Rise of the silver demographic
29th March 2017
For many years, marketers have concentrated all their efforts on the younger generations, whether that be fashion-forward generation X or the tech savvy millennials. The different demographics are being described by a variety of coloured pounds, while the Purple Pound represents the power of the disabled community, the Grey Pound is the spending power of the over 50’s.
It is improved longevity has increased the size of the silver demographic. The Baby Boomers are reaching their mid to late fifties, however the expectations of those years have changed. With healthier and fitter lifestyles, people look forward to longer and more active retirements.
For years the biggest spend has always been with the working generation, while the older citizens live thriftily off pensions and those with the largest expendable incomes keep the luxury car and housing market afloat. That has not been the case for some time, as millennials earn less than previous generations, more are living at home leaving the grey pound in a position of significant power. This is having a visible impact in many aspects. Whether that is quieter shops on the high-street or an increased popularity in home stairlifts the rise of the silver demographic is changing the shape of the UK.
Saga recently published research into the spending power of the grey pound. With 22 million people over 50, there has been a 73% growth of over 75’s and this is reflected in the economics, with the silver demographic responsible for over 50% of UK household expenditure. Saga, while best known as a holiday company for the over 50’s, has built upon its impeccable reputation to offer other services in finance and insurance, this has allowed the company a privileged position to gather data on the age group they have such resonance with. The over 50s now account for over 50% of the UK’s spend on travel and tourism. Paul Green, Director of Communications at Saga has some ideas as to why this is:
“[the over 50s} have the minds of 20-year-olds and still have a thirst for travel, we have seen a great deal of success with a new tour of the silk route. It is a new part of the world that is opening up and people are eager to explore, especially as people are living longer and healthier lives and therefore have the physical capacity. If you ignore older people, you miss out on people who are very demanding, because they know what they want and that is where the money is.”
The over 50’s are also moving away from the classic catalogues and instead are joining the online revolution. According to The Telegraph: “Research from digital marketing agency Greenlight shows that shoppers aged 55 or over are expected to account for £14.45 billion of online spend this year and by 2025 they are expected to make up two-thirds of all retail activity. Despite only 22 per cent of online retailers deliberately targeting the 'grey pound' Greenlight's research found that 76 per cent of over 55s make at least one purchase online a month and that 9 out of 10 will use the internet to both research and buy products.”
This may be due to increased interest in tablet technology. According to research by Pew internet, older adults use tablets and e-book readers rather than smartphones, and online retailers are changing their habits in order to ensure sales of the Grey Pound. Not only are the silver demographic engaging with social media, but they are also altering how people shop online.
There have been concerns for the less wealthy of the silver demographic or even those that rely heavily upon savings. According to the House of Commons Intergenerational Fairness Report: “Historically low-interest rates and loose monetary policy since the 2008–09 recession have reduced returns on savings. Saga told us that this disproportionately affects older people, who are more likely to be dependent on savings income, while younger people with mortgages are benefitting from lower interest rates. Steve Webb emphasised that many current pensioners had been “stuffed” by very low annuity rates.”
Though this does not lead the country back to the pension crisis that was rife in the 1980’s it also releases the assumption that all over 55’s are wealthy. While many are enjoying being SKI-ers (Spending the Kids Inheritance) others live very close to the bread line.
The traditional expectation for those in their post-retirement years has always been to remain in the family home until it is necessary to move on to a retirement or a care home. No longer are people conforming, and this is probably due to the increased life expectancy bringing a rise in the ‘last-time buyers’ who opt for convenience, being closer to amenities or on a single level, without giving up their freedom.
According to First Port, retirement property experts: “Whilst the UK’s younger generation sees themselves moving into a retirement property at the mean age of 65, Britons aged between 55-64 say this won’t happen until they’re 70 with only 6% of over 65’s surveyed having already downsized or moved to a specialist home.”
Richard Ramsey from Ulster Bank spoke of his own findings in the ever-changing British housing market:
“The ageing population has huge implications for the housing market. Traditionally, the dominant direction of travel for people on the property ladder has been upsizing. Going from first-time buyers (single/couple), to family starter homes > larger family homes. More often than not people would remain in the family home when elderly, perhaps only leaving due to death or illness (nursing home).
“Fast forward another 10-15 years and things are likely to be much different. Financial and demographic changes will see the role of downsizing become much more important within the housing market. With life expectancy increasing and pension provision becoming more costly (phasing out of generous final salary schemes etc.) downsizing will become a more dominant feature of an individual’s financial planning. There will be financial push factors to downsize. The need to release capital to fund retirement and lower maintenance costs, rates etc. There will also be health/ageing push factors too. The expectation of people living well into their 80’s and 90’s will provide a major push factor for people to select more appropriate accommodation for a much longer retirement - potentially 25-30 years. The cost and appropriateness of a couple living in a large family home for a significant period of time will increasingly be called into question. We are well aware of the term first-time buyers and home movers. But will we see the emergence of the term/concept of ‘last-time buyers’. Individuals selecting an appropriate home (in an appropriate community) for a long retirement rather than reacting to circumstances such as illness or a life-changing event.
“The housing market will have to respond to these changes. The housing needs for someone in their 80’s or 90’s is different than the housing needs of someone in their 20s or 30s. Even if we are considering 1-2 person households. Mobility/access/security/amenities issues will be more important for the elderly. With the ageing population, the demands and healthcare needs of this age-group will become more complex. This will require a more holistic approach to planning the delivery of public services, infrastructure and housing for the grey population. The building industry needs to respond by building quality housing on an industrial scale for downsizers and their specific needs. The growing importance of the grey pound should shift them in this direction.”
The entirety of the UK is seeing a push towards accessibility, in public transport and high street curbs, but most importantly in renovating old buildings or designing new builds. While this not only shows the growing trend towards inclusivity, it also shows that governing bodies are finally looking to adapt to the older population in a more permanent manner.
There has also been an increase in people in their retirement looking at buy to let properties. Whether this is buying the perfect property to retire into, then letting it out until they are ready to do so, or buying a property ready for the children to inherit, or merely buying and letting property for extra income throughout their retirement, it has become a popular option. This may be due to people being more prepared for their retirement or taking advantage of the tax benefits that up until recently have been associated with owning a buy to let property.
While the increasing age of a population has many positive aspects, it also has other needs that must be met. Whether it is an increased risk of suffering from flu and colds or brittle bones that make trips and falls dangerous, healthcare is a major consideration for the silver demographic. The NHS is currently under strain, made worse by a breakdown of other elements of social care, will it be able to cope with greater demand in years to come?
Data gathered by the International Longevity Centre along with its partners reveals some concerning numbers: “With demand for NHS services already under pressure, new analysis by the International Longevity Centre – UK (ILC-UK) and supported by Engage Mutual, the over-50s life cover specialists, predicts the NHS may have to support up to one million more older people with serious illnesses within the next ten years.
“Serious Illness in the Over 50s” finds an estimated 2.6 million older people or one in eight of those aged 50+ (13.9%) were living with serious illness in England according to the analysis of the latest wave of the English Longitudinal Study on Ageing. ILC-UK predict this will increase to between 2.9 million and 3.4 million by 2025. The researchers forecast that across the UK nearly 3.1 million people were living with serious illness according to the data and that is set to potentially rise to between 3.4 million and 4 million by 2025.”
Meanwhile the House of Lords Ready for Ageing? Report continues to explore the issues that could not only cause problems to the silver demographic but also the NHS that serves them: “A rapidly ageing society means many more older people living for more years, often with one or more chronic long-term health conditions; a consequence of this and other pressures is a large increase in health and social care costs. Predicted increases in demand for health and social care from 2010 to 2030 for people aged 65 and over in England and Wales include:
· People with diabetes: up by over 45%
· People with arthritis, coronary heart disease, stroke: each up by over 50%
· People with dementia (moderate or severe cognitive impairment): up by over 80% to 1.96 million
· People with moderate or severe need for social care: up by 90%.
The treatment and care of people with long-term conditions accounted for 70% of the total health and social care spending in England in 2010, so the large increases in the number of older people with long-term conditions will create significant extra costs.”
One area that is seeing major investment in order to deal with this is wearable technology. Though some may see it as a little ‘Big Brother’, monitoring loved ones by a pendant or watch can keep us informed of falls and trips as well as offering a form of safety and security. There are many different types of wearable technology available, from audio accessories that leave the traditional hearing aid as a thing of the past, to watches that vibrate to inform you of incoming messages and thus avoid not hearing them. There are many ways in which the silver demographic will remain independent for longer.
The Telegraph is aware of the health benefits that will grow out of such innovative advances: “Wearable technology is another fast-expanding business area offering better healthcare and improved potential profits. A 2015 Healthmine survey found that 76 per cent of those who used digital health tools said they improved health – while 93 per cent of consumers who used telemedicine said it lowered their healthcare costs.” Matt Townsend wrote for The London School of Economics and Political Science, an article ‘What are the likely economic impacts of an ageing population on end of life care?’ And believes it is technology that will take the strain off other sources: “In the evidence review medical technology was consistently acknowledged as the biggest driver of health spending at end of life. Efforts should be made to prioritise medical innovations that improve quality of life. Initiatives that use medical technology to help people to remain living at home with complex or chronic diseases could lead to savings in long-term care, and greater labour force participation.”
Though the rise of the silver demographic has been on the horizon for some time, there is still a deficit when it comes to adult social care and other services that are associated with those in later life. The House of Commons Ready for Ageing? Report summarises this: “The UK population is ageing rapidly, but we have concluded that the Government and our society are woefully underprepared. Longer lives can be a great benefit, but there has been a collective failure to address the implications and without urgent action, this great boon could turn into a series of miserable crises.”
Though not heartening news, the lack of government preparation for this shift in population can be seen throughout almost every county as they lack appropriate housing, causing bed blocking at local hospitals. At no other point is this more apparent than Hampshire Council’s plans to make residents pay for their own adult social care. According to Councillor Fairhurst in a recent interview with get Hampshire: “The county council’s funding from central government has roughly halved in recent years and, with ongoing reductions, the county council is having to make some very difficult decisions about the services we provide and the way we do business. This is requiring us to look at how to deliver services in new and different ways, and to charge for services in a way that is appropriate and fair, to help offset some of the cost of providing support to a growing population of older people and adults with complex care needs.”
Kent County Council is putting funding into increasing the amount of older citizens being able to live independently. According to the Adult Social Care Structure: “More people will receive care at home and stay connected in their community avoiding unnecessary stays in hospitals or care homes. We will promote independence by providing targeted support and adaptations such as community equipment, enablement and other assisted living technology which are products designed to help people live independently in their own homes.”
This positive attitude that embraces independence and technology, hopefully, coupled with an increased popularity in adapted and appropriate housing, will reduce the strain that will inevitably land on the social care system. Though for many of the silver demographic, supported living seems a long way off, but with the increased population of over 55’s it is an important aspect of an ageing population that local councils and the government should consider.