According to AARP’s survey, many of America’s baby boomers feel they are lagging behind financially. Such worrying sentiments are likely to drive changing patterns of consumption: makers of consumer packaged goods must now focus not only on offering high quality products, but also at lower prices and more readily at discount channels.
The AARP Life Stage Study, which was based on a nationwide telephone survey of 3,666 adults age 18 and older, found that although many baby boomers are upbeat about their general quality of life, they feel very differently about their personal finances.
Only 20% of boomers were very satisfied with their personal finances, versus 61% who were happy with their mental health and 31% with their physical health. The study went as far to say that, “many of these boomers feel financially strapped.”
Datamonitor’s study of the US Census Bureau’s 2001 Current Population Survey clearly supports AARP’s findings – around 22.4% of baby boomers earn less than US$15,000. Furthermore, another Datamonitor’s research found that an estimated 42.2% of baby boomer households in 2000 maintained less than $50,000 in wealth versus 26.5% boomer households maintaining over $150,000 in wealth.
The future also looks grim – more than half of boomer respondents believe that they are very unlikely to reach their improvement goals in personal finances. The prolonged economic slump is unlikely to help. In 2001, the unemployment rate for workers aged 35 to 44 years jumped 40% to 3.6%, and the rate for those aged 45 to 54 rose 49.6% to 3.1%.
Falling purchasing power and the need to boost savings for retirement are likely to encourage boomers to reduce their spending or to substitute luxury products with more economical ones. CPG manufacturers should respond to this expected trend by supplementing their luxury offerings with increased focus on discount products and channels, such as private label or distribution to dollar stores.
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