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Bye-Bye Boomers, Welcome Yers
There's no question that when boomers retire their spending habits will change. However, this doesn't mean economic calamity for Wall Street, as several factors can help sustain the economy.
For the rest of the November 2005 issue of CRM magazine please click here
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This January the largest generation in our country's history will start to turn 60. If you follow the economy or consumer trends analysis, you may have heard experts suggest that when baby boomers retire, so will their spending habits, having a deleterious effect on our economy. There's no question that when boomers retire their spending habits will change. Many will be living on a fixed retirement income and facing rising healthcare costs, so naturally their investments in nonessential and luxury items will diminish. Additionally, Americans are living longer, which means as our largest population retires, the government's responsibility toward Social Security becomes even more challenging. However, this doesn't mean economic calamity for Wall Street, as several factors can help sustain the economy. The boomer generation, which introduced the world to yuppies and soccer moms and made dual income households and botox bodies popular, has not finished leaving its mark on society. For starters, boomers will not retire all at once, as the nearly 76 million members of this generation span 19 years from 1946 to 1964, according to the Current Population Survey (2003). Instead, in 2011 (when the oldest boomers turn 65), roughly 4 million Americans will start entering retirement age every year for 19 years. Also, simply because boomers turn 65 doesn't mean they'll retire. According to a study on financial concerns from The Gallup Organization, 52 percent of 1,014 survey respondents revealed they are either "very" or "moderately" worried about retirement. Their financial fears will likely keep them working past the age of 65, taking on part-time work in retail or acting as consultants in their respective field of expertise. In some cases, employers may look to accommodate this older, but highly professional and experienced workforce, by offering more flexible work schedules, perhaps leveraging the Internet so they can work from home. This does not, however, bode well for gen Xers in their peak wage earning years seeking career advancement. Gen Xers (born between 1965 and 1976) are taking on more debt than their boomer predecessors, conservative estimates peg this debt level at roughly 78 percent higher--the high cost of home ownership, is largely to blame.
Some relief, however, may come from the emergence of the next dominant generation of Americans--generation Y (born between 1977 and 1994). This generation, otherwise known as Echo Boomers, at 72 million members strong is almost as large as the boomer population. They grew up in a digital world. The Internet has empowered them to become a generation of fact finders, making them fiercely independent and not brand loyal so companies will have to work harder to sell to this generation. However, the large size of generation Y coupled with a healthy, vibrant, and somewhat employed boomer generation, could help sustain the economy. After all, if boomers can make 40 the new 30, they can certainly make 60 the new 50. David Myron Editor-in-Chief dmyron@destinationCRM.com
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