by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Between the inevitabilities of death and taxes one would hope there’s room for a comfortable, even long, retirement. Alas, the data on that possibility are depressing for a lot of Americans. That’s because older people spend less than younger ones. In fact, a lot less. It’s easy to see household spending slowing sharply in the coming years creating a drag on economic growth.
The Economic Policy Institute notes that the average retirement savings for all U.S. families is just $95,776. As low as that number seems, it exaggerates the broader health of retirement savings because some high savers skew the figures; the median (those in the middle of the pack) for families with any retirement savings is $60,000 and for all families is just $5,000. Nearly half of the working-age families have no savings at all for retirement, according to the institute.
The data for our population are particularly striking. Back in 1990 those 55 years of age and older represented 25.5% of the U.S. population. In 2015, that figure was 27.6% and by 2030 it will rise to 31.6%. The median age in the U.S. was 37.8 years in 2015; by 2045 it will reach 42 per Census Bureau projections.
These statistics highlight economic stress that warrants more attention. The bottom line is that an aging population tends to consume less than younger cohorts, which means overall spending (especially for nonnecessities) is likely to moderate. Consumption is the single largest contributor to GDP: over 69% in the third quarter, which is pretty much a record. It hovered around 67% from 2002-09 and averaged 64% from 1980-2000.