Platinum Pensioners’ £72 BILLION splurge
Forget young spenders... an older generation is living a ‘rock star lifestyle’ funded by pensions and property
A HIGH spending group of older people is living a ‘rock star lifestyle’, enjoying lavish holidays, meals in expensive restaurants and other luxury treats while low wages and i nflation are putting t he squeeze on the young.
The ‘Platinum Pensioners’ – estimated to number 3.4 million – could be a lifesaver for businesses. They have been on a spending spree t hought t o have i ncreased by 72 per cent over the past five years to a staggering £72 billion a year.
They have prospered from huge increases in property values coupled with their entitlement to defined benefit pension schemes. Many have just small mortgages or have paid off their home loans.
The group has returned with a vengeance after having previously been virtually written off by marketing men.
Research organisation ConsumerCast is releasing a report this week which forecasts that the over-50s will account for the vast majority of the growth in consumer spending – £7 in every £10 – this year and next.
ConsumerCast director Robert Carruthers said the wealthier older shoppers have ‘ really hit t he jackpot’.
‘I’m sure they would say they’ve earned it, but these are people who are doing exceptionally well out of the current set of circumstances,’ he said. ‘Many of them are living a kind of rock star lifestyle.
‘They took a bit of a hit at the beginning of the financial crisis when interest rates dropped, reducing their investment income. But that has quickly been replaced with additional employment earnings and increases in their occupational and state pensions.
‘ Their discretionary spending power is very significant indeed and they’re really enjoying life.’
The number of these privileged pensioners has increased by more than 40 per cent in recent years. They now account for about 5 per cent of the total population.
Their households typically have an income of more than £38,000 a year – often with few financial burdens such as mortgages, debt repayments, childcare costs and school or university fees.
There are also rising instances of at least one person in the household who continues working into retirement or has taken up consultancy work to protect savings.
Their spending on recreation and culture more than doubled between 2011 and 2016 to £15.3 billion a year. The amount of money paid out for household goods and services, such as furniture and gardening, soared by more than 100 per cent to £5.2 billion.
Spending on alcohol and tobacco in the period increased by 85 per cent to £3.8 billion and they lavished £9.2 billion – a rise of 80 per cent – on restaurants and hotels.
By contrast, many younger people are experiencing tough times. Carruthers said: ‘The overall picture if you are under 50 is one of rising price inflation and low wage growth despite low unemployment. The under 30s in particular have done really badly in terms of wage increases.
‘They are under huge economic pressure at the moment from static income levels, rising inflation and rapidly rising rents.’
Retailers reaping the benefits include Waitrose and John Lewis, which are popular with affluent consumers due to their servicefocused business models and more rarefied product selections. However, the changing demographics have left some firms struggling to cope. Marks & Spencer has seen buoyant food sales. But its fashionwear appears to be continually caught between attempting to lure youthful shoppers and trying to cater for older, more loyal ones who still relate to its brand.
Carruthers said: ‘Instinctively, retailers try to find new customers that are going to be profitable for them in the future. The successful ones used to reinvent regularly in order to survive. The dilemma is, the consumer of the future has no money, while yesterday’s customer is living longer and spending heavily.’
However, he said retailing and marketing industries are often dominated by younger people, leading to ‘a huge lack of cultural insight into what the over-50s need’.
Carruthers said despite the privileges enjoyed by those in the affluent age bracket, many of Britain’s 7.9 million pensioner households are still struggling.
Meanwhile, the Tory Party manifesto is calling for the ditching of the ‘triple lock’ which has guaranteed healthy annual pension rises. It also plans to means test winter fuel payouts.
The TUC said 1.5 million pensioners are living in poverty and that plans to water down annual pension increases are ‘a bad call’.