Bank of America report sees 3.6% Social Security bump easing older consumer squeeze
Older households show weaker spending growth than other generations.
The short version
- A 3.6% Social Security adjustment arrives in 2027.
- A temporary federal tax deduction helps seniors aged 65 and older.
- Real incomes could improve if inflation cools as forecast.
- Better purchasing power helps close the spending gap.
Older American households are falling behind other age groups on discretionary spending despite large wealth gains at the top, according to a report from Bank of America, which owns Bank of America. Bank of America aggregated credit and debit card data to show that baby boomer and traditionalist households have posted weaker spending growth than other Americans for roughly a year.
That marks a sharp reversal from 2022 and 2023, when older households outpaced everyone else. The report ties part of this slowdown to how wealth is distributed within older cohorts. Using 2025 data from the Federal Reserve, the central bank of the United States, analysts found that about two-thirds of net wealth among households headed by someone older than 65 is held by the top 10% of those households.
Stock market and asset gains are doing little to support spending for most older consumers who rely on fixed incomes. Households over 62 that rely only on Social Security have average income and spending close to half that of peers drawing from multiple sources.
Two policy levers could support older budgets in the near term according to the bank. A 3.6% Social Security cost-of-living adjustment and a temporary federal tax deduction for those 65 and older could boost real incomes in 2027 if inflation cools. If benefits rise faster than prices next year, older households may finally narrow the discretionary spending gap with younger workers.
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