I’d like to share with you our view of the most important, inevitable shift in the global marketplace. The aging profile of America and the economies of Europe … often called the Silver Tsunami.
The question I ask you as citizens of a state with the fastest growing 65+ population in the nation is – will you miss this wave, or will you ride it to prosperity?
It’s indisputable: we’re all facing this. We simply have to decide how to use it to build not only a vital, vibrant, longevity economy, but also a longevity society.
Let me share with you how AARP sees the challenges and opportunities. I also want to tell you what we are learning about 50-plus consumers, and paint a quick picture of the vast demographic shifts taking place:
- Over the past six decades, the world experienced only a modest increase in the share of people aged 60 and over — from 8% to 10%.
- In the next four decades, this group is expected to rise to 22% of the total population – a jump from 800 million to 2 billion people.
- Globally, life expectancy has increased by two decades since 1950, from 48 to 68. Today’s 50+ Americans can expect to live for at least three more decades.
- In wealthy industrial countries – life expectancy = 82 years.
- In less developed countries, it equals 74 years. That gap, by the way, is narrowing.
- Meanwhile, fertility rates have plummeted.
In the U.S., 10,000 of us turn 65 every day. This continues for the next 18 years.
Think about this: of everyone who ever lived to age 65 since the dawn of humans, two-thirds are walking the earth today!
Hawaii is experiencing the same phenomena, to a greater degree in certain respects:
- According to Hawaii Business Magazine, Hawaii has the fastest growing 65+ population in the nation, expected to grow by 81 percent by 2030;
- This lovely state has the greatest longevity in the country, but only half as many nursing home beds per capita as the national average.
- In fact, Hawaii ranks last in the number of long-term care beds available in the US.
- Hawaii’s long-term care costs are among the highest in the nation – with a private room in a nursing home averaging $145,000 a year, which means one year in a nursing home costs more than a four-year education at the University of Hawaii!
- We know that unpaid family caregivers provide care for their loved ones worth close to $2 billion in Hawaii, but there will be fewer such folks available by 2030 – from four caregiver-age individuals for every older adult, down to two.
So, challenges – yes! Opportunities? Also yes!
The size and length of the “longevity bonus” should prompt us to ask, “How do we build a longevity economy?” The scary and exciting news is, it’s never been done before, because human society has never been here before.
This shift is a remarkable tribute to public health, medicine, education and economic development.
Still, people are worried that there are not enough young people to support the older population and to spur a growing economy. This is a big switch. Shortly after WWII, anxiety over youth unemployment drove societies to urge early retirements, a trend that is now taking a U-turn.
According to the European Commission, the average age of retirement in Western Europe was 65 in 1960, but 60 today. In the US, average retirement age was 66 in 1960, down to 61 today.
Now, the concern is about future workforce scarcity and the economic burden of retirees.
Conventional wisdom says an older population requires more health and other services, and produces less wealth, than a younger population. Existing pension and social security programs are under pressure.
It’s not surprising that doomsday scenarios abound: predictions of market meltdowns, economic growth slowdowns, and the financial collapse of pension and healthcare systems are among them. Here in Hawaii, a long-term care crisis.
There are certainly challenges. But let’s go back a moment – to the “bonus” part of the longevity economy. Because I believe that changing demographics are also an opportunity.
How we anticipate and adapt to these changes will determine whether longer lives will also be better lives.
Tens of millions of people are reaching their so-called “Golden Years” and discovering that they still want to make a difference in the world. Because of increased longevity, and generally better health, they still have a lot of years left to do it. They still aspire to retire, but they want more.
Let’s take a look at Opportunity #1 – The Marketplace
In the U.S., 78 million Boomers have changed every marketplace. Keep in mind, next year, all of them will have turned 50. Not only Boomers, but the 50+ population through all its ages and stages, makes up a roaring consumer market. Oddly, hardly anyone markets to them.
In this country, those over 50 control the bulk of wealth— over 70 percent, or more than $8 trillion in assets. Baby Boomers and their elders accounted for almost 60 percent of all consumer spending in 2010. People age 50+ spend $2.9 trillion annually, or nearly half of consumer expenditures. As Steve Gillon observes in his book, Boomer Nation, “At heart, the boomers were consumers, not revolutionaries.”
Let me run through some characteristics of this demographic in the US:
- They are the leading consumers in 119 out of 123 Consumer Packaged Goods categories.
- 1 out of every 2 Boomers buys tech products annually—cell/smartphones, digital cameras, computers, tablets and e-Readers.
- They make more trips to restaurants—31 million more than Millennials and 112 million more than Gen X.
- They see themselves not as getting older, but as being in perpetual middle age. They feel vital, active, health- and fitness-conscious.
- They spend more than other generations on foreign travel, restaurants, and home remodeling.
- Close to 100% own computers and those age 50-64 are as likely to go online as those age 18-49.
- 53% of them are on Facebook (driven in part by the arrival of grandchildren);
- 66% send text messages (albeit not quite as many as their teenagers and grandchildren).
- They spend $7 billion online annually.
- Purchase 62% of new cars.
- Purchase 80% of luxury travel.
- They buy three-fourths of all prescription drugs and about half of over-the-counter medications.
- They purchase 25 percent of all toys.
- One in 7 boomers care for a parent or family member.
Spending among the 50+ is driven not only by age, but also by life stage.
Let me run through a few significant life events that are likely to have an impact on what the 50+ population wants and needs:
- Age and life-stage milestones can prompt new focus on financial planning and investment;
- Becoming an empty nester creates new housing considerations – downsizing, remodeling and moving.
- Job and career changes provide opportunities around technology needs and skill building.
- Accommodating a loved one in your care can require adaptations in the home environment as well as in work requirements.
- Aging in place yourself, in your own home and community rather than opting for institutional care, can call for household, work, and transportation alterations.
We know that, overwhelmingly, people want to continue living at home forever, and they want their communities to be livable and age-friendly – easily navigated and conducive to social life.
AARP Hawaii and Hawaii volunteers have a distinguished record of work in this arena – transportation, home modification, assistive technology – and I’m looking forward to hearing more about that in our discussion.
About nine in 10 people who are 60 and older say they want to stay in their homes as long as possible. We’ve encouraged home builders to incorporate the features of universal design, which make a home safe and comfortable for anyone, of any age—and which are sought after by older consumers.
At the same time, we’ve also emphasized access and mobility outside the home.
Enabling people of all ages to live independent, fulfilling, and engaged lives requires creating and sustaining livable communities. These are places that put a high priority on access so that residents can avoid isolation and take part in a rich array of community activities—civic, business, social, recreational, and spiritual.
They are places that create a “built” environment that is open and accessible, with inviting public spaces that spark contemplation and interaction. They are also places supporting a “social” environment that fosters inclusiveness and engagement.
Just as a hint of the possibilities here: Nationally, the aging-in-place market is projected to reach $20 billion by 2020 in the US alone.
Still, societies remain largely youth-centered….with the physical and social environments and institutions built by and for young people. When commercial attention does turn to the 50+ cohort, it tends to be with an eye toward illness and incapacity – those with cognitive or motor impairment from diseases such as Alzheimer’s or Parkinson’s.
This is a worthy and important market, but it’s by no means the entire market. There are a wealth of opportunities for creative minds to develop products and services for healthy older adults whose lives are changing, but are not characterized by pathology.
Opportunity #2 – The Workplace
The key here is to disturb the conventional wisdom, which says that senior workers are too expensive, technologically deficient, and slow to adapt.
Nothing could be further from the truth.
Innovative businesses are stealing the march on the competition by rethinking business practices and public policy to encourage businesses to employ older workers, even part time.
AARP has been a long-time advocate of this approach. An active, engaged, employed older population has the potential to be more an economic boon than a social challenge.
We have launched a comprehensive, multi-front effort to build the public policies, workplace practices, legal safeguards, and practical individual supports to promote the attraction and retention of older workers.
Good news: For economic reasons and for personal fulfillment, the great majority of experienced workers expect to stay in the workplace past traditional retirement age. In Hawaii, again according to Hawaii Business magazine, 80% of baby boomers intend to work past age 65.
AARP believes in the value of experienced workers and believes in the wisdom of attracting and retaining them. We want more employers to recognize the value of attracting and keeping older workers.
Over the years, we have observed a wide variety of best practices by employers that help attract and retain older workers. Among the approaches that appeal to older employees and are a good investment for employers are:
- Actively recruiting older workers – By maintaining alumni networks, rehiring their own retirees (perhaps part-time), using senior placement agencies, and turning to social media.
- Offering a culture of opportunity – By providing tuition reimbursement, in-house training (including job rotations and temporary assignments across departments), and mentoring, .
- Providing solid health benefits – Benefits for long-term care insurance, even if the employee pays the premium, and short- and long-term disability are valuable for older workers. Health screenings, flu shots, smoking cessation and weight loss programs advance well-being and productivity.
- Establishing a secure retirement – By automatically enrolling employees in a 401 (k) plan and matching at least part of the employee’s contribution, companies can make a solid investment in their workforce and greatly increase their financial security. Offering financial education to employees reinforces this investment.
- Building a flexible workplace – Compressed work schedules, telecommuting, phased retirement, on-site care, and leaves of absence (with or without pay) are accommodations that enable workers to meet family responsibilities and focus on their work.
To counter negative stereotypes of older workers, AARP has used multiple media channels as part of a 50-year campaign. Our strongest weapons are the facts –experienced employees are among the most reliable, most loyal, and most engaged.
We also lend our support to legislation and litigation to combat age discrimination in the workplace.
It’s our response to the changing world and the changing needs of people age 50+, our members, their families, and our future members.
The longevity economy also offers an opportunity to combat one of the most disturbing trends in developed economies, and that’s the rising, destabilizing levels of income inequality.
Clearly, the recent economy and pressures of the longevity economy have imposed great challenges upon us. Mainly, the middle class is declining, and unless we are able to reverse the trends driving its decline, many of today’s middle-class workers will become low-income in retirement, taking their spending power and their economic contributions to society along with them.
From 2009 to 2012, the top 1 percent of incomes grew by 31 percent, while the bottom 99 percent grew only by 0.4 percent. Remember, most folks yearn to leave the world a better place for their children– that’s the kind of social mobility that keeps economic engines churning, instills personal and national pride, and feeds prosperity.
Finally, this is not just about economics. A strong middle class is the bedrock of a functioning society. An ever-widening gap between the “haves” and the “have-nots” leads to instability in families and in society and makes it much more difficult for people to move up the socio-economic ladder, achieve the American Dream and live their best life. That’s not good for business.
We’ve already talked about some of the considerable upsides to the longevity bonus – a broad, deep pool of talent to sustain and replenish your labor force, and a consumer appetite and spending power to fuel the economic engines.
There are many other opportunities:
- There’s the opportunity for new industries. Think about technology that helps people age in place, which about 90% of our members frantically want to do. Think about brain fitness, and how to serve the demand for tools and resources.
- There are new markets for existing products: look at the Wii game system and its popularity in nursing homes, for example. The possibilities are really endless: Travel, housing, age-friendly banking – the older consumer will reward companies that meet their needs in innovative ways.
- There also are opportunities for entrepreneurship and small business growth: Individuals age 50 and older are two times more likely to start their own business as the 20-somethings are.
The reality is that the older population is quite possibly the greatest untapped market for labor and commerce that the world has ever seen.
As a society, we can choose whether to embrace and take advantage of this remarkable 50+ generation, or we can risk losing out on their tremendous potential.