BOOMERS

THE ECON­OMY IS STILL ALL ABOUT — WHO ELSE? —

USA TODAY International Edition - - MONEY - Paul David­son

Hey ad­ver­tis­ers! Take a break from fix­at­ing on Mil­len­ni­als and check this out: Baby Boomers and their el­ders are mak­ing up an out­size share of con­sumer spend­ing.

The trend has sig­nif­i­cant im­pli­ca­tions not only for the big­gest brands that are miss­ing out on a lu­cra­tive au­di­ence but for an econ­omy that con­tin­ues to trudge along at a mod­est pace. It’s help­ing fuel a shift in house­hold spend­ing from re­tail goods to ser­vices, spurring more job growth but weaker worker out­put. And it’s con­tribut­ing to the woes of re­tail­ers, such as Macy’s and Sears, that are clos­ing hun­dreds of stores. The Com­merce De­part­ment said Fri­day that re­tail sales un­ex­pect­edly fell in June.

“The 50- plus and 60- plus pop­u­la­tion is clearly play­ing a large role in con­sumer spend­ing, and older con­sumers are go­ing to be­come more sig­nif­i­cant as these trends in­ten­sify,” says Wayne Best, chief econ­o­mist of Visa.

In the first quar­ter, Amer­i­cans 55 and older ac­counted for 41.6% of con­sumer spend­ing, up from 41.2% late last year and 33.5% in early 2007, ac­cord­ing to govern­ment and Moody’s data. Toss in 53- and 54- year- olds, and the Boomer- and- older set com­prise about half of all con­sump­tion, ac­cord­ing to Visa and Moody’s An­a­lyt­ics. In other words, they’re spend­ing some­what less than they did when they were younger but more than their pre­de­ces­sors.

Ad­ver­tis­ers, mean­while, fo­cus their cam­paigns al­most ex­clu­sively on Mil­len­ni­als, says Mar­shal Co­hen, chief in­dus­try an­a­lyst for the NPD Group, a con­sult­ing firm on con­sumer be­hav­ior and re­tail. “The fastest- grow­ing seg­ment is the Boomer con­sumer,” Co­hen says.” And they have a higher level of dis­cre­tionary spend­ing power.” Mar­keters “still tend to put all their eggs in one bas­ket.”

The big brands, he says, as­sume their Mil­len­nial- tar­geted ads will also move Boomers who as­pire to­ward peren­nial youth­ful­ness. But he says that misses the mark be­cause older adults have dif­fer­ent needs.

In­stead, he says, the com­pa­nies should tai­lor sep­a­rate cam­paigns to dif­fer­ent age groups.

Boomers also have dis­tinc­tive spend­ing pat­terns. They’re buy­ing fewer cars, shirts and TVs and shelling out more for ser­vices such as health care, travel and en­ter­tain­ment. Ap­parel pur­chases ac­counted for 2.7% of all spend­ing for con­sumers age 55 to 64 in 2015, down from 3.6% for that age bracket in 2005 and 5.6% in 1995, Moody’s and La­bor data show. Mean­while, 8.7% of their out­lays went to health care, up from 5.9% in 1997 and 5.7% was de­voted to en­ter­tain­ment, up from 4.8%.

And con­sumers age 50- plus ac­counted for 57% of credit spend­ing at ho­tels last year, ac­cord­ing to Visa. House­hold spend­ing over­all makes up about 70% of eco­nomic ac­tiv­ity.

Karen Ellers, 64, a re­tired in­for­ma­tion tech­nol­ogy man­ager, drives an 11- year- old Nis­san Al­tima and has scaled back her re­tail pur­chases. “I don’t need to spend money on busi­ness clothes, don’t need any more jew­elry, don’t re­ally need any new fur­ni­ture,” says Ellers, who lives in Peachtree Cor­ner, Ga.

But she’s spend­ing “a lot more” on med­i­cal pre­mi­ums. And while she’s still tak­ing a cou­ple of week long va­ca­tions each year to Las Ve­gas, she has added an­nual trips to places like Ot­tawa, Canada, as well as a few overnight stays at ho­tel casi­nos in North Carolina.

Her in­come from So­cial Se­cu­rity and a pen­sion is less than a third of her for­mer six- fig­ure salary, but she has a siz­able nest egg and her mort­gage is paid off.

“I have the time, I have the money,” she says. “My fi­nan­cial ad­viser told me to start spend­ing it.”

Here’s why older adults are im­por­tant to the econ­omy:

There’s lots of them. The 90.7 mil­lion Amer­i­cans 55 and older last year made up 28% of the pop­u­la­tion, ac­cord­ing to the Cen­sus Bureau. In 2000, the 59.3 mil­lion peo­ple in that age group com­prised 21% of all U. S. res­i­dents.

They’re work­ing longer. Amer­i­cans are health­ier and liv­ing longer, al­low­ing many to work into their 60s and 70s. That shift has been but­tressed by the de­cline of phys­i­cally de­mand­ing oc­cu­pa­tions in fields such as man­u­fac­tur­ing and con­struc­tion, and the spread of white- col­lar jobs re­quir­ing col­lege de­grees, says Mark Zandi, chief econ­o­mist of Moody’s An­a­lyt­ics. Many still en­joy their work and con­sider it a vi­tal part of their iden­tity, Visa’s Best says.

At the same time, “some are com­ing back into the work­force” af­ter their nest eggs were ham­mered by the stock mar­ket and hous­ing crashes of the late 2000s, Best says.

All told, 38.7% of all 55- an­dolder Amer­i­cans are em­ployed, a share that has risen steadily from 30% in 1997, ac­cord­ing to the La­bor De­part­ment and AARP. The me­dian in­come of house­holds headed by 65- to 74- year- olds in­creased to $ 47,432 in 2015 from $ 31,670 in 2005, far more sharply than the earn­ings of other age groups, Moody’s and govern­ment fig­ures show.

uThey got lucky. Many Boomers en­tered the work­force dur­ing the ro­bust eco­nomic ex­pan­sions of the 1970s and 1980s, al­low­ing them to land good first jobs and ad­vance in their ca­reers. And de­spite the stock sell- off in the Great Re­ces­sion, they ben­e­fited from the long bull mar­ket of the 1980s and 1990s and the mar­ket’s re­cov­ery since 2009. In 2013, the lat­est Cen­sus data avail­able, the me­dian net worth of house­holds headed by 55- to 64- yearolds, ex­clud­ing home- eq­uity, was $ 66,047, up from $ 51,026 in 2005.

Many Mil­len­ni­als, by con­trast, strug­gled to get jobs out of high school and col­lege or took po­si­tions for which they were overqual­i­fied dur­ing and af­ter the eco­nomic down­turn, set­ting back their ca­reer tracks and earn­ings.

RED MOUN­TAIN RE­SORT & SPA

AMERIPRISE

Den­nis Hop­per ap­pears in ads that show peo­ple pur­su­ing their re­tire­ment dreams, whether it’s build­ing a boat or a house.

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