Conventional wisdom suggests that monetary stimulus is particularly bad for senior citizens: When the Federal Reserve holds interest rates low, retirees tend to get less income from their nest eggs. Over the past eight years, though, they’ve done a lot better than this simple logic would imply.
Consider the amount of goods and services that seniors consume — an important indicator of their well-being. According to the Consumer Expenditure Survey, the average household headed by someone aged 65 or older consumed 5 percent more in 2014 than in 2007, adjusted for inflation. That compares to declines of 5 percent for all households and 7 percent for households headed by someone aged 35 to 44.
Averages, of course, can be driven by a small number of households. That said, the apparent rise in seniors’ consumption mirrors an increase in median pre-tax income: Families headed by someone aged 65 to 74 saw an inflation-adjusted gain of about 5 percent from 2007 to 2013, according to the most recent (2014) version of the triennial Survey of Consumer Finances. For families headed by someone aged 75 and over, the increase was 10 percent. By contrast, families headed by people aged 35 to 44 and 45 to 54 suffered declines of 4 percent and 17 percent, respectively.