Page 521 - Business Principles and Management

Case Study

AGING OF “BOOMERS” LEADS TO POTENTIAL INVESTMENT

OPPORTUNITIES

Baby boomers, people born between 1946 and 1964, have the potential to
strongly impact the health care and retirement planning systems. Accord-
ing to the Census Bureau, there are 76 million baby boomers. This group
will make up 20 percent of the population by 2030. The wants and needs
of aging baby boomers provide a wide range of investment opportunities.
Boomers spend more than $1 trillion a year, according to an estimate
from American Demographics. Industries producing boomer-friendly prod-
ucts and services offer attractive investment opportunities. Top boomer
“niche” industries include travel, leisure, and recreation; senior living;
health care services companies; chronic disease management; generic phar-
maceuticals; “vanity” products and services; and financial services.
The money that baby boomers spend on travel, leisure, and recreation
will help the industries related to cruises, motor homes, high-end hotels,
at-home entertainment systems, health clubs, and golf.
Companies that provide senior housing services will benefit as
boomers enter retirement. Home improvement will benefit as boomers
retrofit their homes to accommodate their changing needs. Assisted liv-
ing is another industry that will cater to aging baby boomers, and nurs-
ing homes could see a dramatic increase in demand as people live longer.
Boomers’ consumption of health care products and services is rising.
Specialty pharmaceutical and biotechnology companies that develop
drugs for diabetes, arthritis, osteoporosis, cancer, heart disease, and
Alzheimer’s will experience greater demand from an aging population.
Pharmaceutical prices will continue to spur the growth of generic drugs.
Higher demand for pharmaceuticals will increase the need for benefit
service managers.
Baby boomers had the highest rate of cosmetic procedures of all age
groups, according to the American Society for Aesthetic Plastic Surgery.
Industries linked to cosmetic procedures and personal-care products will
benefit from boomers’ attention to their appearance.
Advice and guidance in the areas of wealth management and trust
services are increasingly important to boomers as they move into their
golden years. The aging of the baby boom generation could provide in-
vestors with a variety of attractive investment opportunities.

THINK CRITICALLY

1. What investment opportunities arise from the needs of an aging
population?
2. Why are baby boomers an attractive customer base?
3. Give an example of how aging baby boomers affect the housing
industry.
4. How can financial services offered at banks be adjusted to the needs
of individuals in assisted care centers?

508