Baby Boomers are a generation made up of all the people in the world born between 1946 and 1964. They are called “boomers” because after World War II there was a massive increase in birth rates, especially in the United States and Europe. Today they make up the bulk of the population in most if not all of the developed world.
What does this mean for investors?
Today there are about 80 million “boomers” in the United States. In 2030 there will be approximately 57.8 million of them at or past the retirement age of 65 which basically means that a large, hard working and idealistic generation will stop working and start spending their lifelong savings. 2030 is the “sweet spot” when smart and successful companies will start truly cashing in on the bulk of those savings flowing out of retiree’s pockets. If you have grandparents or know elderly people then you know about the kind of purchasing power they wield and the kind of spending decisions they make; now imagine most of the population in 2030 will be like that.
Consider their situation: all of a sudden upon retirement they have a life’s worth of savings and don’t have to work nor care for a family anymore (i.e. no big responsibilities), plus they want to make the best out of the remainder of their lives and not only make it worth it but also make it last. To me they are not unlike teenagers with money, with the added bonus that they will not only spend freely in some areas of their lives (like travel or luxuries) but also carefully in others (like health care or financial services). This opportunity has something for everyone.
What will they spend on?
The first thing to consider is that elderly people more often than not will spend on quality regardless of the price when they perceive it is worth it. Health care is clearly one of these areas and they will spend big on it. I believe that the reason for this preference towards quality will stem from believing or knowing that they “don’t have a lot of time left” and the fact that they have already been making sacrifices on quality their whole lives for family and to save for retirement. However, it is important to factor in the notion that they will also be prudent with their savings and try to hold on to them as much as possible. They will probably want to make that nest egg last in order to remain independent and then be able to leave some of it to their children or grand-children.
Aside from health care which is an obvious industry to focus on there are a myriad of other needs that retired baby boomers will need satisfied, both directly and indirectly. Their spending power and spending patterns will shape the coming world in a big way.
This blog aims to explore the issue of retiring baby boomers from the point of view of the investor that wants to cash in on this amazingly historic long-term opportunity.
Baby Boomer demographics – a smart investment play
Baby Boomers are a generation made up of all the people in the world born between 1946 and 1964. They are called “boomers” because after World War II there was a massive increase in birth rates, especially in the United States and Europe. Today they make up the bulk of the population in most if not all of the developed world.
What does this mean for investors?
Today there are about 80 million “boomers” in the United States. In 2030 there will be approximately 57.8 million of them at or past the retirement age of 65 which basically means that a large, hard working and idealistic generation will stop working and start spending their lifelong savings. 2030 is the “sweet spot” when smart and successful companies will start truly cashing in on the bulk of those savings flowing out of retiree’s pockets. If you have grandparents or know elderly people then you know about the kind of purchasing power they wield and the kind of spending decisions they make; now imagine most of the population in 2030 will be like that.
Consider their situation: all of a sudden upon retirement they have a life’s worth of savings and don’t have to work nor care for a family anymore (i.e. no big responsibilities), plus they want to make the best out of the remainder of their lives and not only make it worth it but also make it last. To me they are not unlike teenagers with money, with the added bonus that they will not only spend freely in some areas of their lives (like travel or luxuries) but also carefully in others (like health care or financial services). This opportunity has something for everyone.
What will they spend on?
The first thing to consider is that elderly people more often than not will spend on quality regardless of the price when they perceive it is worth it. Health care is clearly one of these areas and they will spend big on it. I believe that the reason for this preference towards quality will stem from believing or knowing that they “don’t have a lot of time left” and the fact that they have already been making sacrifices on quality their whole lives for family and to save for retirement. However, it is important to factor in the notion that they will also be prudent with their savings and try to hold on to them as much as possible. They will probably want to make that nest egg last in order to remain independent and then be able to leave some of it to their children or grand-children.
Aside from health care which is an obvious industry to focus on there are a myriad of other needs that retired baby boomers will need satisfied, both directly and indirectly. Their spending power and spending patterns will shape the coming world in a big way.
This blog aims to explore the issue of retiring baby boomers from the point of view of the investor that wants to cash in on this amazingly historic long-term opportunity.
Numbers: U.S. Census Bureau – Age Data of the United States