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New York Life recently published an 11-page article for its employees discussing trends that will affect consumer behavior. I thought it was interesting enough to condense and share with all of you. All statistics quoted are from this article.

New York Life referred to five different trends.

  • The post-recession conspicuous consumers
  • Retirement’s new normal
  • The non-mobile middle class
  • The rise of social media
  • Changing family structure

The post-recession consumer: Life for the average American has changed. Household dollars are stretched, and people have changed their consumption habits. They have also become more conservative with their savings and investments, with 62% having cut back on household spending.

Value is now the buzzword for consumers. People are more price conscious but willing to spend if they feel it’s worth the cost. They are asking more questions before making decisions.

Retirement’s new normal: Americans are working later in life because of poor planning and inadequate savings. Today, they are finding they must save more during their working years, pay more out of pocket for medical and long-term care, and if they don’t plan adequately, scale back their lifestyles and even depend on their children for financial support in their retirement years.

According to a Wells Fargo survey, on average, Americans have saved only 7% of the amount they were hoping to save for retirement. Median savings, according to Wells Fargo, were $25,000, while 30% of those in their 60s had saved less than that. All this means boomers and seniors are unprepared for today’s financial realities.

Stuck in the middle class: In 1973, 53% of the nation’s income went to the middle class. By 2010, this was down to 46%. When adjusted for inflation, the annual incomes of the bottom 90% of U.S. families have been essentially flat since 1973.

This has made it more difficult for middle-income families to achieve many goals, including buying a home, paying for college educations and saving for retirement. Middle-class Americans are uncertain as to their ability to successfully cope and navigate the country’s economic trends and are looking for someone to assist them. Agents and advisors are telling them they need to take personal financial responsibility for their financial futures in order to maintain their lifestyles for what may be a longer than anticipated retirement.

Social media: In the early years of the Web, social media was primarily an information seeking tool. Now, users spend substantially more time on social networks. According to Pew Research, 66% of Internet users in 2011 used social networking. Eight years ago, this was just 8%. Social networking accounts for 16.6% of all the minutes a user spends online, and 9 out of 10 U.S. Internet users visit a social networking site each month.

The way people access social media is also changing. According to comScore, 64 million smartphone owners accessed social media or a blog via their mobile devices in December 2011, an increase of 77% from 2012. More than half accessed these destinations on a daily basis on their phones.

The key for the insurance industry is to adapt to the changing trends by using social media to reach out and to respond to the consumer.

Changing family structure: American families are no longer just mom, dad and 2.5 kids.  In 1970, 71% of all U.S. households were two-parent families. Today that ratio is less than 50%, and 28% of all households today consist of just one person.

There are a number of trends accounting for this. First, the number of married people is declining. In 1960, 72% of American adults were married. In 2010, less than half were. Part of the decline is the fact that people are getting married later — five years later, on average, than in the 60s. Another reason is the near tripling of the number of divorced or separated individuals.

In 2010, 49% of all births were outside of marriage, including more than half of the births to women under 30. The fastest growth in the last two decades has occurred among white women in their 20s with some college education.

The number of people living together as unmarried partners has nearly doubled since 1990, and 44% of all adults have cohabitated at one point in their lives.

Other nontraditional households are increasing as well. Among 24 to 34 year olds, 20% are living with their parents, up from 11% in the 1980s.  According to the Census Bureau, 56% of men and 48% of women ages 18 to 24 are living with their parents.

Among young adults, 35% are receiving financial assistance from their parents averaging $40,000 per year. This, in turn, is causing parents to delay retirement by an average of two years.

Senior demographics are also changing. More seniors are turning to their relatives for financial aid and are living with their families. According to Pew Research, 39% of adults with parents 65 or older reported giving them financial aid last year, and 20% of seniors lived with their relatives.

Demographics are also shifting for women. They currently account for 57% of all college students, according to the bureau of Labor Statistics. Pew Research and Working Mother magazine state that women are the primary breadwinners in 40% of households.

Women are having fewer children. The U.S. birthrate hit an all-time low in 2010, down from 18.4 in 1980 to 13.5 in 2010.

For the first time in American history, more than 50% of women are single. That’s up from 29% in 2000 and 35% in 1950.

Women also control 60% of all the wealth in America and are involved in 90% of the family financial decisions. Marketing to Women states that women make 89% of the banking decisions for their families.

So, what does this all mean? It means the industry, agents and financial advisors need to adapt to the changing times and demographics. Reliance on friends, family and government programs may be unrealistic. The LIFE Foundation is here to help you communicate the message to your clients that they need to take personal financial responsibility for their planning decisions by using life insurance and related products to help achieve their goals.

 

For more from Marvin Feldman, see:

A New Norm

What You Should Be Asking Clients

Want to Reach Young People? Embrace Social Media