Insurance News - Baby Boomers: Every Silver Lining Has a Touch of ...

While the oldest members of this generation are starting to retire, marketers should not panic- many members of this cohort will be working for years to come.

This is an important time for Baby Boomers. The oldest - born in 1946 - turned 65 last year, the point at which the majority of Americans retire. Which means their spending habits, their financial concerns, and their thoughts about retirement in general all are likely to have changed from three years ago, when we last reported on Boomers and their attitudes.

Indeed, that was just about the time when the economy took a precariously sharp drop, in September 2008. For most of us, things haven't been the same since.

According to a recent report by CNNMoney, a quarter of middle- class Americans are now so pessimistic about their savings that they are planning to delay retirement until they are at least 80 years old, two years longer than the average person is even expected to live.

So, given the fact that many Boomers aren't in a hurry to quit their day jobs, how has their outlook changed from their "pre-retirement" years - or has it? And how should marketers change their strategies, if at all, to adjust to Boomers and their current attitudes?

That depends entirely on which expert you talk to, and we interviewed several. Some subscribe to the theory that, at retirement age, consumption of "stuff " drops like a stone.

According to the Bureau of Labor Statistics, in the United States, spending reaches its climax at the age of 50, says Kenneth Gronbach, author of The Age Curve: How to Profit from the Coming Demographic Storm. That, he says, is when our earnings and consumption are at their highest and when we own our biggest homes.

"Now that the peak of the Boomers is fifty-four years old, the bloom is off the rose," he observes. "This will be disastrous for companies like Wal-Mart and The Home Depot that bet the farm that Boomers would drive their business forever."

The answer for them, he suggests, is to find a new market, like Generation Y, who are all about selection and trying new things regardless of price (for more on this younger cohort, read the feature "Gen Y: The Next Generation of Spenders" on page 20). This does not bode well for the big box retail concepts of cheap and deep with limited selection, he adds. "The big box retail model is history," Gronbach says.

Matt Thornhill, coauthor of Boomer Consumer and founder of Richmond, Va.-based Boomer Project, a marketing research and consulting company targeting this demographic, is somewhat more optimistic. "While the first of the Boomers are reaching sixty- five, the median age of Boomers is more like fifty- six. And most surveys these days report that Boomers plan to keep working at least four years past age sixty- five. So let's not jump to any conclusions that Boomers are leaving their peak earning - and spending - years any time soon."

Thornhill's advice to marketers is to ignore 50 -plus consumers at their own peril; the 18^19 -year- old group - the so-called "golden demographic" - is not expected to increase in size over the coming decade, but the 50-plus segment is rapidly expanding as the Boomer generation crosses that threshold.

According to the latest Census projections, by 2022, the 18-49 segment will number 143 million and the 50plus segment will be 122 million. For these groups, the increase over 2012 projections is 4 percent and 18 percent, respectively.

"If you want to grow your business," Thornhill says, "don't ignore almost half of the market - which is the half that is increasing in size. Develop a plan to market and sell to the fifty-plus, or plan on shrinking your business in the coming years."

WHAT'S IN THE PIGGY BANK?

According to most analyses, about one in three Boomers, or roughly 25 million, are prepared financially to retire, one in three will never be prepared, and one in three are in the middle - and things aren't looking good for them.

"That's twenty- five million who are woefully unprepared without money in a retirement account," Thornhill says. "They hope to live off Social Security and Medicare, which isn't going to work."

Most Boomers see themselves working five to seven more years than they had originally planned, and over half believe they will have to work parttime even after that, since their home values have been significantly reduced, says Britt Beemer, president and chairman of the Summerville, S.C.-based America's Research Group. At least one-third of Boomers believe their retirement years will be much more challenging than they had previously expected, he adds.

"Boomers' retirement money is in their houses," Gronbach notes. In 2007, there was $14 trillion of equity in U.S. homes. Today there is $7 trillion. "Do the math," he says. "Once the foreclosure issue is dealt with and remedied in about three years, the housing market will return with a vengeance and so will the missing equity. Boomers will begin to retire en masse in 2015."

SHOPTILLTHEYDROP

Given the unsteady economy, just how are Boomers spending their money?

Many are keeping a tight hold on their purse strings due to debt problems and being upside-down on their mortgages, Beemer says. Over 60 percent say they regret their earlier spending ways. And many have given up their credit cards for a cash/check/debit card payment strategy.

Increases in spending are mainly on healthcare - out of medical necessity and the rising costs of care.

Luxury spending is down by more than 50 percent. And Boomers' lack of disposable income has forced many to focus more on "affordable" activities, like eating out. Meanwhile, the new car is being replaced by the used car.

But with 76 million Boomers, there are certainly millions who are spending money on luxury items and/or taking more trips. In general, Thornhill says, once one reaches age 50 and beyond, priorities shift "from material things to ethereal things. Boomers are more interested in acquiring more experiences over more 'stuff.' "

Which means cruising is big, as are closer destinations with shorter easy trips that are all-inclusive and grouporiented, according to Sean Seitzinger, a consumer/shopper insights expert. "Vacations are becoming social hot spots," he says.

The biggest difference for Boomers between now and five to 10 years ago is the lasting changes brought on by the Great Recession and the "empty nest" life stage. "Boomers have fewer family obligations than ten years ago," Thornhill says, "but a greater sense of priorities when it comes to spending money."

GET OUT THE VOTE

This year is, of course, an election year, and it is likely that those issues that concern Boomers will be at the forefront of political campaigns, namely medical insurance, home values, and the economy, especially government debt.

How influential will this generation be to the election? "They are the driver of the process, mainly because they still make up a majority of the voters," Seitzinger says.

Indeed, Boomers tend to vote at high levels, Thornhill says, and are equally split between liberals and conservatives.

ACT YOUR AGE? WEO RATHER NOT!

Suddenly, Boomers are starting to look in the mirror and realize they are mortal, and they have become unsure of their quality of life to come, Beemer says.

And yet, the Boomers - because of their focus on health - will likely be the "youngest old people" in the history of the world. "Sixty is the new forty," Gronbach says.

"Overall, Boomers aren't trying to find the Fountain of Youth, but the Fountain of Vitality," Thornhill explains. "They know they are older - not aging, just growing older - so they aren't trying to fool anyone that they are still young. But they will spend time and money doing whatever is necessary to maintain vitality."

Thornhill sees this in five areas: financial vitality, physical (health, fitness, and appearance) vitality, social vitality, mental vitality, and spiritual vitality.

Marketers take note: If you have a product or service that helps Boomers maintain that vitality until they take their last breath, Thornhill says, you'll be making money for years to come.

For instance, there seems to be an upward trend in plastic surgery procedures, not to "fix things to look younger, but to slow down the signs of aging," Thornhill notes. "No one wants to freeze their face in time like Cher or Joan Rivers. Rather, they want to reduce wrinkles or age spots so they look vital, active, healthy - not younger."

Along with their quest for vitality, Boomers are placing a high priority on family, mainly because families are so fragmented these days. Half of all Boomers have been divorced once, and 25 percent have been divorced twice, Gronbach says.

How do Boomers want their family - and others - to view them? As young, thin, and rich. . . and relevant, vital, and engaged.

SO WHAT DO YOU THINK?

Boomers' habits aren't the only things that have changed since we took a good look at them in 2008 - their attitudes have as well.

In general, Boomers are afraid of dying - and are really afraid of dying poor, Gronbach says. As a result, they are using whatever self-control they can muster with their credit cards, and shopping lists are replacing their previous, more carefree spending patterns.

What really irks them is marketers who cater to the young, Thornhill says. "Their wallets will punish those who ignore them," he says.

One misconception is that Boomers are fearful of technology and aren't participating in the newest high-tech devices. Remember that it was the parents of Boomers who had "12:00" flashing on their VCRs, not Boomers - who are consuming it all.

"The one area that Boomers will spend their money without too much hesitation is on technology and ease- of- communication devices," Beemer says. "Smartphones are a priority, and while it maybe a bit much to call Boomers tech- savvy, they definitely live on their iPhones, just like the younger generation."

In fact, Boomers are the leading users of online dating services. "Technology has been a great way for Boomers to feel connected and relevant," Seitzinger notes.

According to Pew Internet Research, while the frequency of social networking usage among young adult Internet users under the age of 30 was stable over the past year, among the Boom er- aged segment of Internet users, usage on a typical day grew a significant 60 percent (from 20 percent to 32 percent).

"The graying of social networking sites continues, but the oldest users are still far less likely to be making regular use of these tools," says Mary Madden, a senior research specialist at Pew. "While seniors are testing the waters, many Boomers are beginning to make a trip to the social media pool part of their daily routine."

And while Boomers have been a little slower on the uptake in terms of using the Internet for online purchases, the habit is definitely growing on them, Seitzinger says.

The Internet is replacing conventional mail order and today is used for maybe 10 percent of their purchases, Gronbach says.

In terms of communication with the companies they do business with, Boomers want to use technology, Beemer says, "but you also see them back in the teller lines at banks because some are still leery about ATMs. They also hate voicemail or anything that prevents them from getting answers or resolving a problem quickly."

Boomers' expectations of the companies they do business with haven't changed much in the past five years. They want companies to respect them more by taking back items they've bought that they don't like or that don't work as well as they should. They want value, service, and a real person to solve their problems, and they embrace the concept that companies need to be responsible stewards.

LOCATION, LOCATION, LOCATION

Until the real estate crisis is fixed, Boomers are staying put.

While a few years ago, many considered downsizing or moving to retirement communities in warmer climates, today they are choosing to stay near children who they pray will care for them later in life, Beemer says. "The real estate crisis has destroyed their piggy bank," he says. "Boomers never envisioned that their homes would not increase in value."

But once the housing crisis is fixed and they can sell their homes and retrieve some of their equity, "we suspect they will overwhelm Florida, the Carolinas, Arizona, and Nevada," Gronbach says. "Ground zero for the Boomers' retirement is the housing crisis and foreclosures. Look for an aggressive assault on the major banks by the attorneys general of the states hardest hit with foreclosures. We have only cleared about twenty- five percent of the six million bad mortgages since 2009. This is way too slow. Banks will be pressured to mediate with troubled homeowners to slow foreclosures and take their homes off the market.

"Once the housing market returns, the U.S. economy will rebound," he adds. "For every house sold, a job is created. For every house built, four jobs are created. Housing is the economy."

THE BOTTOM LINE

Experts point out that marketers and those in the CRM industry who are targeting Boomers - or who plan to - need to remember that the Baby Boomer generation has been marketed to since they were five-year-olds watching Saturday morning cartoons. As a result, they are savvy and experienced consumers.

"Appeal to them and they will reward you many times over," Thornhill says. "Make them feel marginalized and they will penalize you.

"Your goal should not be to create a separate program for reaching fifty- ? lus but on developing a program that is 'ageless,' appealing to all ages and generations," he says. "Ageless marketing is the future. Bet on it."

Boomers

Born between 1946 and 1964

Numbers: About 76 million

A quarter of middleclass Americans don't expect to retire until they are at least 80 years old, two years longer than the average person is even expected to live.

"Twenty-five million [people] are woefully unprepared without money in a retirement account. They hope to live off Social Security and Medicare, which isn't going to work."

Being Old Is OK, Being Made to Feel Old Isn't

In her new book, What's Your Point? Cut The Crap, Hit The Mark & Stick, strategist, futurist, and author PJ Wade provides insights into Boomers' attitudes- and the attitudes of others about Boomers:

* Talk to enough Boomers and you begin to hear one viewpoint above all others- they are not as upset about aging as they are about being made to feel old.

* In the 21st century, no one wants either the handful-of-quiet-years-tillyou-die version [of retirement] or the drop-out-and-fade-away version, which were the only choices available to our parents and grandparents. WeVe progressed from a handful of quiet years to two, three, or more active, involved, purposeful decades. The new reality for Boomers is extended living, well into their 80s and 90s and beyond.

* It's common knowledge that we are living longer, healthier, more active and completely connected lives, yet companies persist in selling to Boomers by regurgitating the "R" word [retirement]. Financial products and services continue to be linked to this never-popular concept, and to negative and increasingly out-of-date aspects of aging.

* How can companies innovatively design and successfully sell 21st-century products using 19th-century concepts and 20th-century thinking? Applying the retirement label to our decades of active living is like talking about your car as a horseless carriage or your MP3 player as a digital eight-track tape deck.

* Stereotypes and myths about aging persist. For instance, exercise and healthy eating have gained ground as solid anti-frailty strategies. They are now also proven essential elements for lifelong brain health. Low emotional maturity leaves too many Boomers ignoring these proven positive aging strategies, and spending too much on cosmetics, medications, and procedures that promise "easy" alternatives.

"The one area that Boomers will spend their money without too much hesitation is on technology and ease-ofcommunication devices."

Paul Hyman was editor-in-chief of several high-tech publications at CMP Media, including Electronic Buyers' News.

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