‘Silent Generation’ wins life lottery as richest group
JON BURKHART was born during the Great Depression. Like many of the so-called Silent Generation, he couldn’t have been more fortunate.
When he and his wife married in 1959, they lived in Texas and saved 10 per cent of every paycheck. Thanks to well-timed equity and property investments, the 81-year-old now lives a much different life than the elderly he knew as a child.
“We just invested the money very wisely, some in markets and some in real estate, and as a result we built up a nice little nest egg by the time we were ready to retire,” said Burkhart, who lives at the Arbor Acres retirement community in Winston-Salem, North Carolina.
The median net worth for the oldest Americans has climbed to near the top compared with other age groups from near the bottom just two decades ago, based on the Federal Reserve’s Survey of Consumer Finances. This shift in buying power may not be a positive development for the economy as prime-age workers typically spend more than their elders.
The Silent Generation, born between 1928 and 1945, has benefited from improved health, a more generous social safety net, an exit from the job market ahead of the past recession, and re-bounding stock and home values. Combined with a diversified approach to investing, that’s made them “the richest old generation we’ve ever seen,” said William Emmons, a senior economic adviser at the Federal Reserve Bank of St. Louis. “They are in the sweet spot.”
The median family net worth of Americans 75 and older was US$194,800 last year adjusted for inflation, compared with US$130,900 in 1989, the Fed data show. Members of the Silent Generation are currently about ages 69 to 86.
With the youngest of the group eligible to start retirement in 2007, they had some protection against the largest financial downturn in the post-World War II era. The title of richest ever will probably go unchallenged for now as the hit to net worth for the two subsequent generations — late-wave baby boomers and much of Generation X — will be difficult to recoup before those groups begin to leave the workforce, Emmons said.
Increased net worth of today’s elderly may not translate into a boon for consumer spending, he said. While new retirees may release pent-up demand for travel and restaurant meals, that behaviour usually doesn’t last for most people.
JPMorgan Chase & Co. found that household spending peaks at age 45 and then falls in every category except health care, dropping about 43 per cent by 75.
“The overall wealth numbers are going up, but they’re not necessarily translating into spending,” Emmons said. “That’s one of those implications of this ageing population that we need to think more about.
The term Silent Generation was coined by Time Magazine in a 1951 article as the group was coming of age. It described the generation as “working fairly hard and saying almost nothing,” one that “does not issue manifestos, make speeches or carry posters.” Some 34 per cent of the Silent Generation self-identifies as Democrats, 32 per cent as independents and 29 per cent as Republicans, according to the Pew Research Center in Washington. Still, older Americans were critical to the GOP’s success in midterm elections this month. About 22 per cent of the electorate was 65 and older, and Republican candidates won their vote by a 16-point margin, Pew data show.
The generation came of age at a time when the US and global economies were picking up. — WP-Bloomberg