Social Security COLA, tax break could narrow spending gap for older consumers in 2027

The spending growth of older consumers has trailed other age groups for the past year despite sizable wealth gains at the top. But a 2027 cost-of-living adjustment for Social Security recipients and temporary tax break could modestly improve their purchasing power, according to a Bank of America Institute report released last week. Bank of America aggregated credit and debit card data to show that baby boomer and traditionalist households have posted weaker discretionary spending growth than other Americans for roughly a year. That marks a reversal from 2022 and 2023, when older households were outpacing others. Boomers were defined as those born between 1946 and 1964, while traditionalists are those born before 1946. The report ties part of this slowdown to how wealth is distributed within the older cohorts. Using 2025 data from the Federal Reserve Survey of Consumer Finances, the bank found that about two-thirds of net wealth among households headed by someone older than 65 is held by the top 10% of these households. This concentration means that stock market and asset gains may do little to support spending for most older consumers. Labor income boom skips many retirees Overall ...