Older Americans Form a New Market
NEW YORK — FREDERICK ADLER - although only a "baby-boomer" himself - welcomes the "aging of America." He has developed a successful advertising and direct marketing business aimed at the more than 16,000 senior citizen centers in the United States.
Older Americans (65 and up) represent the fastest growing segment of the US population.
Mr. Adler's company, called "The Senior Network," brings the promotional and advertising material of such corporate giants as General Foods, Campbell Soup, Quaker Oats Company, TWA, and AT&T into thousands of senior citizen centers.
"We are a company at the very start of an important new trend," Adler says, one of "reaching out to older Americans."
The increasing average age of the US population is expected to have major implications for American companies in the years ahead, as well as for the US economy itself. Mature Americans, those over age 55, already spend more than $900 billion a year, Adler says.
Companies that aim products at younger age groups will have to scramble to retain market share in the changing demographic environment of the next few decades, experts say. Companies that target older audiences, such as health providers, insurance, finance, or home maintenance firms, stand to gain.
The overall impact of the aging of America will not be entirely upbeat for the US economy. Growth will slow in the number of Americans in the 25 to 45 age group when most families form and spend a great deal on buying and furnishing a house.
US companies have only recently started to direct more advertising dollars to older Americans, industry experts note. For example, about 6 to 7 percent of all ad dollars on television are directed at older Americans, according to Food & Beverage Marketing magazine. Of the more than 2,000 magazines in the US, a handful, such as Modern Maturity, Mature Outlook, and New Choices, are specifically targeted at older Americans.
Yet the demographic changes under way in America are significant. In 1983, for the first time, the number of Americans 65 or older surpassed the number of teenagers. Today, there are more than 31 million people in the US aged 65 or older, according to the American Association of Retired Persons (AARP) in Washington. They make up almost 13 percent of the total population. That age group has expanded by 22 percent since 1980, compared to an increase of about 8 percent for the under-65 population. By the ye ar 2030 the 65-plus age group could make up 22 percent of the population, the AARP projects.
Richard Rippe, chief economist for Prudential Securities Inc., notes that the number of 20 to 34-year-olds will decline by about 3.5 million in the first half of this decade. That likely means less spending for durable goods, such as houses, cars, appliances, and furniture. Gains in the size of "older" age groups, such as 50 and up, will favor food eaten away from home, lodging (including leisure companies), house maintenance products, and health care. The 45 to 54 age group are likely to spend more on h ousing (in terms of "buying up" to a better house), and education (paying children's college bills).
The negative impact of the aging of America will be primarily felt in the next century. This could include a reduction in per capita consumption, resulting in slower gains in gross national product. Richard Hokenson, an economist with Donaldson, Lufkin & Jenrette Inc., an investment house, points out that each new adult household that is formed in America adds $11,589 in total consumer demand. But older Americans tend to be savers and offset that increase.
A larger number of older Americans will also put added pressure on pension plans, including the US Social Security system.