By Saeculum Research
- Boomers will shake up the economy as they enter elderhood. In the coming decades, demographics and generational change will power the impending senior wave. Boomers will swell the nation’s oldest age brackets—bringing their attitudes and preferences with them. Not only will seniors be buying more, but they will also have new priorities, which will fuel a wide variety of industries. Health care will experience the largest influx of Boomer spending. Home improvement and travel and hospitality will also cash in on seniors that prioritize family and New Age values. And the auto, film, and vintage sports industries will continue to gray with their primarily Boomer customer base.
- Sharing-economy technologies that cater to aging Boomers are a smart investment. A growing number of startups are doubling down on Boomers. Whether it’s meal delivery kits or Uber rides for seniors, the possibilities are endless. And with more Boomers living independently, the demand for sharing-economy services is sure to grow. Some companies have already jumped on the trend. Envoy, for example, allows people to hire stay-at-home parents to do a wide array of everyday activities—from shopping to transportation to household chores. GreatCall (the company that sells Jitterbug phones) now gives customers the ability to press a single button to contact an operator who can hail a Lyft for them—no app required!
- Companies that emphasize telehealth are a smart investment. According to a 2015 survey, only 15 percent of 1,500 family physicians used telehealth in their practices last year. But that number is certain to grow in the coming years. Although Medicare currently has restrictive rules on telehealth payments, lobbyists are boosting their efforts to pass legislation that will provide more financial support for services. Telehealth services will be particularly notable in rural areas where people have trouble accessing care. Third-party telehealth companies like Teladoc, American Well, and Healthsense offer remote health monitoring services and telephone consultations.
- Boomer culture will be ageless. In recent postwar decades, the cultural touchstones of seniors were often shunned by younger generations. When G.I.s and Silent dominated older age brackets, Benny Goodman or Frank Sinatra were widely considered “old-people music.” Today, Boomer icons like Led Zeppelin or Mick Jagger don’t have the same associations. The widespread generational appeal of Boomer culture explains why it is often used in advertisements not just for older folks, but for younger audiences as well. Age itself has acquired a certain cool. (The Dos Equis man, anyone?) The cross-generational appeal of Boomer culture will further narrow the generational gaps across extended families headed by Boomers.
According to a recent Wall Street Journal article, the senior care franchise business is booming and shows no signs of slowing.
Small wonder: An impending wave of Boomers is poised to swell the 65+ age bracket in the coming decades. What’s more, Boomers’ distinctive attitudes and preferences will set them apart from previous generations of seniors. They won’t just be buying more; they will be buying differently. Many industries will be transformed along the way. Health care will experience an explosion in Boomer spending. The home improvement and travel and hospitality industries will benefit from a generation of family-centric, New Age seniors. And the auto, film, and sports industries will begin to go gray. Looking back, Boomers have had a profound effect on every age bracket they have entered throughout their lives—and old age will be no exception.
The impending senior wave is powered by two distinct drivers. First, demography: Boomers will be entering older age brackets in record numbers over the next couple decades. Last year, 14.9 percent of the population was age 65 or over. By 2035, that share is projected to rise to 21.4 percent. In that same time period, the share of the population over age 75 is projected to nearly double from 6.4 percent to 11.1 percent.
Second, generational change: Boomers will bring different attitudes and behaviors shaped by their collective experiences into older age brackets. Most notably, Boomers will be less likely to live with spouses or same-aged peers (in senior communities or long-term care). Instead, most will be closer to their families, while a growing minority will be living alone. Overall, Boomers will be more family-centric than previous generations of seniors. In addition, the lifelong Boomer obsession with values, culture, and spirituality will begin to sway senior purchasing behavior—for example, millions of seniors will start supplementing traditional medicine with New Age alternatives.
Accompanying these quantitative and qualitative changes are socioeconomic shifts within the Boom Generation. Compared to preceding birth cohorts, Americans reaching age 65 or age 75 over the next two decades will (on average) experience declines in median household net worth, in retirement income, and in measures of wellness (such as freedom from chronic disease; see: “Boomer Malaise”). Last-wave Boomers are more likely to live alone, be unmarried or childless, and be part of an immigrant or minority population than their first-wave counterparts. Late-wave Boomers will bring a decidedly more hourglass-shaped income distribution to a “golden-years” age bracket that has in recent decades been known for its strong middle class.
Across all economic sectors, of course, the biggest transition will be the explosion in health care spending. The reason is simple: Old people spend many times more per capita on health care than young people. According to the Kaiser Family Foundation, per-capita Medicare spending increases exponentially by age—peaking at age 96. As the U.S. population becomes top-heavy with seniors, the expenses associated with older age brackets will skyrocket. While a pipeline of non-stop demand is good news for health care providers’ topline growth, it’s their bottom line that is in danger. As public programs come under increasing regulatory pressure to cut costs, profit margins will be squeezed.
Boomers are already triggering an explosion in Medicare Advantage (MA) spending. This will continue to accelerate. Since the passage of the Affordable Care Act, MA enrollment has increased by more than 50 percent to an all-time high of 17.1 million enrollees—or 32 percent of all Medicare beneficiaries. The CBO projects that about 41 percent of Medicare beneficiaries will be enrolled in MA in 2026. Why is MA so popular? These plans offer a more comprehensive set of benefits than traditional fee-for-service Medicare. Members are guaranteed access to an integrated network of doctors, out-of-pocket limits on health care services, and additional benefits like dental and vision programs. These qualities make it popular among both high-income and low-income seniors—further highlighting the growing socioeconomic “spread” within this generation.
While last-wave Boomers will put pressure on the system with their health problems, first-wave Boomers will fund the system with their demands for extra services (at higher premiums). In the long run, MA could potentially generate HMO-like cost savings over time (unlike fee-for-service Medicare) with growing bipartisan support.
Perhaps the largest health care expansion of all will occur outside the realm of insurance. With more seniors living independently and alone, Boomers (and their children) will increasingly hire professionals to handle everyday tasks like household chores and transportation. (Since these services fall outside the CMS’s strictly medical “home health care” category, these costs will be largely out of pocket.) Similarly, Boomers will also spearhead growth in New Age products and services—including supplements, coaches, traditional Chinese medicine, and other “wellness” remedies.
The senior wave will affect more than health care. The home improvement industry is also poised to gain from a generation of family-centric seniors. As we have discussed before (see: “Home Remodeling Flexes Its Muscles”), Boomers have become the biggest spenders on home improvement in recent years as they prepare to “age in place.” This doesn’t mean, however, that Boomers will be living alone. Many are making upgrades to accommodate their adult children and grandchildren.
Travel and hospitality will benefit from senior travelers with new priorities. As we have discussed before (see: “The New Senior Traveler”), Boomers will be looking for meaningful multigenerational experiences. Boomers will gravitate toward accommodations that allow the entire extended family to share the same space rather than be divided by hotel doors. When they aren’t spending time with their families, Boomers will want to go on their own adventures of self-discovery. Unlike Silent seniors who traveled together in large tour groups, Boomers will seek out “voluntourism” or ecotourism or food tourism opportunities on their own.
For other industries, aging Boomers represent the beginning of the end. In the auto industry, Boomers will continue to be more likely to buy high-end, high-margin cars than younger generations. (In 2011, one vehicle was purchased for every 14.6 drivers ages 55 to 64—compared to one for every 34.9 for ages 25 to 34.) At the movies, attendance among younger audiences is falling, while attendance among older audiences is on the rise. (See: “The Hard Truth Facing the Reel World.”) And finally, there is the sports industry. According to a 2013 Nielsen report, NASCAR, MLB, and the PGA had the oldest audiences with 49 percent, 50 percent, and 63 percent over age 55, respectively. These sports will continue to gray.
Looking ahead, aging Boomers will have a substantial economic impact on society. Although their size and spending power will benefit a number of industries, they will also put our system through the ultimate stress test. At this point, no one knows how the nation will handle a graying population—but it is a challenge that younger generations will have to take on sooner rather than later.
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