Ageing population: silver spending opportunities

In Ageing population: the golden age of silver spending we showed that older generations collectively control an increasing share of global wealth and spending. The global spending power of consumers aged over 60 years old is set to reach US$15tn by 2020, from $8tn in 2010¹.

Looking beyond simply the scale of this spending power, it is critical to assess how this money will be spent.

Living better

Average global life expectancy increased to 72 from 66.5 years between 2000 and 2016². As we reviewed in Ageing population: living longer or better?, increased life expectancy will drive spending on traditional age-related categories, such as healthcare.

However, when looking at health-adjusted life expectancy, or the number of years a person can expect to live a healthy life, new patterns emerge. Between 2000 and 2016, health-adjusted life expectancy increased to 63.3 from 58.5 years. This means that more older people are enjoying a more active lifestyle².

Feeling younger

Recent academic surveys around age perception show that as we get older we still feel younger than our chronological age, in many cases by over a decade³.

By living not only longer, but healthier lives, how affluent older people spend their wealth could reshape entire markets. Below we consider potential effects on the travel and tourism and the healthy living industries.

Investment opportunities

Travel and tourism
Travel is cheaper, faster and more comfortable than ever before; and more older people now have the time, spending power and health to make the most of it.

The cruise industry is one likely beneficiary of this trend given that more than half of their passengers are over 50 years old⁴. This potential for growth follows the surge in passenger numbers seen in the last decade, with 30m passengers expected globally in 2019, from 17.8m ten years ago⁵.

Demand for cruises has increased twice as much as international holidays, with the biggest growth coming from Asia-Pacific where demand tripled between 2007 and 2017⁶. With a rapidly rising middle class and ageing Asian population, this could provide another significant revenue generator.

Specialist travel
For some, cruising may be too relaxing for their tastes. Instead, those with a keen sense of adventure will fuel demand for experienced-based getaways, such sports holidays, ‘gastro adventuring’ and educational tours or retreats in far-flung corners of the world.

The increasing demand expected from older people has led to a growing number of ‘silver travel’ providers – notably given more mature travellers tend to spend more. For instance, research from Barclays Corporate Bank revealed that over-65s spend 27% (£708) more on average than those aged 35–54.

Specialist tour operators and travel agencies catering to older holidaymakers will benefit from the increased propensity to travel. Within this group, solo travellers and personalised packages are particular areas of growth. Even traditional operators, who have historically targeted younger age groups, can seek to fill quiet periods by broadening their target market to older travellers that can travel out of the peak season.

Looking and feeling good

While older people may see themselves as younger, they also want to look and feel physically fit.

As they seek to stay fitter and enjoy recreational activities for longer, the fitness industry will see greater demand from the older generation. Related industries, such as sports equipment and activewear, will also receive a boost in demand, aided by the greater spending power of the older people compared with their younger counterparts.

Ageing populations wanting to look and feel their best will also be a significant driver of anti-ageing consumer personal care and beauty products. European women over the age of 60 account for 34% of the facial skincare market, buying twice as many products as women under 25⁷. Silver spenders are also willing to pay for premium products; on average, the 50-and-overs spend £192 a year, 47% more than the below-50 age group's £131⁸. Seeking to look good suggests that cosmetic products, vitamins and dietary supplements, and aesthetic dermatology sectors are possible investment plays.

Investment conclusion

Many investors look for opportunities around ageing populations where this demographic starts to experience poor health and disability. We also advocate looking beyond this to consider the increased vitality of this group. Companies in tune with the changing beliefs and consumption of these silver spenders will benefit, and so will the investors who select them.

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