the wheel. This trend can lead to lower automobile sales moving forward and put a damper on any recovery efforts.

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