Wednesday, 23 February 2011

CONSUMER FINANCE: Older Americans Are Powerful Consumers

By Marshall Loeb, A DOW JONES COLUMN
Business people who are eager to sell increasing amounts of their goods and services may be ignoring an active category of consumers. It consists of people aged 65 and over--a group that now numbers about 37 million, or an estimated 12% of the population, according to the U.S. Census Bureau.
These older Americans are an underserved part of the consumer population, says Jakob Nielsen, a leading expert on Internet use. "Based on the number of businesses that have bought reports for each age group, there is three times as much interest in catering to teenagers as for seniors, [but] there's probably 10 times as much money to be made from seniors," Nielsen said.
Older adults are rapidly becoming the largest market segment in society and will possess the most purchasing power of any demographic, according to a task force at the International Longevity Center in New York. Yet advertising in many industries has been slow to respond to the new demographic realities brought upon by an increasingly aging population.
Population groups of Americans aged 65 and older, according to 2004 census data, are concentrated in seven states: California has the highest number of consumers who are aged 65 and over (3.8 million), followed by Florida (2.9 million), New York (2.5 million), Texas (2.2 million), Pennsylvania (1.9 million), Ohio (1.5 million) and Illinois (1.5 million).
But it is not just about a growing population. This group of people tends to be fairly affluent, too. In 2000, the median net worth of households aged 65 and over was $108,885. In contrast, householders under the age of 35 had a median household net worth of $7,240. And 81% of householders aged 65 and over own their own homes compared with only 68% of all householders.
Adding this all up suggests that this is a big audience to be tapped, especially for items in which they have shown strong interest and need, including travel, dining out, prescription medications and other health-related products and services.
The expendable income of this group is not static, either, as more are staying on the job beyond the typical retirement age of 65. Some continue to work to increase their retirement funds or simply because they want to continue working.
Only 20 years from now, when the oldest baby boomers will be 85 and the youngest 67, approximately 70 million Americans will be over 65. By 2030, the U.S. Census Bureau predicts, those over 65 will make up 20% of the population. Most important, the fastest growing segment of the population is the over-85 group.
Typical of this affluent older group are Jill and Marty Cammarata, both 67 and living in Scarsdale, N.Y. Both are eager to stay physically and mentally active. "Maintaining our health is more important than anything else" says Marty, who spends several hours every day preparing for various bicycling competitions. "I try to get in 100 miles per week" he says. He and his wife also spend time watching their diet. Jill's interests also range from making jewelry to working for non-profit organizations. And both spend time watching their investments. Says Marty, "our number one goal is to stay healthy and stay around to see our grandkids get married and have kids of their own."
(Marshall Loeb is a writer for MarketWatch. He can be reached at 415-439-6400 or via email at AskNewswires@dowjones.com.)

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