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Aging Global Population and Older Parents

• In 1980, median age of the world was 23.  According to the UN, by 2050 it will be 38.  In 1970, about half of the world’s population was younger than 20.  In 2011, that it was a little more than one-third of the population.  The number of people older than 65 increased from 5 percent to 9 percent between 1970 and 2011.
• Fertility has fallen below replacement rates in the majority of the 224 countries from which the UN collects data.
• China in 2010 had just 11.3 people over 65 for every 100 people in the working age population, less than half of Britain’s 25.1 and the U.S.’s 19.9.  The UN estimates that by 2045, China will be at 39, almost the same as Britain and above the 34.6 forecast for the U.S.
• American first time mothers have aged about 4 years since 1970 (25.4 from 21.4).  College educated women have a 1-in-3 chance of having first child at 30 or older.  The average age of American man when he becomes a father is between 27 and 28.

Potential implication: Countries will need to change immigration policies and aggressively pursue immigrants.

Potential implication: Resource demand will potentially plateau or decline

Economic effects on older Americans 

• Americans in their 50s and 60s have lost the most earnings power of any group, with household incomes 10 percent below what they made when the recovery began.
• Over the last year, the average duration of unemployment for older workers was 53 weeks, compared to 19 weeks for teens.
• Just one in six older workers who were laid off during the recession had found another job and half of that group had accepted pay cuts.  Fourteen percent said the new job paid less than half of previous job.
• More than one in every eight  people in late 50s is now on some form of disability.
• Prescriptions for patients 65 and older declined 3.1 percent in 2011.

Potential implication: Safety nets will be tested (and needed) more than ever before.

Potential implications:  Those that are older and out of work will cut back on everything.

Work longer

• Number of workers 75 and older has increased by 76.7 percent in the past 2 decades.  They were 7.6 percent of the workforce last year, up from 4.3 percent in 1990.
• 30 percent of Americans now plan to work until 80 or older, up 25 percent from A YEAR AGO in a survey of adults with incomes less than $100,000.
• Respondents in a recent survey said they will need a median of $300,000 in savings to support themselves in retirement, the average amount currently saved is only $25,000.  Fidelity claims that medical bills alone through retirement will cost $240,000 per couple in retirement.
• As of 2011, more than 36 percent of employees at state level and more than 35 percent at the local level were over age 50.

Potential Implication: Harder for Millennials to get into the work force and when they do, there will be a knowledge gap.

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The following are some recent facts and events that begin to illustrate the new reality of housing- that the majority of new construction will be multi-family, smaller and in cities.

New American Lifestyles

• There are two million  more adults ages 18-34 living under their parents roof last year than four years ago.
• 80 percent of units now have one bedroom. In the past, 60 percent had two bedrooms
• New units are as small as 500 square feet in Houston, even smaller in San Francisco and New York City.
• Married couples with children make up under one in four households today
• Between 2010 and 2011, 86.5 percent of small metro areas saw an increase in the number of people living in the city.
• Cities in the smallest metro areas (150,000-250,000 people) saw the largest increase in people within their boundaries.
• Cities in small metro areas grew in population by 0.89 percent outpacing suburb growth by 0.67 percent.
• Small metro cities are seeing more growth then big cities. 55 percent of cities in small metro areas grew at a faster rate than their suburban counterparts between 2010 and 2011. 51 percent of cities in large metro areas added population at a greater rate than their suburbs.
• The nation added more than 2 million households in the 12 months that ended March 31 about triple the average for the previous four years. Most of the gains came from baby boomers. – divorce?
• The number of people ages 25-29 who moved across state lines reached its highest level in 13 years

Multifamily housing

• Multifamily construction is two-thirds of the way back to prerecession peak.
• New apartment complexes are going up at fastest rate since July 2008
• In Houston, from January to September, construction permits for multifamily housing increased by more than 70 percent over the year earlier.

Single family housing

• Single fam construction is one-third back to peak
• Houston permits for single family increased 25 percent from Jan to Sept.

Economy and General Housing

• Net worth increase by $1.7 trillion in Q3
• Households got $301 billion bump in value of real estate assets
• Case-Schiller 20 home index has risen month over month for 6 months with four consecutive monthly year over year gains.
• Jobless rate of those ages 25-34 dropped from 9 percent at start of the year to 7.9 in November

• There have been 559,000 home seizures in 2012. The Fed Reserve Bank of NY had estimated as many as 1.8 million properties would be taken back this year.   Foreclosures are at a five year low.
• Foreclosures and short sales made up 24 percent of October sales. The same level as September but down 28 percent from a year earlier.
• There were 2.14 million existing homes for sale in October, down 1.4 percent from September. That translates to a 5.4 month supply at the current sales rate, the lowest level since February 2006.
• The number of residential properties for sale in the U.S. shrank to the lowest level in a decade. Prices have appreciated in the fastest pace since 2005.
• Median price of an existing home sold in October jumped 11 percent from a year earlier, steepest annual increase since November 2005.
• Almost a quarter of all US homeowners with a mortgage are underwater
• Fed reserve is buying $40 billion in mortgages every month which is keeping rates low.

General home building

• Pace of home building rose to its highest level in more than four years in October. U.S. builders increased their spending on construction projects in October by the largest amount in 5 months. Level of spending is still considered low.
• Builder confidence in the housing market rose for the 8th straight month in December to its highest point in more than six years. Sentiment reading of 47, means more builders have a negative outlook than a positive one

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First, for some time, the movie industry has targeted its filmmaking power at the young, yet last year, movie attendance declined among every demographic group (including the young) but one:  those over 60, which actually increased.  Second, the publishing industry has long looked to Baby Boomers to lead all segments in book buying, and they have…until last year.  In 2011, book-buying leadership slipped away from those born between 1945 and 1964 to those born between 1979 and 1989, Generation Y.

What an inversion of stereotypes! Book-buying young people and movie-going elders, really?  Looking a little deeper, the younger cohort’s book buying makes sense because they are buying books for school and are purchasing digital books. Yet that younger age group has never taken the book-buying lead in the past.  Also, looking a little deeper into the over-sixty segment of the Boomers, the reality that they have money and time, and, in fact, indulged deeply in movies in their past suggest that they are returning to what once drove their media interests.  They are indulging their movie-going whims just as the younger cohort turns to digital technology to satisfy their move-viewing needs.

These realities have taken both industries by surprise, and as a result, every movie studio has an “older demographic” film in the pipeline, and every publisher is looking for another title to sweep across the youth market.  Marketing messages will adjust accordingly.

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With members of the class of 2012 graduating this week across the U.S., it’s interesting to note the challenging economic times they and their immediate predecessors face. While many have noted that the unemployment rate for *all* college graduates is about half that of the general unemployment rate, it is those in the youngest cohort of college graduates who face disproportionate economic difficulties. Even when accounting for education, the effects of the recent Great Recession have been uneven on different age groups.

According to an estimate by Fidelity Investments, a married couple retiring this year should expect their healthcare expenses throughout retirement to total $240,000. Currently, 42 percent of Boomers have less than $25,000 saved for retirement. (Boston Globe, 5/9/12; Esquire, 4/12)

With respect to that group of recent college graduates mentioned above, those young adults shouldn’t expect a wave of career advancement openings to emerge from the mass-retirement of Baby Boomers any time soon. Too many Boomers remain financially unprepared for retirement, especially considering that housing prices haven’t climbed for a decade. Boomers are likely to stay in their jobs longer than expected and remain the driving force of the U.S. economy.

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While most pet owners continue to buy medications through their veterinarians, and online retailers, including those operated by Target and Walmart, some retail pharmacies are starting to see pet medications as an opportunity. Perhaps they see this opportunity coming from the confluence of some demographic adjustments in the U.S.: Millennials and Gen Y adults are marrying less often than past generations; the birthrate among women of all ages is the lowest in 100 years; and the median net worth of households headed by someone 65 or older is $170,000, 42 percent more than it was in 1984.

Do fewer children among the young and more wealth among empty nesters add up to more pets in Americans’ future and an increased wherewithal to cater to pets’ health needs?

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