Wide generational difference in spending habits, data shows

Older Americans are splurging on travel and dining out more than younger consumers, who are spending more on housing and basics, in an unusual and growing generational gap in spending patterns.

Internal data from Bank of America account holders reflects a widening split in spending habits between working-age adults and retirees. Boomers (ages 59 to 77) and the generation that preceded them (78 and older) in every income group are outspending their younger counterparts, the bank found. Many of those gains were concentrated in leisure spending, such as travel and hotels.

“There’s a large wedge that’s opened up between the older generation and the younger generation’s spending,” said David Tinsley, senior economist at the Bank of America Institute.

One reason for the divide, he said, could be a shift in spending behavior after the pandemic, which proved more dangerous for older Americans who have been reluctant to travel until now.

But just as important is that older Americans also tend to have lower housing costs. Many own their homes outright or have locked-in low mortgage rates. Younger adults are more likely to rent and are also more likely to move, either for work or family reasons, which means constantly renegotiating housing costs.

Resuming student loan payments could widen spending gaps even more, dealing yet another blow to adults between 25 and 49, who hold about 70% of the country’s student loans.