The EU defines the Silver Economy as “the sum of all economic activity that serve the needs of people aged 50 and over, including the products and services they purchase directly and the further economic activity this spending generates.” It stretches across all sectors (public and private) of the economy, including health and nutrition, leisure and well-being, finance and transport, housing, education and employment.
Senior citizens are becoming more prominent in the economy and this is due to continue into the 2020s. Those who are over the age of 65 tend to have higher incomes than any other segment of the population, especially in developed countries. Their income has risen even more due to retirement and they also tend to have more needs than younger people, such as medical care.
Seniors are also growing rapidly in number: There are currently 750 million seniors in the world, and that figure will cross the 1 billion mark by 2030.
Because of the higher incomes and growing numbers, the share of seniors (50+) within the ‘consumer class’ is rapidly growing. The consumer class – defined as those who spend at least $11 per day – is expected to grow from 3.9 billion in 2020 to 5.6 billion by 2030. Within the consumer class, all age groups will contribute to this growing number, except for the senior age group which will surge by 66 percent during this decade!
Seniors (and older professionals – 45-64 years) are the wealthiest group in the world. The larger growth in this group will initially be in the Western countries – North America and Europe. The reason for this is not because older people are richer but because mature economies are aging and poorer countries are younger.
Today, the spending power of the silver economy is equally divided between North America, Europe, and Asia.
But over time, the silver economy will shift from more developed, Western countries to the emerging markets, primarily South Asia and the Pacific Rim. By 2030, it is projected that Asia’s share in the silver economy will exceed $5 trillion annually. This growth will be primarily in China and India. Japan’s senior spending is beginning to plateau.
Certainly at the top of the list of business sectors who will benefit from the growing Silver Economy will be senior living options, the pharmaceutical industry, and drug stores. But, there are other sectors that can grow with this Silver Economy’s growth.
As this huge baby boomer generation continues to age, more and more of them will be needing services and support for their ‘activities of daily living’ (ADLs). This will translate into a growing demand for assisted living communities and nursing home facilities. High occupancy rates are great for these businesses and the demand will create new staffing needs, medical services, and related construction services, etc.
As we age, we tend to require more and more medications to manage the increasing ailments. This business sector currently shows strong revenue performance. And that will only continue to grow into the future.
As the population ages, the demand for medical support industries will grow. Even though there has been some contraction in profits in the recent past in some of the medical services sector, the demand will be there and the businesses that can maximize their business model will see strong growth.
As with all population segments, Baby Boomers are increasingly buying products and services through online portals. More than half of Baby Boomers prefer shopping online during the holiday season. [Deloitte] Companies should be maximizing their online marketing and shopping portals.
According to Retail Dive, Baby Boomers increased their spending on new clothes by 28 percent compared to before the pandemic. Gone are the days of the monochromatic ‘track suites’ for the elderly.
According to Deloitte, 59% of baby boomers are willing to pay more for socially compliant, sustainable products. Also, roughly half of baby boomers are interested in food products like probiotics and vitamins.
Prior to the pandemic, baby boomers planned to spend $7,800 on travel, or approximately 4-6 leisure trips each year. How the travel and vacation businesses speak to baby boomers will allow them to tap into this spending. [AARP]
As a percentage of annual spending, baby boomers (6.0% – $3,801) outspend Millennials (4.5% – $2,391) and Gen Xer’s (5.3% – $3,921) in entertainment expenses. The bulk of this spending goes towards subcategories like fees and admissions; television, radio and sound equipment; entertainment supplies, equipment and services. [The Bureau of Labor Statistics’ 2018 Consumer Expenditure report]
The “silver economy” can be a powerful source of new products, services and jobs. Population ageing has a real potential to create a new market and opportunity for innovators to respond to the unmet needs of the ageing population, this includes the rising demand for leisure and services by retirees in good health.
Contact our team today to explore ways that your business can take advantage of this growing business sector.