Baby Boomers Still Driving the American Economy
By Lorrie Baumann
If you’re a retailer looking for more dough, you should follow the Baby Boomers, because they’ve got the bread. Welcome to the longevity economy, in which Baby Boomers may be outnumbered by Millennials, but they’re living longer than their parents, and they’ve still got most of the U.S.’s wealth to spend, according to market researcher Marsha Everton, a Principal in AIMSights, an international marketing company studying the intergenerational dynamics of the Baby Boomer and Millennial generations.
She and AIMSights Millennial Associate Whitney Ryan made her point during an address during this year’s International Home + Housewares Show, held in Chicago in March.
The number of adults between ages 20 and 49 – the Millennial Generation – is now 56 percent of the American population and it’s still growing due to immigration into this country, which is precisely why this generation is of such deep interest to marketers, who are spending about 90 percent of their advertising dollars courting Millennials’ purchases, according to Everton.
It’s the generation that’s been all but abandoned by the marketers, though – the Baby Boomers – that still has a disproportionate share of the nation’s purchasing power. While the Millennials now outnumber their parents, the Baby Boomers still have 70 percent of the nation’s disposable income and 83 percent of total wealth, according to Everton. “That presents a big opportunity,” she said.
Those who want to capture a share of Baby Boomers’ spending are well advised to understand where Baby Boomers are in their life stage, according to Everton and Ryan. Baby Boomers are at the age at which previous generations of Americans are retiring or preparing to retire. Baby Boomers, by contrast, are holding onto their places in the American labor force with every breath in their aging bodies. More than half of them are still employed. “This is not a group that’s settling into retirement,” Ryan said. “They are still very active in the work force.”
Adults over 50 currently make up a third of the American work force, and this percentage is increasing. “This group is the only one with a rising labor force participation,” Ryan said, adding that 40 percent of the workers who are more than 65 years old are holding down full-time positions.
It’s a myth that workers who are more than 50 years old who become unemployed for one reason or another are never coming back into the workforce, and the reality is that 40 percent of people who take a break are back in the workforce within two years – 60 percent of them in a new career, according to Ryan. They’re certainly not moving into retirement homes – they’re simplifying their lives and they’re kicking off their uncomfortable high heels, but they’re not necessarily downsizing. “They’re tidying up and decluttering,” Ran said. “Boomers really are getting rid of everything that’s not serving them.” They’re looking for products that bring them joy and that earn their space.
It’s also a myth that Baby Boomers are holding onto their jobs because they’re saving for their retirement. The reality is that it’s more likely to be fear of boredom than lack of money that’s sending them to work each morning. “Boomers are making a choice to stay in the work force,” Ryan said. “They’re not doing it out of financial necessity.”
Baby Boomers are quite likely to stay in the work force – or to reenter it – by starting their own business. In 2015, a quarter of new businesses in the U.S. were started by Millennials, but Baby Boomers ages 45 to 64 form businesses at a higher rate than other age groups. Those aged from 55 to 64 years old start new businesses at the highest rate of any age group, according to the California Association of Business Brokers, a trade association that sees profit potential in helping Baby Boomers buy and sell those businesses. Baby Boomers are feeling the loss of their economic safety net as the nation’s economy has transformed, and they’re seeing ownership of their own business as a greater source of economic security than employment in a large corporation, according to the association.
The Baby Boomers’ startups are more likely to be successful than the businesses started by Millennials: 70 percent of startups founded by adults over 50 last longer then three years, compared to only 20 percent for entrepreneurs who start their businesses when they’re younger than 50. Baby Boomers are also more comfortable with technology than many people give them credit for: 74 percent of Baby Boomers have a smart phone and 82 percent belong to at least one social media site.
Baby Boomers are also focused on health and wellness, and they’re driving this trend, according to Ryan. “They are leading the trend toward natural foods and ‘healthy-ish’ eating,” she said. “They eat to live and live to eat. Food must taste good in addition to being good for you.” It’s the Baby Boomers who are driving the demand for ingredients with recognizable names, minimally processed and locally sourced food and for tools to prepare the food at home, she said.
For retailers, what this means is that they should be smart about the Baby Boomers and budget marketing dollars to appeal to the consumers who are still outspending every other generation. They should make sure that they’re spending some of those dollars on online media, since most shoppers who access a website while they’re in a store are actually looking at that store’s website because they’re seeking more information about the products in front of them, Everton said. “Baby Boomers are looking for products that will work in a simplified space – their filters are different, and that’s what’s defining their decisions,” she said.
Baby Boomers love products that are customized, since customization appeals to Baby Boomers’ sense that they’re special. They love products that offer more than good looks. “They love sustainability,” Everton said. “They’re updating traditional looks.”
Email is still the best way to reach out to Baby Boomers, and Facebook is the social platform that reaches Baby Boomers, Everton advised. She noted that, “What you really need to do is to get people to talk to each other, so tell them stories – and then listen to them, so that you have those stories to tell.”