Facing a bear market alongside rising inflation is enough to make any consumer skittish. But for one in every seven Americans, or seniors 65+ in the U.S., it can be downright scary. Seeing their account statements drop is a stark reminder for seniors of reduced cash flow from interest and investments.
Many retirees with the highest discretionary spending follow the 4% rule, or the idea that a retiree can safely spend 4% of their retirement nest egg annually. Nest egg reductions translate to monthly budget reductions.
Nowadays, even the expected monthly income of retired seniors from Social Security distributions to the 68% of retired seniors who have a pension, is cause for concern. With a fixed cash distribution each month, it is painfully apparent to seniors that they are spending more and getting less for it due to inflationary effects. The effects of inflation are most visible in the grocery aisle. Even though seniors spend less on gas than other cohorts, they spend more on food at home.
What is the only aspect of their household economy that seniors truly can control? Their spending.
Marketers in all sectors understand that seniors have spending power. And it’s not all health and personal care spending: 27% of seniors have been active recently with luxury retail, specialty sporting goods, upscale travel or entertainment services, per Acxiom retail activity data. Seniors are also shopping online now more than ever, with 79% making a purchase on Amazon in the last 3 months (per Resonate).
Which marketers are most affected by a senior consumer pullback?
Nonprofit marketers know how important the senior cohort is to recurring donations, as contributions generally escalate with age. Seniors spend about 62% more than the 35– to 44-year-old age cohort on gifts and charity. Seniors shop early and often for friends and family, so senior spending shows up in holidays and Q4 promotions for retail products.
Seniors are also ready to start traveling this year, with the majority of trips involving traveling with or to family (per Mintel). Senior discounts and savings for consumers willing to sacrifice a bit of time for money may help manage yield during off-peak times.
Marketers with big footprints in senior-heavy states like Maine, Florida, West Virginia and Vermont should also look to understand how confident their consumers are about their household economies. Emphasis on features, benefits and rational purchase drivers may resonate now more than ever.
For seniors and retired consumers, so much of the current economic state is out of their control. It may seem there is only one way to react -- with discipline. For seniors, this means pulling back on spending to maintain the annual budget they’ve set for themselves despite getting less for their budget. For marketers, this means giving seniors more of a feeling of control over their financial health.