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Age and income help determine what households buy. It is common knowledge that Baby Boomers will fill the 55- to 74-year-old age category during the next few decades. But what is not well known is that along with this population growth we will see a surge in the number of affluent older households — those with annual incomes of $100,000 or more.

A sharp rise in the number of wealthy older people will likely have an impact on the demand for several types of consumer goods or services, such as health care, travel and luxury products. This trend might also change the general perception of the mature market, from retired elders living on a fixed income to an attractive demographic that companies want to target.

Over the next five years, the number of households headed by people ages 55 to 74 will grow about 15 percent, to nearly 31 million, according to projections by the San Diego-based market research firm Claritas. Additionally, the firm forecasts that the number of households with 55- to 74-year-olds whose annual income is $100,000 or more will jump a whopping 61 percent during that same time period, to more than 6 million. If that level of growth continues, the number of these well-to-do older households will more than double by the 2010 Census, to over 8 million.

Affluent older households often have substantial assets in addition to six-figure incomes. According to the Federal Reserve Board, family net worth peaks between the ages of 55 and 74, at an average of about $500,000. But if one considers only households in that age group with more than $100,000 in annual income, then the average net asset figure balloons to more than $1.5 million.

If the number of households with that kind of buying power is doubled, it would suggest that the market for very expensive, and possibly highly customized, products and services will be robust for at least the next eight years. The reason: Older consumers are more likely to have a been-there-done-that attitude about ordinary products and to be ready for something different.

And let's not forget the wannabes, of any age group, who would like to be thought of as rich even though they are not. Whenever a select group of well-to-do consumers buys something — a Rolex watch, for example — there is always a group of consumers with not quite as much money who will buy the same product or something similar that looks as expensive but isn't.

As a result, the economic impact of this older segment could be magnified by its trendsetting behavior. (In the past, no self-respecting marketing professional would suggest that anyone 55 to 74 was a trendsetter.) For virtually every expensive custom-designed consumer product, there is almost always a considerably cheaper knockoff version that's widely available.

One service sector of the economy that should benefit greatly from a big increase in affluent older people is health care. As Baby Boomers move into the cohort where the aging process significantly accelerates, we will almost certainly see an increased demand for general medical services. But there is also likely to be an increased demand for specialized health care by those older people with the resources to pay for the services themselves.

Those people currently in the 55-to-74 age category spend an estimated $72 billion of their own money on health care, according to the Bureau of Labor Statistics 2000 Consumer Expenditure Survey. Undoubtedly, additional medical expenses were paid by their insurance company, Medicare or Medicaid.

But the concept of health care includes more than just necessary medical procedures or doctor visits. Baby Boomers have already shown a penchant for trying to delay the aging process by whatever means they can. As millions of them move into their 60s, they will almost certainly avail themselves of such cosmetic procedures as Botox shots to erase wrinkles, while others may opt for skin treatments at health spas.

We may also see a dramatic jump in the demand for highly personalized health-care services for this older cohort. Some wealthy people already have personal trainers who come to their homes. It's not much of a stretch to imagine periodic house calls by a doctor to check on health status.

But the goal isn't merely to maintain one's mental or physical health, but to improve it in some meaningful way with therapy. The National Center for Health Statistics forecasts a rapid increase in the number of older people with various chronic conditions — such as arthritis, high blood pressure and diabetes — as well as a rising demand for mental health services. There will likely be an increase in nonstandard therapies for both physical and mental conditions afflicting older people, which may be effective but are not covered by insurance.

Of course, the nation's citizens are not going to age at the same rate. Some states and regions already have a greater number of older residents than others, and some also have an above average number of affluent older households. Several states have large numbers of households that are both old and affluent. Two such states are New Jersey and Connecticut, which rank first and second in terms of median household income. More than 1 in 5 householders between the ages of 55 and 74 in those states have an annual income of $100,000 or more — and that income is likely to keep rising. Claritas projects that by 2007, close to 1 in 3 households headed by people who are 55 to 74 will have a six-figure income in those states.

Some of these older, affluent consumers will choose to spend a portion of their wealth on second or third residences, while others may prefer to purchase luxury goods or take extended vacations. Who else is likely to benefit greatly from the rising affluence of older people? The next decade or two will probably be boom times for philanthropy. Colleges and other nonprofit organizations looking for large donations may want to turn up the heat on fund-raising efforts that target this older group.

Peter Francese is the founder of American Demographics. He can be reached at peter@francese.com.

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