Senior Citizens the Most Important Demographic for Bank Deposit Rates

When speaking of the banking system and bank rates, we often forget that this system is comprised not only of buildings, computers, and money, but of people. One vivid illustration of this fact is to ponder the role that American senior citizens may increasingly play in the interest rates paid for CDs, money market accounts, and savings accounts.

First of all, there are going to be many more people who fit the category senior in the coming years. As this article about the aging of America shows, statistics indicate that by the year 2020 there will be 115 million senior citizens in the U.S.

But it is not only about numbers, it is also about mentality. This new class of seniors, at the risk of putting it bluntly, has some conflicting attitudes about money. On the one hand, Baby Boomers have acquired wealth unlike any other generation in American history. At the same time, the fear of running out of money in old age is palpable.

Obviously each individual person will make varying choices, but as a whole, are there certain saving trends among this group that will affect interest rates on CDs, money market accounts, and savings accounts?

For example, if banks do keep rates low, will seniors seek other options for making money with their money, or will the safety of an FDIC-insured deposit account rule the day?

As of now, there are more questions than answers on this front, but certainly this demographic shift will have far-reaching consquences for many aspects of the banking system.