Monday, August 22, 2011

Demo Memo: Are Older Americans Willing to Spend?

Are Older Americans Willing to Spend?

Most businesses assume that older Americans are not big spenders, directing their marketing efforts at younger adults.

Since the 65+ age group is now the fastest growing segment of the population, this suggests that businesses must look elsewhere to find eager customers.

But do older Americans deserve their penny-pincher reputation?At the household level, the spending differences are stark. The average household spent $49,067 in 2009 compared with the $37,562 spent by householders aged 65 or older, according to the Consumer Expenditure Survey.

But this is an apples to oranges comparison because the average household is larger than those headed by people aged 65 or older (2.5 versus 1.7 people).

On a per capita basis, the differences disappear. In fact, on a per capita basis, householders aged 65 or older spend more than average--$22,095 versus $19,627. Older Americans do not devote all their dollars to health care either.

On a per capita basis, householders aged 65 or older spend more than average or close to the average on most categories of goods and services--including items often associated with youth such as entertainment and women's clothes. Not only are they willing to spend, but the 65+ age group is economically more stable than younger adults, many with guaranteed incomes pegged to inflation. So the fact that the 65+ age group is now the fastest growing segment of the population may be good news for business.

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