14 February 2020 - Article
Longevity, as the older demographic grows, is creating a number of business, social and legal opportunities and challenges across the world.
LONGEVITY AND THE SILVER ECONOMY
People are living longer than ever before as average life expectancies continue to grow above 80 years old in countries such as Japan, Switzerland, Singapore and more. Better education, improved diets, living conditions, hygiene and medical care are all partly responsible for this increasing longevity. In 2015 more than 1.6 billion people fell into the over 50 age bracket, and this is expected to double to 3.2 billion by 2050.
It is something to be celebrated and presents many advantages, though there are plenty of economic, legal and social challenges increasing longevity introduces. With recent reports predicting ongoing growth for the silver economies of many first world countries, businesses need to be aware of the issues surrounding the phenomenon.
DEFINING LONGEVITY AND THE SILVER ECONOMY
The silver economy is best defined as the market for goods and services for people aged 65 and over. However, it is sometimes referred to as people over 60, as either can be viewed as the optimum retirement age. A product of longevity, in the US the silver economy is currently valued at $7.1 trillion, which makes it the third largest economy in the world behind the USA as a whole and China. The spending power of the US’ silver economy is also expected to grow and reach $15 trillion by 2020.
It’s not just purchasing power and the sale of products and services that creates such a powerful silver economy. Economic activity generated through their needs, such as spending by businesses, governments and other consumers on the silver economy, creates additional jobs, taxes and further value. Plus, there’s all the productivity associated with the silver economy thanks to members of the workforce over 50, 60 and 65 years old.
AN ECONOMIC OPPORTUNITY
Many of the baby boomers have a large amount of spending power which they should retain throughout their retirement years. The majority will have experienced long-term, stable employment, returning substantial savings and pensions. This has seen many of the older generations’ spending power match and sometimes exceed that of younger consumers. In Europe, the median disposable income of over-65s is 95% that of the under 65s in Austria and 90% in Germany, while in France it is actually higher.
Private spending by those in the silver economy is predicted to grow as well, presenting many economic opportunities for businesses. Traditionally most businesses have targeted the younger generation, but now many are adapting to focus more of their marketing at the over 60s. Through using older actors/models in their adverts, creating strategic plans and adapting products, this growing demographic are being targeted.
CHALLENGES TO BUSINESS
However, targeting the silver economy is still not seen as desirable by many businesses. Despite its size and opportunity, this is due to a few reasons, including:
- There is a lack of market data for older generations, compared with younger ones, making it difficult to adapt targeting
- Companies don’t always want to have their branding associated with ageing, even if they are aimed at them
- Older consumers themselves are often reluctant to buy products and services aimed at the elderly too
As with any large and emerging market, there will always be such drawbacks that require further work to maximise the opportunity. There are also the economic challenges of supporting longevity, with the added stress to governmental and social services, pensions, healthcare and more.
LEGAL IMPLICATIONS OF LONGEVITY
Many of the same challenges and opportunities that longevity and the silver economy presents for businesses also affect the legal industry. With people living longer, they will require legal cover and solicitors’ services for a greater amount of time, increasing the chances of encountering legal issues as well. The growing demographic of over 50s and 60s has created longevity law in some areas, covering age discrimination, abuse, financial exploitation, business law, autonomy and personal choice, estate planning and more.
For the older generation and those coming up to enter the silver economy, it is worth considering the many areas longevity law can cover. Preventing financial exploitation and discrimination for part of one of the world’s largest economies could become a fast-growing area of the law in the next few years.
Longevity and the silver economy is creating a big shift in demographics for many areas of business and the law, with future developments set to take place in the coming years.