Welcome to Financial Advisor IQ
Follow

Seniors Are Families' Financial Backstops — But It Won’t Last

March 21, 2018

Members of the so-called Silent Generation — those born 1925 to 1942 — control more wealth on average than any of the more recent generations, Forbes writes. But the “golden age” for seniors isn’t likely to continue past 2025, according to the publication.

The Federal Reserve’s most recent Survey of Consumer Finances found that the Silent Generation grew much more wealthy in recent years than the average American, Forbes writes. While mean net worth for American households grew 26% from 2013 to 2016, it soared 60% for those 75 and over, according to Fed data cited by the publication.

Members of the Silent Generation have around 1.3 times the net worth of baby boomers, more than twice that of members of Generation X and 23 times more than millennials, Forbes writes. A typical 80-year-old household has twice the net worth of an average 50-year-old household, while in 1995 they were roughly the same, says Forbes.

The Silent Generation benefited from a string of fortunate events and their own doggedness, Forbes writes. As the generation growing up after World War II, they were typically risk-averse, married and had children early, avoided debt, were in good health and well-educated, according to the publication.

At the same time, many bought their homes in the 1960s, when rates were low and before the rise in inflation, Forbes writes. In addition, they were saving throughout the 1980s and 1990s, one of the strongest markets of all time for both stocks and bonds. They also reached 65 and to some extent “sold out” of riskier assets before the 2008 financial crisis, writes Forbes.

It’s no wonder members of the Silent Generation are now frequently helping all the others. They regularly pay for family vacations and college costs, spend on average $2,383 on their grandchildren every year and are twice as likely to be caretakers for younger family members than to be recipients of care, Forbes writes.

Senior affluence is likely to continue as the first wave of boomers turns 75, according to the publication. But by 2025, late-wave boomers, who are less wealthy, more indebted and less likely to get retirement benefits than their immediate forebears, will start turning 75.

And that will be the end of the “golden age” for America’s seniors, according to Forbes.

By Alex Padalka
  • To read the Forbes article cited in this story, click here.