Retirement Boom to Impact Consumption

As the number of U.S. retirees increases by 1.2 million a year, the resulting population shift will have a dramatic effect on consumption patterns, according to a report from The Conference Board. The report, “The Impact of Demographic Trends on Consumer Spending,” examines how spending patterns will change as people age, and provides perspective on how population-growth trends are likely to impact spending, Investment News reported. While the U.S. population will grow 8% between 2015 and 2025, the number of people ages 70-84 will spike by 50%. This is driven by the size of the Baby Boomer generation and increases to life expectancy for the elderly. This aging effect will have direct implications for consumer spending. The Conference Board projects the health care sector will see 15% growth, compared to 8% for consumption spending overall, and notes categories that are especially concentrated among the older population, such as long-term care, are likely to experience even more dramatic growth of about 20% – 25%. The reports forecasts that categories that will benefit from increased spending by retirees include household maintenance, gardening, reading, pets, personal care products and travel, while men’s clothing, food away from home, housing rental and used cars will see a decline in spending. There is also a geographic impact. Population shifts will boost consumption in Florida, Texas, Arizona and Nevada by more than twice the national average. Some retirement destinations will likely see more than 30% consumption growth, while other states will see little impact or a decline in consumption.