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Between now and 2025, America's elderly population is projected to grow 80%, reshaping demand for housing, financial products, health care and more. Our country's biggest generation isn't young anymore. Baby boomers, born between 1946 and 1964, swamped our schools in the '50s, ignited a cultural and political revolution in the '60s and '70s, helped jam maternity wards in the '80s and fueled an investment boom in the '90s. Now members of this huge generation are becoming grandparents and heading into retirement.
For this decade, that means more investment and more spending. The oldest baby boomers turn 54 in 2000. They are in the heart of their highest-income, highest-spending and highest-saving years. The youngest boomers are only 36, still nearly two decades from their peak financial period, but they still represent a large group of spenders for household items and children's goods.
By 2020, the number of people aged 55-64 will have grown by 75%. In terms of share of population, this age group will capture about 13% by 2020, up from 9% in 2000. The number of people aged 45-54 will also grow, increasing by 4%. But because total population is growing even faster, this second wave of baby boomers will lose share of population, declining from 13% of the total in 2000 to about 12% in 2020.
According to a survey by Scudder-Kemper Investments, a whopping 71% of boomers say that they have not spent enough time planning for retirement. That's a bigger share than their parents, grandparents and even members of Generation X, which means that the years ahead will be ripe for financial planners, banks and other investment-related businesses. As more and more companies phase out defined-benefit retirement plans, individuals will have to pick up the slack. They'll do so mainly by boosting contributions to Individual Retirement Accounts, Keogh accounts, 401(k) plans, etc.
Bill Burkart, president of Age Wave Impact, a marketing firm focusing on older adults, says that 40% of people over 35 don't even have a will. He believes that there are big opportunities ahead for firms specializing in the basics...Web-based firms that help people draw up wills, for example. In general, Internet offerings appealing to the elderly could boom. Today, only 12% of the 55-plus group use the Internet, while 48% of 35-to-54-year-olds do, according to market researcher Iconocast. Down the road, they'll be using the Internet to find eldercare for their aging parents, exercise tips, funeral planning, etc.
Forever Young
By 2020, the generation that kicked off America's fascination with youth will join the ranks of the elderly. The first boomers will turn 74 that year. In succeeding decades, the "very elderly" population will continue to grow. In fact, by 2025, the U.S. population 85 years and over will almost double, nearing 7.5 million. By 2050, the 85-plus group will be four and a half times the size it is today. For perspective, note that in 1970, a 65-year-old man could expect to live 13 more years, to age 78; today, he can expect to live 16 more years, to age 81.
Just because they are heading into old age, don't expect the boomers to give up some of their core values. This is a group that focuses on self-fulfillment. They are independent. Service industries will need to pitch "help" that lets the consumer "stay in control." And as they enter old age, boomers will be spending on their grandchildren. According to Gretchen Straw of AARP, last year the average grandparent spent $500 per grandchild on items such as books, clothes and toys.
Old-age and retirement patterns will be different for this generation. Retirement won't come as early or as completely as it did for earlier groups. According to Robert L. Clark, a professor at North Carolina State University, one in six men over retirement age are in the labor force today. In the next 20 years, there will be a slight uptick in that figure, he predicts, as well as a larger increase in the number of senior working women. "The decline in physical requirements of jobs will make it more likely [for people] to keep working into old age," says AARP's Sara Rix. Many will work part time or start second careers after retirement age, aided by good physical health.
Where Baby Boomers Will Live
Post-retirement moving patterns will also be unique for this group. Many will choose not to relocate to a retirement community but will stay where they worked and raised children. "Because the boomers are the first suburban generation, they're also going to be the first primarily elderly suburban generation," says William Frey, demographer for the Milken Institute. Those who don't get up and move will "age in place," making tremendous new demands on suburbs for transportation, health care services and other infrastructure to aid the elderly.
At the same time, a sizable number of boomers will move. They have more money, have traveled more than any generation before and are highly educated...all indicators of retirement mobility. But they won't move to Florida and other traditional retirement havens, which won't have the same lure for this generation as they do for their parents. Many rural locations and small towns will be attractive to boomers. According to Frey, most will look to the "New West," or Rocky Mountain states, and to a lesser extent to the Southeast. He projects fastest growth in the elderly populations of Utah, Alaska, Idaho, Wyoming and Colorado. Recently, he points out, smaller metro areas such as Myrtle Beach, S.C.; Las Cruces, N.M.; and Wilmington, N.C., have become retirement magnets.
Frey also predicts a big boost for college towns with cultural amenities and attractive facilities available to alumni of advanced ages. Burkart agrees: "Sun City will be replaced by College Town" as a major destination for retirees. Continuing education programs can expect big gains from retirees in the future as boomers retire and want to learn new skills or a new field. They are a well-educated group comfortable with going back to school and looking to live among younger people, not in some Florida city with a bunch of other retirees.
Scenery, climate and recreation opportunities will be top considerations, assuming that other things, such as health care availability, housing costs, crime rates, etc., are equal. Demand for leisure activities will be high: Golf, tennis, boating & fishing, spectator sports and other attractions, such as Branson, Mo.'s country music mecca, will lure retirees to particular areas. For many, retirement will be a vigorous, physically active period. Businesses that provide services to the elderly...perhaps as much adventure as leisure...will thrive.
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