Senior Spotlight: Boomer Wealth Redirects Economic Spending

You’ve heard of the silver tsunami, but have you heard of the silver cohort? The silver tsunami term has been in use for years, often used to describe the projection of a sudden, sizeable shift occurring when older adults turn 65. It often came with the expectations that a big wave of seniors would retire, downsize, move and need care support at the same time. 

Newsweek used a term this week that we feel fits the demographic even better – the silver cohort. While there is no doubt a historic aging population, a tsunami would indicate one sudden wave with drastic (and negative) impacts. Instead, researchers are now talking about the effect of the silver cohort in terms of redirecting spending over time. Discussions of the silver cohort reflect the diverse behavioral trends, spending habits and healthcare needs of an aging population. And rather than one sudden wave, the cohort is more descriptive of slow transitions over time. 



So how might the silver cohort redirect spending and shape our economic and social systems? Here are a few projections:

1) Moody’s Ratings completed a new study that says Baby Boomers are “… poised to reshape large parts of the U.S. economy in the coming years as their enormous wealth and changing needs redirect spending toward health care, housing, financial services and premium experiences.”

2) Also according to Moody’s, affluent older Americans will invest their money and time into private banking, wealth management, cruise travel, luxury hospitality, premium food and beverages and health-related products (i.e. hearing aids, supplements, and elective procedures). 

3) Older Americans tend to spend less on apparel, vehicles, casual dining and mid-market retail, education & children’s products as they age. Thus, these industries are likely to experience weaker demand. 

4) Healthcare spending is also set to shift the economy, as most US households 75 or older account for 15% of industry share. 

5) Housing. It’s no secret that most Americans desire to age in place, and current rates and cost of living prices are supporting that effort. Thus we are seeing less of a sell/buy/move real estate impact and more of a home modification impact. 

6) Expect increased spending on housing maintenance, HVAC systems, roofing, smart home health monitoring and accessibility/aging in place modifications. 

7) Financial planners are also addressing that longer aging in place is often leading to critical planning for long-term care. The cost of in home support is often under-estimated and calculated as a peripheral cost rather than a primary one – whish is not necessarily accurate! 

Wow! The significance of the silver cohort on marketing, industry spending and healthcare is big – and cannot be covered in one blog. But we hope we have provided insights to help you shape how you see the ‘silver tsunami’ (or not!) and how our local and national economies and industries may be imprinted. 

Change is certain. May we continue to see the best in it! 

Cheers to enjoying the journey,

Bobbi 

Resources Used: How Boomers Could Reshape the US Economy in Coming Years; Baby boomers are setting up a showdown with millennials, aging in place and plunking down hundreds of thousands on renovating their homes; Most baby boomers want to age at home. That could be a blind spot for advisors

Bobbi Decker
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Broker Associate
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www.bobbidecker.com

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