Boomers will reach a milestone at the end of the next TV season: More than half of baby boomers will be age 50 or older.
|Aging boomers have the means and desire to keep spending as they move beyond the 18-to-49 demographic.
Bad news for marketers? Not really. Aging boomers have the means and desire to keep spending. True, annual household spending on goods and services is about 10% lower in 50-plus households than in homes where the head of household is below age 50, according to the Bureau of Labor Statistics' 2003 Consumer Expenditure Survey.
Kids move out, more money to spend
But 50-plus households tend to be smaller because the kids have moved out, and that means more money to spend on fewer people. The average member of a 50-plus household spends about $19,000 a year -- 30% above what under-50 households spend on each member of the family.
Next year will see two milestones for boomers, the post-war generation born from 1946-1964: The first boomers turn 60 in January; and, according to American Demographics' analysis of Census Bureau data, more than half of boomers will be age 50 or older next May.
It's prime time for the nation's 78.8 million boomers. The center of that generation -- age 45-54 -- has the highest average household income ($68,028 before taxes) and highest household spending ($50,101) of any age group, according to the 2003 Consumer Expenditure Survey.
A long way off
Old age is a long way off. A 50-year-old can expect to live 78.5 years (men) to 82.5 years (women), according to the National Center for Health Statistics. Full Social Security for boomers kicks in at 66 to 67 (subject to change).
Not all boomers have money. But boomers have the lowest poverty rates of any age group; 7.6% of boomers age 45-54 live below poverty vs. 12.5% for the overall population, according to a 2004 Census study.
Boomers will keep spending as they move into their 50s. For proof, open the garage door. The 50-plus group today makes up 39% of the U.S. adult population. But the group this year will account for half of auto sales, and that share will increase to 53% by 2010, said Art Spinella, president of consultancy CNW Marketing Research.
Boomers drive the auto industry
"Everybody looks at the youth market ... [but] it's 50-plus that's going to drive the auto industry and incremental sales" for the next 10 to 15 years, he said.
Old drivers traditionally have been content to maintain their old Buicks, seeing little reason to splurge on new wheels. But as life expectancy has grown, the old market has taken on new life. CNW expects the share of cars bought by 70-plus drivers will jump from 5.7% in 2000 to 8.6% in 2010. The market for 20-somethings will go in reverse, from 8.1% to 6.2%.
The aging of the car market will accelerate as boomers pass the 50 mark. From 2005 to 2010, says CNW, the share for every 10-year age group below 50 will fall -- and the share for people in their 50s, 60s and 70s will grow.
Boomers grew up with the automobile, and Mr. Spinella said they "still are caught up in a car-culture mentality where a vehicle is really a primary means of defining who you are."
A fickle car consumer
Fifty-plus boomers and consumers already in their 60s are lucrative segments, but it's a fickle market. The challenge, Mr. Spinella
|The 50-plus demographic purchases half of all the cars sold in the U.S.
"Look at the household fleet" of 50-somethings, he said. "They have an SUV, maybe a sports car, a classic in the back of the garage. ... You can't guarantee that somebody in their 50s is going to buy a [Toyota] Camry even though the vast majority of Camry buyers are in their 50s."
The list of top-10-selling car brands for buyers older and younger than 55 is remarkably similar, with nine brands appearing on both lists, according to R.L. Polk & Co. The exception: General Motors' Buick, No. 8 for older buyers but No. 25 with the younger set. (DaimlerChrysler's Jeep, No. 8 on younger buyers' top 10 list, scored No. 12 with older consumers.)
The good news -- or bad news -- for car sellers is that automotive brand loyalty is plummeting. Offer boomers an appealing model like the Chrysler 300C and "they're more than willing to jump ship and buy it," Mr. Spinella said. Among 300C owners, he said, 70% had never owned a Chrysler.
Upsizing the home
For more indications of what's ahead for 50-plus, leave the garage and enter the house. Boomers are accustomed to living in supersized homes; the average size of a new single-family home jumped from about 1,300 square feet in 1960 to 2,349 square feet in 2004, according to Census data. An April survey by home builder Pulte Homes, parent of 55-plus community pioneer Del Webb, found that only 36% of young boomers (age 41-49) plan to downsize their housing in retirement; 49% of older boomers want to downsize.
Del Webb has been upsizing for decades. In 1960, houses in its first development, in Phoenix, were about 1,000 square feet (77% the size of an average new home then). Today, Del Webb's new houses run from 1,154 square feet to 4,300 square feet.
Loaded with stuff
A new Pulte development near Denver will include both regular family homes and Del Webb homes for retirees. Square footage in the retirees' area will average about 77% the size of homes in the regular section -- the same percentage as in 1960. So maybe boomers will downsize a bit in retirement, but they still will own large homes loaded with ... stuff. For decades to come, baby boomers will remain the consummate consumers.