Why Do Baby Boomers Continue to Save So Much in Retirement?

The transformation of baby boomers—once viewed as carefree consumers—into diligent savers can be attributed to various factors.

In France, economic growth relies heavily on consumer spending. However, the impact of inflation since 2021 has slowed this momentum for many households. 

According to recent data from INSEE, the economic shock was felt particularly acutely by the least affluent 10 percent of households, with an impact “more than twice as severe as that experienced by the wealthiest 10 percent.” As a result, low-income and middle-class households had to cut back on their spending, even on essentials such as food and energy.

In contrast, more affluent social groups weathered the storm better thanks to robust growth in wages and income from their assets (dividends, etc.). The elimination of the housing tax also helped strengthen their financial position. The wealthiest 20% of the population thus has a high savings rate, reaching 28% of gross disposable income, compared to just 3% for the least affluent.

One surprising finding concerns members of the baby boomer generation, who have long been associated with a culture of consumption during the Trente Glorieuses. It appears that these individuals—particularly the oldest among them (those born before 1953)—have belatedly adopted a savings-oriented approach. They even manage to save, on average, a quarter of their gross disposable income, thereby exceeding the average savings rate of French households from the previous year (17.5%).

The next generation of baby boomers—born between 1955 and 1963 and currently aged 60 to 69—also has a notable savings rate of 18 percent, compared with just 8 percent for those under 30. This trend challenges Franco Modigliani’s “life cycle” theory, which suggests a shift from saving to spending upon retirement. Surprisingly, older adults opt for riskier investments than younger people, likely because the uncertainties associated with annual income have disappeared.

The transformation of baby boomers—once perceived as carefree consumers—into diligent savers can be explained by various factors. Higher pensions, the absence of child-related expenses, and the fact that many own their primary residence provide ample room for saving. Motivations include France’s tradition of saving, building a reserve to cover long-term care expenses, and the desire to pass on wealth to future generations. This trend aligns with the observation that France has become a society where inheritance accounts for 60% of total wealth, compared to 35% in the early 1970s. Retired farmers and self-employed individuals stand out as the economic groups with the highest savings rates, reaching 35% and 31%, respectively.