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Baby Boomers ramp up spending on travel & dining while Millenials struggle: BoA report

By Jake Beardslee · January 19, 2024

In brief…

  • Baby Boomers ramping up spending on travel and dining out
  • Millennials and Gen Z cutting back amid high housing costs
  • 8.7% Social Security COLA driving spending surge among seniors
  • Student loan freeze ending soon, younger generations bracing
A new Bank of America report shows older Americans spending freely thanks to Social Security hikes while younger generations tighten budgets facing high housing costs and looming student loan payments.  Yaroslav Shuraev/Pexels

A new spending report from Bank of America paints a picture of the growing financial divide between older and younger generations in America. While Baby Boomers and the Silent Generation are ramping up spending on travel and dining out, Millennials and Gen Z are cutting back amid high housing costs and looming student loan payments.

According to the bank’s internal data, spending increased 5.3% for the Silent Generation and 2.2% for Boomers over the past year. However, spending dropped around 1.5% for younger generations over the same period. This “significant gap” is fairly unusual, notes David Tinsley, senior economist at the Bank of America Institute, in an interview with CNN.

A major factor driving higher spending among seniors is the big cost-of-living adjustment to Social Security payments. The 8.7% COLA increase this January was the largest since 1981, boosting the average retiree’s monthly benefits by $146. The bank noticed a clear bump in spending from households receiving those boosted payments. However, the spending surge was not limited just to lower-income seniors, indicating other factors are also at play.

For younger Americans, housing affordability remains a significant burden. Rents, home prices, and mortgage rates have all spiked dramatically in recent years. This hits younger generations hard as they are more likely to move and take on new housing costs. Millennials and Gen Z are also bracing for the return of student loan payments, which are set to resume after August following a lengthy pandemic pause. With $1.6 trillion in student debt looming large again, many younger Americans are pulling back on discretionary spending.

The generational divide extends across categories like travel and dining, with Boomers splurging on vacations and restaurants while younger generations tighten their budgets. As this gap widens, it illustrates the diverging fortunes between America’s older and younger spenders.