Producers Will Have To Embrace An Income Distribution Focus Soon

“Its amazing how many times you see it in the media–they have all the boomers retiring in the next five years,” said Dr. David K. Foot, professor of economics at the University of Toronto, who spoke from the main platform.

Foot explained that the first boomers were born in 1946, so today they are age 57. Its likely that they will continue to work for an additional three to seven years, he continued.

This is just the beginning of the boomer wave. “So, the first quarter of the Baby Boomers are starting to think about retirement, the rest of them are too busy raising their kids to think about it,” he said.

Foot noted that the peak of the Baby Boom generation was born in 1960. These people, he said, wont be retiring for another 20 years.

By taking a close look at the demographics of the country, Foot drew some conclusions on certain trends found in the economy. For example, after the boomer peak of 1960, throughout the rest of the 1960s and 1970s there was generally a decreasing trend in the number of new births. Eventually, this decrease would lead to the labor shortage seen in the early 1990s.

Similarly in some communities, the reduction in the number of births in recent years will eventually lead to underpopulated schools a few years down the road.

In addition to exploring demographic trends, Foot expanded on the spending lifecycle of people as they age. For example, when people have children in their 20s and 30s they spend a lot of money on child care. After their children grow up, this segment of the population spends money on other things, like eye care. Eventually, as they continue to age their spending shifts to health care and prescription drugs.

Looking at life insurance products, Foot noted that spending on life insurance products hits a peak as people reach their late 50s. “Many of these boomers are beginning to want new products. You need a new product mix for people in their 50s. Theyre entering the next phase of their life, and they need to plan for retirement,” he said.

By “mirroring” this life cycle spending approach to the demographics of the population, it can be determined what products and services will be successful. Foot noted that the success rates for different products in different segments of the economy are dependent on “how many people are in the age groups needing those products and services.”

Another factor that needs to be considered when looking at demographics is the improvements in life expectancy the country continues to see. According to Dr. Richard Woychick, director of The Jackson Laboratory, there will be an increase in longevity over the coming years. “The National Center for Health Statistics and the Social Security administration are predicting that we can expect to live another 10 years–a life expectancy of 80-90,” he said.

Reproduced from National Underwriter Edition, May 12, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.