Boomers Like It or Not They Set the Tone
Today’s world is managed and run by the largest generation in the history of America, the Baby Boomers. With over 78 million scheduled to retire in the next 30 years the trend is simple to see, everything is being influenced by the Boomer generation.
Now that the Boomers are moving into their latter phase of life, they have traveled the spectrum from entry level positions into Corporate America to running Corporate America and establishing policies. Entering into their retirement phase they will become the marketing focus of the Corporate America they once shaped. Companies that provide products and services will be directing their advertising campaigns at Boomer’s disposable incomes.
Currently one of the industries aggressively marketing to the Boomer generation is the pharmaceutical industry. Because of their aging and the desire of the boomers to stay young, pharmaceutical companies are allocating more and more of their budgets to advertising direct to consumers. Traditionally pharmaceutical companies market to physicians but the tide has changed in the last 5 to 7 years. Marketing to the consumer the benefits of a drug moves the consumer to go and ask for the medication directly from the doctor.
“Last year’s Super Bowl featured ads for Cialis, Viagra and Levitra. In the first five months of this year, the manufacturers of those drugs spent a total of $265 million to advertise them to consumers” (AARP, 2005). That’s not all, other companies are spending upwards of $40 million in marketing their products directed at the aging Boomers.
Once referred to as the “Me” generation, this generation has now become the total focus of businesses. Pharmaceutical companies aren’t the only ones targeting the Boomer generation for spending. Car companies have thrown in the heavy dollars to attract this generation’s spending. The current trend of remaking muscle cars from the Boomer youth is the direct result of the Boomer’s having the disposable income to make those purchases now.
Never before has a generation become so affluent during their time. The economy has exploded during the growth of the Boomers and that has yielded them a financial windfall. Household incomes for the Boomers peaked in their 40’s, in the year 2002 the middle aged had the highest household incomes at $79,089 for boomers between the ages of 45 and 49 with the second highest average being $77,396 for the ages between 50 and 54 years old (Russell, 2004, 97 / 4). In 2002 the boomers top the charts with over 72% between the ages of 45 - 64 owning homes (Russell, 2004, 74 / 3).
As the income for Baby Boomers has gone up so has their debt! In the year 2000 while income was up for Boomers, their personal debt broke 18% of their disposable income for the first time in twenty years. That means that a typical American family had to spend $1 out of every $5 on some type of consumer debt. According to Experian, a major world-wide provider of credit reports, the U.S. average personal debt, excluding home mortgages was $11,497 (Experian, 2005). The younger population of Boomers ages 35-44 years old between the years of 1989 and 2001 increased their debt 49%. Older Boomers, 37-43 years of age increased their debt up to 67% between those same years. To date, debt has hit a record high for the Boomer generation (Russell, 2004)!
While debt continues to increase, personal savings has fallen. According to an article from the Associate Press the average American puts away barely $1 out of every $100 earned. Savings has fallen to a meager 1.8% last year. If the average income for Boomers is currently $65,000 then their standard savings is amounting to less than $1170 annually (Associated Press, 2005).
With all the marketing being directed at these boomers in their latter life, one has to question, are the Boomers going to leave any inheritance for their children or will they remain true to their “Me” mentality?
Scott Lovely is the founder of Generation X Consulting
Tags: Baby Boomers, Boomer debt, Boomers finance, Boomers household income, Trends