Will senior consumers drive the economy of the future?
The world population is ageing, and seniors (aged 65 and over) are the fastest-growing demographic group. This is driving consumption of goods and services that enhance seniors' living standards, and it's a trend that offers many positive opportunities for investors.
Population ageing is not confined to Europe — it's a global phenomenon, as can be seen in the population charts for China and Japan. Seniors rose from 6% of the world population in 1990 to 9.3% in 2020. That proportion is expected to continue rising, to reach 16% by 2050, when one out of every six people will be aged 65 or over.
In economic terms, ageing is generally viewed as a negative phenomenon. However, there are many positive aspects and opportunities linked to active, healthy ageing. This process is creating a growing demand for goods and services aimed at improving the quality of life in areas such as housing solutions suited to the needs of the elderly, mobility, leisure, travel, health and medical care, finance and education. Global ageing will transform spending habits and, as a result, seniors will be an increasingly important segment of the economy in the future.
Changes in the spending priorities of this segment of the population, which has spending power, represent opportunities for investment. Out of the range of investable options linked to seniors, three in particular stand out:
1. Real Estate
According to the OECD, by 2030 all major cities in member countries will see a sharp increase in the number of older people, and cities will need to adapt and develop a range of short- and long-term strategies to respond appropriately to the challenges and opportunities of an ageing population. There is an untapped market for quality housing adapted to the needs of older people. This may explain, for example, why the assisted living industry has exploded in recent years.
2. Silver Tech
A new wave of start-ups is developing platforms, apps and devices to help older people live independently, combat diseases such as dementia, and improve their quality of life. Examples include telemedicine, mobile clinics and health monitoring using smart devices, which help improve care in underserved areas and allow for more personalized attention. Moreover, artificial intelligence (AI) and data-driven innovation will provide practical solutions for improving the quality of life and affording greater independence.
3. Financial advice
Wealth management in developed economies is an increasingly important segment of the financial sector, according to leading strategic consulting firms. In a paper entitled "The Future of Wealth in America", the Deloitte Center for Financial Services projects that U.S. household assets will increase from USD 87 trillion in 2015 to more than USD 140 trillion in 2030, of which nearly USD 64 trillion will be in investable financial assets. So, Baby Boomers, particularly the younger cohort, will continue to be major users of financial services through 2030. By then, this demographic segment, numbering over 60 million, will be aged between 66 and 84. We expect rapid growth in advisory services, given the need to plan investments and manage the transfer of wealth to upcoming generations.
At Santander Private Banking, we see an interesting range of investment opportunities connected to the senior consumer of the future. Through our Future Wealth advisory framework , we are working to select those companies that best channel this innovation stream.
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