Today, boomers are the longest living generation in history and remain at the forefront of the economy. With control of 70 percent of the nation's disposable income, and average annual spending that tops 3.2 trillion dollars, this cohort holds sway over a wide-range of industry and lifestyle trends. This dominance is likely to continue as spending by Americans over 50 is projected to increase by 58 percent through the next two decades.
Boomers are often more apt to set the trends than follow them. This spirit is reshaping the retirement landscape with new methods for meeting both financial and personal goals, while catering to a more active lifestyle than previous generations of retirees. Below we look at some of the top retirement expenses to see how boomers are driving new trends in these industries as they pursue meaningful retirement.
Retirement Expense: Transportation
Transportation is the second biggest drain on retirees' annual budget.As transportation needs and technologies evolve, boomers will lead the charge for what may be a radical change in how we live in retirement, and how we get around after slowing down.
Retirement Trend: Self-Driving Hotbeds
Retirement communities are proving ideal settings for autonomous ride-sharing services. While self-driving cars are still in early development stages, many major car brands and transportation-related companies are putting a lot of resources into the technology. There are already multiple retirement communities in Florida and California that have deployed the service for residents, with cars limited to 35 mph that only drive within the community.
The benefits of self-driving cars could be two-fold: safety and financial. The service offers a safe, reliable option for individuals with age-related difficulties getting around at night or other challenges. Plus, as more communities incorporate this service and bring it on as part of an amenity package, seniors' budgets may benefit from eliminating expenses like car payments, insurance and maintenance.
Retirement Trend: Going Abroad
Many baby boomers plan to travel in retirement. According to an AARP study, 38 percent have already created a travel bucket list they hope to fulfill in the coming years.A growing segment of retirees and pre-retirees are even finding their new home is overseas. The Social Security Administration listed an increase of 100,000 payments to overseas residents in recent years. Experts assume there are far more baby boomers retiring abroad who do not receive checks internationally.
This expat approach is another age-in-place option appealing to new retirees. Often, major international metropolitan cities provide the same living benefits as domestic options, with less reliance on personal transportation, and at a fraction of the domestic cost. For instance, an International Living report lists five capital cities throughout Europe, Asia and Latin American where one can live on less than $37,000 a year.
Retirement Expense: Health Care
Boomers are aging into retirement at the nexus of sweeping innovation in two key industries: health care and technology. Moving forward, the groups are poised to work in tandem to revolutionize late-life living. Pew Research recently reported an uptick in technology adoption for the group. Boomers are now far more likely to own a smartphone than they were in 2011 (67 percent now versus 25 percent then). Furthermore, roughly half (52 percent) of them now say they own a tablet computer, and a majority (57 percent) now use social media. Point being, the industry is well on its way to wide-spread integration into retirement life.
Retirement Trend: Active Lifestyle
Today’s retirees are, by in large, healthier and more active than previous generations. As a result, we are living longer and enjoying lengthier, happier retirements that entail more activity. This increasing interest in an active late-year lifestyle dovetails with a growing fitness technology and wearables market. Boomers have traditionally embraced technology, and are currently emerging as a prosperous market for fitness wearables manufacturers.
Fitness tracking has grown from niche to ubiquitous in a matter of years, and does not show signs of ebbing. Look no further than Apple who recently announced their increased foray into health care and wellness. These are slated to be an integral part of the tech giant's app, services and wearables’ future. They are also aiming to become a personal health record service, jumping into research, medical devices and more.
Retirement Trend: Health Care Innovation
As baby boomers have come of age, the health care system has scrambled to accommodate the significant impact a generational patient influx will have on already strained medical resources. For the individual, health care costs are a perennial concern in retirement when annual medical expenses average 13 percent of spending. (Plus, expected to increase with age).This combination of factors may serve as a catalyst for major health technology developments, which can play a significant role in reducing costs and improving care for the demographic.
Baby boomers, as much as younger patients, are ready to utilize technology for an active role in self-care. Research from the College of Public Health and Social Justice shows more and more boomers are turning to health websites, email, automated call centers, medical video conferences and text messaging as part of their health care services. Meanwhile, consumer health technology providers are broadening their services to reach patients where they live. Additional improvements and implementation of better communication platforms and health-monitoring services can help enable home and self-care. As these patient and provider technologies evolve, boomers may find themselves on the leading edge of a more efficient health care system that allows for more patient care while keeping costs low.
Important Steps on the Path to Retirement
Whether hoping to begin, buck or follow a retirement trend, the steps taken today can help protect a life's work and ensure lifelong income for what the future brings. While no two retirements are alike, retirement benefits like principal protection and securing a guaranteed income source are universal needs. That's why finding a retirement income solution that helps meet those needs is an important early step in pre-retirement planning, regardless of where your retirement takes you.
"You only have the moment. You can't live in the past and you don't know what the future is going to bring," said Kathleen Casey-Kirschling, the original baby boomer, on her 70th birthday.
That's sound advice for a positive outlook, and underscores the importance of securing financial stability.
In our retirement trends series, we also looked at retirement trends in housing. In our last installment, we will explore retirement income trends.
The content provided is for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact your state insurance department to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.