Helen Dennis writes about the economic contributions of people aged 50 years and older in the Successful Aging column this week.
Q. I have heard a lot about the longevity economy and don’t fully understand what it means. Can you explain it and why is it important? Many thanks. N.D.
Let’s begin with the term “longevity.”
Often it is used as a substitute for aging, yet the words are different from one another. Aging can be defined as a progressive decline to maintain one’s biological and physiological functioning. Longevity does not include decline. It is the average lifespan under ideal conditions suggesting how long we could live if all is well, per the Max Planck Institute for the Biology of Aging.
Now to the longevity economy. It refers to the economic contributions of people aged 50 years and older. AARP further explains it is the sum of these contributions that include the goods and services they purchase directly in the market. It also includes other economic activities that this spending generates.
The contributions of this age group are noteworthy. In 2020, the 50-plus population contributed $45 trillion to the global GDP or 34 percent of the total, according to an AARP report.
The longevity economy in the U.S. is equally striking. For the first time, it includes four generations of age 50 and older: The GI Generation (1901-1926); the Silent Generation (1927-1945); the Baby Boomers (1946-1964) and Generation X (1965-1980).
These generations collectively represent one-third of our population and, taken together, would be the third-largest economy in the world, just after the U.S. and China.
To quote an article written by AARP CEO Jo Ann Jenkins, “This age cohort is transforming markets and sparking new ideas, products and services … across our economy.” As they continue to work, “They are fueling economic growth past the traditional retirement age. They earn wages, spend more money, generate tax revenue, give back to social causes and create demand for products and services that stimulates job growth.”
Furthermore, “they contribute $8.3 trillion to the U.S. economy and create an additional $745 billion in value through unpaid activities, such as volunteering and family caregiving,” according to AARP’s Longevity Economy Outlook report.
Businesses can gain from this vast cohort. At least five industries are benefiting: financial services, health care, technology, leisure and hospitality and farming, natural resources and mining.
Let’s just look at healthcare. This is considered a recession-proof sector of the economy and is one of the fastest growing. Since 2017, it has been the biggest employer in the country. And the 50-plus population plays an important role in using almost two-thirds of healthcare services in 2018.
Older adults also are consumers and represent just over half of all consumer spending, according to the U.S. Consumer Expenditure Survey mid-year 2020. They generate just over half of all annual household income and spend more than those ages 18 to 49.
So why is this important? Some believe that older adults are a drain on the U.S. economy. Such a statement ignores their economic contributions and perpetuates a stereotype that older adults are an economic liability rather than an asset.
Such misperception carries over to a misunderstanding of older adults as consumers, which has led them to become an underserved market even though they own a majority of household wealth.
Again, one reason is the belief in ageist stereotypes. Here are some examples of such beliefs: younger consumers are easier to connect to, older adults have limited spending power, are brand loyal and unwilling to try new things. Add to that the belief that those aged 50 and older don’t engage in social media.
Joseph F. Coughlin, founder and director of the Massachusetts Institute of Technology AgeLab and author of “The Longevity Economy: Unlocking the World’s Fastest Growing and Most Misunderstood Market,” has an interesting explanation. He writes in his book that the “belief of old age is made up” and is “delusional.” He notes our concept of old age is grounded in biology which has become dangerous because it limits what we can do as we age. Of equal importance, it distracts companies from serving the true needs of older consumers. And this group is growing larger, wealthier and more demanding, he writes.
So this message is about building awareness: Let’s recognize older adults as drivers of our economy, as valued older consumers and as an asset to our society.
Many thanks, N.D. for your question. Stay well and spread the gift of kindness.
Helen Dennis is a nationally recognized leader on issues of aging and the new retirement with academic, corporate and nonprofit experience. Contact Helen with your questions and comments at Helendenn@gmail.com. Visit Helen at HelenMdennis.com and follow her on facebook.com/SuccessfulAgingCommunity
