Over 50s have all the cash - and they're not afraid to spend it

Baby boomers drive spending

The over 50s outspent their younger counterparts for the first time in 2016 - splashing out an impressive total of £376 billion on the good things in life. This means the 'silver pound' contributed £119 billion to the UK economy - which begs the question of why businesses are so obsessed with selling to the young.

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The figures, from Hitachi Capital UK and the Centre for Economic and Business research, found that the silver pound is now worth over 6% of GDP. Crucially the contribution that the over 50s is making to overall spending is growing much faster than the spending of young people - three times faster in fact - which means that in every subsequent year the silver pound will carry more and more weight.

Why?

This is the result of a combination of forces. As people live longer, the number of over 50s is growing - and hit 23.6 million in 2015. Meanwhile, more over 50s are employed nowadays, and as a result are earning and spending more than before. Those who have retired are benefiting from the triple lock, which has helped push up retirement benefits by 15% in the past five years. And let's not forget that the Baby Boomers now fall firmly into this bracket - and this was the group of people who invented the consumer society in the first place.

At the same time, younger households haven't fully recovered from the last recession, and are struggling with sluggish wage growth - older people have seen wages rise more than twice as fast as those aged 30-49.

Robert Gordon, CEO of Hitachi Capital UK, comments: "Not only have we shown that this group is now the dominant force in the UK economy, but also that their contribution across jobs, spending and wealth creation is growing at a considerably faster rate than the under-50s'. We are now seeing the over 50's setting up and running their own businesses at a faster rate than any other age group, directly employing nearly 10million people, 2 million more than the under 50's."

Why aren't shops selling to older people?

It begs the question, therefore, as to why so many businesses continue to be obsessed with selling to younger people. Clothes are the most striking area where the number of brands targeting older people can be counted on the fingers of one hand - while those targeting people in their 20s over-run the high street.

With a very small number of exceptions (including M&S which has used Twiggy, Annie Lennox and Emma Thompson), there are very few aspirational fashion images shown to older women: adverts and mannequins don't tend to feature older faces or figures. When it comes to staffing these shops, meanwhile, the sales assistants are almost universally young, and in many cases exhibit something akin to horror if someone over the age of 50 dares walk through the doors.

Technology companies, meanwhile, are obsessed with Millennials. There's an enormous number of older people crying out for technology to make life easier and more entertaining, but there are no role models, sales strategies or brands established to help them embrace the latest gadgets.

In fact, according to Goldman Sachs, nearly two thirds of businesses focus their efforts on targeting Millennials, while Baby Boomers are being sorely overlooked. Meanwhile, the Institute of Customer Service discovered that 93% of them feel they are let down by customer service, and 49% say they have stopped buying products or paying for services as a result.

But what do you think? Are shops neglecting the power of the grey pound? Will they ever wise up to the potential of the older market? Let us know in the comments.

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Figures from Saga show that the over 50s now account for the majority of money spent by Brits on travel and tourism. They have the time to spare, the money, and they are healthy enough to take on the world.

A poll from Abta found that in the wake of pension freedoms, 35% of people were considering cashing in at least part of their pension to travel. A separate study by Senior Railcard found that pensioners take an average of three holidays a year, plus two weekends away, and 17 day trips.

Research from Senior Railcard found that retirees eat out an average of three times a month. However, one in ten do so more than twice a week, and one in three people said that one of the first things they did when they retired was to go out for lunch with their friends.

Of course, just because retirees want to enjoy themselves, it doesn't mean they are happy to throw money away. The vast majority are keen to eat at lunchtimes, when a fixed lunch menu tends to be cheaper, and canny retirees are skilled at tracking down pensioner special offers too.

Figures from the Office for National Statistics show that on average nearly a fifth of the money spent by people aged 65-74 is on leisure. This includes everything from the cinema and theatre to golfing and gardening. They spent more on this than on food, energy bills and transport.

A report by Canada Life found that retirees are spending £4,279 a year on having fun - that’s more than £1,000 more than they spend on boring essentials, and is a 74% increase over the past ten years. It went on to predict that this trend was set to continue, and that pension freedoms would encourage people to spoil themselves a bit more in retirement

Pensioner property wealth is now over £850 billion, and all these family homes don’t look after themselves. The Senior Railcard survey put home renovations in the top 20 activities people got stuck into on retirement, and figures from ABTA found that almost a third of people who were considering raiding their pension pots under the new pension freedoms planned to spend the cash on their home. This seems like an eminently sensible investment - looking after what is undoubtedly their most valuable asset.

Unsurprisingly, while some pensioners are very well off indeed, others are struggling with debt. Figures from Key Retirement found that the average retiree has £34,000 of debt.

Most of this is mortgage borrowing - in many cases driven up by the number of people who unwittingly signed up to an interest-only mortgage. However, credit cards, overdrafts, and loans are also common. It’s why so many pensioners have used pension freedoms to access enough cash to pay their debts.

The day to day basics are swallowing up their fair share of pensioner cash too. On average, people aged 65-74 spend a third of their weekly income on essentials like food and bills - which is hardly living the high life.
The bank of gran and grandad has become an increasingly vital source of cash for families. According to Key Retirement, of those who release equity from their property, 21% of them use the cash to treat their children and grandchildren. This includes an average of £33,350 to help children get onto the property ladder, £6,000 to buy them a new car, £11,000 on family weddings, and £24,780 giving grandchildren a helping hand.

While retirees are quite rightly spending what they need to enjoy retirement, they are hardly all throwing caution to the wind, buying flash cars and spending the kids' inheritance.

Most expect to have something left over to pass onto their family after their death. Some 69% expect to leave property in their wills, and 75% expect to leave cash - according to Unbiased.co.uk - because while baby boomers know how to have fun - they also know how to save for the future.

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