Original Coverage & Source Attribution: komonews.com
(TNND) — The U.S. economy is entering the “age of the older consumer,” driven by an aging population and close to $140 trillion in net worth tied to 55-and-over households, according to a new Bank of America Institute report.
The demographic shift could have a significant influence on the wider economy.
“I think this does provide big opportunities for businesses that can cater for the kind of older dollar, if you like,” Bank of America Institute Senior Economist David Tinsley said.
The aging of America “isn’t in some ways a new story, but it’s a sort of accelerating, ongoing story,” Tinsley said.
BofA pointed to Census Bureau projections that people over 60 will comprise nearly 30% of the population by 2055.
Tinsley said older Americans have different time commitments than their younger counterparts. And he said that’s at the root of their different spending habits.
Older consumers have more leisure time and allocate a greater share of their card spending to groceries and travel. BofA data shows that older consumers spend relatively less on restaurants, gasoline, general merchandise and clothing.
Stephen Kates, a certified financial planner and the principal at Clocktower Financial Consulting, said older consumers are gaining influence in the economy.
And Kates said businesses will be catering to the needs of older customers as a result.
“Retailers and businesses are doing this today, but they will do so more in the future,” Kates said. “They’re going to start to skate to where the puck is going – to use that old phrase from Wayne Gretzky.”
Kates said the shift should be seen more in service-related businesses rather than product-focused businesses.
Older consumers already have a lot of stuff, Kates said.
“But the services are where the rubber meets the road,” he said.
And Kates said it won’t just be travel and hospitality vying for the dollars of older consumers.
He said older Americans own more homes than younger folks.
“As they get older, they’re going to need more help with those homes,” Kates said.
He said health care and wealth management are other service sectors primed for continued growth.
A new Gallup report found that Americans 65 and over are “thriving” at higher rates than other age groups, especially in contrast to the youngest group of adults.
Gallup largely credited increased financial security for the improved well-being of those 65 and older.
The BofA report also noted that a large and growing proportion of net worth is held by older Americans.
“When you look at the run-up in equities boosting financial wealth over the last, say, you know, five years or so, a big share of that is sitting with the older consumer,” Tinsley said. “Now, they may hand some of that down in due course – gift it and via inheritance – but it’s also there at their fingertips to spend on discretionary items. Obviously, it’s a mixed bag. Not everybody is in that position by any means.”
The BofA report noted that older Americans are not a monolith.
While some older Americans have seen significant wealth gains, others are struggling to make ends meet. The report said about 14% of Social Security recipients over 65 rely on the program for more than 90% of their income, leaving health care and other cost pressures weighing heavily on them even in a period of growing influence for older consumers.
