Marketing Matters
Are Baby Boomers Grinches or Big Spenders?
The economic impact of the baby boom generation has become the subject of significant debate.
Marketers should study this huge population sector to determine whether their goods or services fit baby boomers’ needs and wants.
As boomers approach retirement, they are castigated as people who will bankrupt Medicare and Social Security.
The real estate industry, struggling with oversupply, sees masses of boomers trading down in house size to accommodate empty nests and cranky knees.
And now the Federal Reserve blames boomers for a predicted stock market slump over the next decade.
“To finance retirement, they (boomers) are likely to sell off acquired assets, especially risky equities. A looming concern is that this massive sell-off might depress equity values,” wrote Zheng Liu and Mark Spiegel of the Federal Reserve Bank of San Francisco.
The Employee Benefits Research Institute projects that the average married boomer couple is about $30,000 short in retirement savings. Even with Medicare, the average boomer couple needs $300,000 to cover the lifetime cost of health care.
“People who haven’t saved enough for health-care costs will deplete their assets,” said Michael Markiewicz, a partner at New York-based Fogel Neale Partners.
New York Times columnist Thomas Friedman weighed in with this comment to NPR: “We shifted from the Greatest Generation that operated on sustainable values — saving and investing — and handed power over to the Baby Boomer generation who lived by situational values, borrow and consume.”
Attitudes changing
The Consumer Intentions & Actions survey conducted monthly by BIGresearch shows that boomers might be becoming more economically conservative.
More boomers than any other generation have begun agreeing with this BIGresearch statement: “Over the last six months, I have focused more on what I need rather than what I want.”
“It seems the message of Depression-Era parents has finally taken root in the Boomer brain: save money and live within your means,” said Matt Thornhill, founder of the Boomer Project.
However, I have found a big exception — grandchildren. The majority of today’s grandparents are working-age baby boomers, and they can’t say no when it comes to their precious grandchildren.
According to the MetLife Report on American Grandparents, households headed by a person 55 and older spent $7.6 billion on infant food, equipment, clothing, toys and games. That’s up 71 percent since 1999.
Boomer grandparents spent $2.43 billion on primary and secondary school tuition and supplies, a three-fold increase since 2000, and the spending doesn’t stop there. Households headed by people 55 and older spent $863 million on used cars as gifts last year, up from $224 million in 2000.
Several factors fuel this growth:
They have the money: Boomer households command 46 percent of the nation’s total household income.
Better incomes: In the last decade, household income for families headed by someone 55 or older increased by $659 billion, while 25- to 44-year-olds’ household income declined by $312 billion.
Heads of households: A grandmother or grandfather heads one in three households.
Therefore, marketers shouldn’t characterize boomers as self-centered and greedy, especially as regards their grandchildren, and they should study carefully what boomers’ overall spending patterns are.
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