Marketing to Seniors: 10 Differences About Boomer vs. Millennial Market Potential
June 1, 2021
Given all the talk about Boomer and Millennial market potential, here are ten items that compare the financial clout of the over-50 cohort with its under-50 counterparts, gleaned from the U.S. Bureau of Labor Statistics (2018), that are worth considering.
- Consumer spending. Households headed by someone over 50 years old make up an increasing share of total consumer spending versus households headed by someone under 50. The over-50 group is now responsible for 52% of total U.S. consumer spending, up from 44% just ten years ago. And the percentage of Boomer spending will continue to grow for the foreseeable future.
- Spending momentum. Though conventional wisdom suggests consumer spending should diminish considerably after age 50, that’s simply not happening! Households headed by someone 50+ are spending at nearly the same rate as under-50 households – an average of $59,236 per household per year versus $60,984, respectively.
- Spending gap. The combination of increased consumer spending share and comparable spending momentum results in a growing spending gap between the two cohorts. Total consumer spending by over-50 households was $350-billion more than under-50 households in 2017 – and that gap is four times greater than what it was just two years earlier.
- National ramifications. This increased 50+ household spending has had a significant impact on the U.S. economy. From 2016 to 2017, 69% of total U.S. consumer spending growth was generated by purchases made by the over-50 group.
- Household income. The capacity for greater consumer spending by older adults has to come from somewhere! Over-50 households combine to generate $67-billion more income annually than under-50 households.
- Accumulated wealth. In the past year, the average net worth of the 50+ cohort increased approximately $20,000 – nearly three times faster than it did for the under-50 group that grew +$7,400. Roughly 75% of total annual U.S. household net worth growth is attributable to that older group.
- Home ownership. Without question, home ownership makes up a large part of most people’s overall wealth. 77% of over-50 households are homeowners, whereas only 47% of under-50 households own their own homes. Furthermore, the older segment is less likely to carry a mortgage (45% vs. 79%), and that frees up money to spend on a wide variety of other home-related categories – which takes us to #8…
- Home spending. Not only does the 50+ cohort represent a significantly higher percentage of total homeowners, they spend more on their homes and on related product categories. They are responsible for more than half of all spending on pets (61%), household supplies (60%), vehicle repairs (60%), small appliances (58%), auto insurance (58%), major appliances (56%), audio/visual equipment/services (55%), household furnishings/equipment (54%), and food eaten at home (53%).
- Other category domination.Beyond the home, there are other major categories where the 50+ households dominate spending, including life insurance and other kinds of personal insurance (67% share of market), healthcare (65%), and new cars/trucks (54%). They also represent the largest share of spending in some other categories you might find surprising, like entertainment (53%) and personal care (51%).
- Population growth. Finally, look at core demographics. Based on government population projections, the number of 50+ households will grow at roughly twice the rate as under-50 households over the next five years, all but ensuring the continued spending dominance of the older cohort.
The takeaways here are pretty obvious.
The value of the over-50 market is significantly greater than the value delivered by younger cohorts. But you probably already knew that. Boomers have been accumulating wealth for a half-century. So it stands to reason they have more money available for discretionary spending – on themselves, on their children and grandchildren, on travel, and to give away to charitable causes.
They will continue spending on their homes, too, even though they are not necessarily in an acquisition-stage of life. According to AARP, 86% of adults 65+ plan to remain in their homes for the rest of their lives. Beyond the ongoing upkeep of their residences, significant investments in home improvements that will allow them to remain in their homes will also be required.
Affluent Boomers are going to be market drivers for another 20-30 years. Their market potential will remain significant. Don’t make the mistake of giving this valuable cohort a short time horizon.