High earners are crucial part of the U.S. economic picture, and their immense spending power can propel the nation’s economic growth. Now, new data reveals that high earners have curtailed their spending. This could contribute to slower economic improvement, but presents an opportunity to financial professionals. The lack of spending from high earners is linked to concern about the economy’s lasting health in the wake of the financial crisis. While this has impacted people’s desire to spend money, that same concern could push them to invest in insurance solutions that protect their savings and income into retirement.
Consumer spending slows
The economy has been recovering from the wounds left by the financial crisis that hit near the end of the last decade, but it has yet to hit the highs experienced after the turn of the century. New consumer spending data indicates the recovery will be even slower than initially anticipated. In April, personal consumption expenditures actually decreased slightly, according to the Bureau of Economic Analysis. The decline in spending wasn’t limited to one segment of the population, either. It seems high net worth people have cut back on discretionary spending alongside other demographics.
High earners decide not to spend
With about 20 percent of U.S. households earning more than $100,000 a year, high earners can have a substantial impact on the country’s overall economic health. Unfortunately, these people aren’t spending like they used to. Bloomberg spoke with Ron Kurtz, the president of the American Affluence Research Center, who noted that these wealthy people often carry a middle-class mindset. While they may have the means to weather a financial storm, they are still concerned with wealth preservation and avoiding unnecessary expenditures.
The shift away from consumer purchases is undoubtedly bad news, but it could be a boon to insurance providers who need an opportunity to speak with clients about retirement planning options.
Thinking about the future
The financial caution shown by high earners is rooted in a desire to preserve and build on existing wealth. Insurance solutions that guarantee consistent retirement income make it easier to protect savings from unexpected expenses later in life, and in many cases offer peace of mind to these consumers. With life insurance, consumers can save money that allows them to ensure a legacy for their beneficiaries while protecting their principal savings. Financial professionals who appeal to high earners’ economic concerns can turn a lack of spending into a lasting financial relationship.