Generali SpA

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    09 January 2018 - 12:49

    Silver business

    The spending power of people over 65 will be worth, in 2020, 15.000 billion dollars of consumption

    All eyes are on Millennials and the big digital circus but the future is over 65. Demographic projections seem to cast no doubts: in 1960 the elderly, or the differently young, as many in our days like to call themselves, were just the 5% of the total population, but today, according to calculations of the World Bank, they represent the 8.2%. And we are talking of a globally weighted average. If we look at developed countries, the picture becomes alarming. In Japan the over 65s are the 26% of the total population. The Old Continent too has increasingly gray hair: in Italy the over 65s are the 22%, in Greece and in Germany the 21% and in France the 19%.

     

    Considering the current birth rate - the lowest in history - of developed countries, it is estimated that in Europe, by 2060, there will be only two workers per each retiree. The pyramid of the social security system, and conversely the wealth that resulted from the growth of a generation of baby boomers, is about to tip over and become untenable for the public purse. To straighten out a situation that is on the border of collapse, courageous and impactful socio-economic reforms will be necessary. The lengthening of life expectancy and the going gray of much of the population, however, have awakened unexpected economic forces, what we today call the Silver Economy.

     

    It is known that in the past years of this long crisis, it was the "welfare of grandparents" to keep afloat many young people struggling between job insecurity and poor prospects. What is emerging now is that those over 65s are becoming big spenders. It is shared knowledge that former baby boomers of the 50s have solid assets due to estate properties and generous pensions. Today the Third Age’s combined consumer spending is around 4000 billions a year. But the tribe of people over 65 is growing and growing in number and the figure for developed countries is going to skyrocket from 164 to 222 millions by 2030.

     

    It is estimated, therefore, that the consumption of the elderly will reach 15 billions dollars within three to four years. According to Oxford Economics, nearly half of this turnover is already generated by American consumers. And we are not referring to sprightly old people who cannot wait to get merry on a cruise paid by the pensions and the savings of a lifetime. According to a Merrill Lynch study titled "Work in Retirement: Myths and Motivations”, nowadays 47% of the retirees work or has plans to do so during their retirement years. 72% of people approaching retirement said that they have no intention to pull the plug but indeed want to devote themselves to some form of work and occupation. And these are individuals who are, in many cases, even more productive than younger colleagues, according at least to an analysis carried out by The Center for Retirement Research at the Boston College.