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Delayed Retirement: What this trend means for businesses that market to the 50+

Retirement has been the ultimate goal, a natural end to a career, for generations. And with Social Security, a hard and fast date of retirement (currently age 65) has long been something people plan toward. But things are changing. More and more people delay retirement for a number of reasons. The fact that Baby Boomers are working longer and have more disposable income can have a profound effect on your business if they make up a sizeable portion of your customer base.

Why They Wait

For a lucky few, retirement is delayed because they enjoy work and want to stay busy. A job for this sub-segment is a source of reward and social interaction. Going into the office every day makes them feel knowledgeable, confident and valued. Another reason people choose to continue working is that they feel healthier compared to previous generations. They have the energy and mental clarity, so why sit at home? This is especially true among the better educated Boomers. They tend to have more opportunities to keep working.

But for many others, probably a much larger portion of Boomers, they are working longer because they feel the need to. Due to chronic under-saving, they can’t quite afford to retire — at least not in the style they prefer. In fact, studies show that more than half of today’s households don’t have enough retirement income to maintain the lifestyle they currently enjoy, even if they work to 65. It’s also tied into the reality that defined pension plans are no longer very common.

Still others push their non-working years off so they can stay on their employer health plans or boost their monthly Social Security payments.

What It Means For Businesses

So how does delayed retirement affect the spending habits of Boomers? And how do they spend the paychecks they earn? Interestingly, their spending habits are often similar to those who’ve retired but, because they’re working, they have less free time than the typical retiree.

Whether it’s official retirement or something less (such as reduced work hours) new retirees commonly overspend on food and vacations. Even though they feel the need to work in retirement, they have a mistaken sense of how much money they have at their disposal. Restaurants, travel clubs and resorts may benefit from this reality in the short-term. New retirees tend to tick off their bucket list items, take long-awaited trips or fill newly found free time with dinner with friends.

Eventually, however, spending falls back to a more sustainable level and more familiar patterns. Forty percent is spent on housing and about 11% on health care.

Keep in mind too that for some Boomers, even if they have delayed retirement for a few years, they are trying to set themselves up to live on a fixed income. Typically that means consolidating debt. As a result, they’re going to be wary of new, long-term loans. So financing new big-ticket purchases can prove challenging.

Finally, retirement is a huge life change for most people. It’s exhilarating in some ways and plain scary in others. Be aware of this emotional rollercoaster and carefully judge where customers are on the journey. Understanding Baby Boomers’ developmental life stage and mindset will help make the sale or customer service process more rewarding for all involved.

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