The Undervalued "Silver Economy"—A New Driver of Global Consumption Growth

Population aging has always been seen as a drag on economic growth, but this perception is quietly being overturned by data. As developed economies' elderly populations continue to accumulate wealth and their labor participation rates rise, those aged 65 and above are moving from the margins of the consumer landscape to the core, becoming the most structurally significant force in global consumption growth over the next decade.

According to the latest research report from HSBC Bank, in 2024, Americans aged 65 and above contributed 22% of nationwide consumer spending, a significant increase from 18% in 2014. Since 2014, this group’s nominal consumer spending has grown at an average annual rate of 6.3%, far higher than the 4.2% of other age groups. Looking ahead to the next decade, HSBC expects the real consumer spending of those aged 65+ in developed markets to grow at an annual rate of 4–5%, while other adult groups may only see about 1%.

This trend has direct and far-reaching implications for investors. Categories such as leisure and entertainment, home furnishings, and travel are expected to experience the fastest growth, thus strengthening the long-term demand logic for related industries. Meanwhile, some elderly people are actively choosing to "spend all their savings" rather than keep them as inheritance, and this behavioral shift may further unleash near-term consumption potential.

Elderly Consumers’ Spending Power is Unmatched

For a long time, mainstream economic narratives held that retirement leads to a decline in income, thus suppressing consumption. But this logic is now showing clear cracks.

The HSBC report points out that if financial expenses such as mortgage repayments, rent, pension contributions, and insurance premiums are excluded, the non-financial consumer spending of Americans aged 65 and above is already close to 90% of the all-age average, even higher than the 25–34-year-old cohort. This signifies that, in terms of day-to-day consumption, the gap between the elderly and the younger generation has significantly narrowed.

The primary driver of this change is extended employment.

Data show that in the US and globally, more elderly workers are postponing retirement, remaining in the labor market. OECD figures indicate that over the past two decades, the average actual age at which men exit the labor force has continuously risen, although it is still below the official retirement age. Longer working years directly support income levels for this group and translate into greater spending power.

Wealth Effect: Elderly Hold Unprecedented Asset Scale

The second pillar supporting elderly consumption is wealth accumulation.

HSBC cites US consumer financial survey data showing that the average financial assets of those aged 65-74 are about four times that of the 35–44 age group. In 1989, this ratio was just 2.4 times; it rose to 2.9 times in 2001, and now has surged to about 4 times. The long bull market in equities is the main driving force—the elderly, as major holders of stock assets, have benefited the most.

In terms of non-financial assets, real estate also makes a huge contribution. Data show that the total non-financial assets held by those aged 65+ far exceed those of younger groups, with real estate being the main component. This means that even without relying on further gains in financial markets, this group already has a solid asset base.

Notably, more and more elderly are actively changing their balancing acts between consumption and inheritance.

HSBC cites survey data showing that about one-third of people aged 60+ plan to spend all their savings rather than leave it as inheritance, and this proportion is still rising. Consumer spending survey data also confirms this trend—since 2019, the 65+ group is the only age cohort to continuously increase the proportion of income spent. Billionaire Jeff Bezos has publicly stated he plans to spend or donate more than $250 billion during his lifetime, which reflects, to some extent, a broader intergenerational shift in attitudes toward consumption.

Accelerating Demographic Tilt: Silver Economy Consumption Share to Rapidly Expand

Beyond wealth and income, changes in the demographic structure itself will completely reshape consumer patterns at scale.

HSBC data show that in most developed economies, from 2025 to 2035, the population aged 65+ will grow 2–3% annually, while the 20–65 labor force population will remain stagnant or even shrink.

This "scissors effect" is especially pronounced in more aged economies such as Italy, Germany, and South Korea.

Even if overall consumption growth in these countries is weak, spending by the 65+ group may remain strong, while that of the working-age population may decline due to absolute population shrinkage. HSBC’s rough estimates based on population forecasts and per capita consumption assumptions show that over the next ten years, annual consumption growth for the elderly in most developed markets could reach over 4%, while for other adults it may only be about 1–2%, or even lower.

Where Will Consumption Flow? Entertainment, Healthcare, and Home are the Biggest Winners

Clarifying the total volume of elderly consumption is not enough—its structure is equally worthy of investor attention.

HSBC’s analysis of US consumer spending surveys finds that the 65+ group’s expenditure on the following categories is significantly higher than other age cohorts: out-of-pocket medical expenses, household utilities (water, electricity, heat, etc.), home maintenance and furnishings, audiovisual equipment and services, reading materials, as well as particular food categories such as vegetables, baked goods, and seafood.

In terms of growth rate, entertainment spending, public transport, and furniture are the fastest-growing areas of elderly expenditure. HSBC believes travel and mobility are the most representative long-term trends—population aging forms one of the core rationales behind the institution’s continued optimism on the global “super trend” in tourism.

Meanwhile, even if some wealth is not spent but passed on as inheritance, it will have a profound impact on asset markets.

HSBC cites data that globally, about $100 trillion in wealth is expected to be transferred between generations, with about $4 trillion in annual flows—equivalent to the UK’s full-year GDP. When these funds pass into the hands of the next generation, a considerable portion will be converted into investments in equities and other rights-based assets, providing potential support for capital markets.

Consumption Dividends Can’t Fill the Fiscal Gap

However, the consumption potential of the silver economy does not solve the fiscal pressures that accompany it.

HSBC’s report clearly states that no matter how wealthy the elderly are, as long as government provision of pensions, healthcare, and social care remains universal, fiscal costs will rigidly increase with the deepening of population aging.

Possible policy responses include: implementing pension reduction mechanisms linked to private pension accumulation, introducing user fees for non-emergency medical services, and reinforcing inheritance taxes to cover part of social care costs. But these policies face tremendous political resistance—any government will find it difficult to advance them easily in the face of an increasingly large elderly voting bloc.

Analysts summarize in the report that the rise of silver economy consumption will profoundly reshape the structure and rhythm of global consumption, but the fiscal challenges brought about by aging will not be resolved as a result. For investors, it is essential to grasp the structural opportunities in consumption while continuing to monitor government policy approaches to fiscal challenges and their potential market impact.

~~~~~~~~~~~~~~~~~~~~~~~~

The above content is from Chasing Wind Trading Desk.

For more detailed insights, including real-time commentary and frontline research, please join [Chasing Wind Trading Desk▪Annual Member]

Risk Warning and DisclaimerThe market carries risk, and investment requires caution. This article does not constitute personal investment advice, nor does it consider individual users' unique investment goals, financial circumstances, or needs. Users should assess whether any opinions, viewpoints, or conclusions in this article align with their own circumstances. If acting on this information, responsibility is solely theirs.