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Sunday, January 29, 2012

Generational Economics: The Age of Increased Equity

Marketing Observation:  Draw an arbitrary line around that segment of the population that begins at around age 45 and runs up to around age 59.  This is the Age of Increased Equity.  Why do I make that assertion?

In this life stage, there is a very good chance that the careers in a household are very well established.  People in this age group are often earning at a higher level than at any other time in their lives.  (Of course, some households have had to adjust that relative income due to recession-related job loss.)  Still, many people in this life stage are working in professional occupations (doctor, lawyer, engineer), as upper managers and executives, or have been in a blue-collar job long enough that they could be called, “Blue Chip Blues.”   

Meanwhile, this pinnacle income is happening just as the fixed expenses in their lives are beginning to fall.  Think about this combination of events:  By now you have a solid career, lots of experience, and you’re probably earning more money than ever… and it’s happening just about the time you’ve pared-down your consumer debt, kids are leaving home, and you may even be close to paying off your mortgage. 

True, there is probably college tuition to worry about, and helping young adult children get their feet on the ground… and a lot of folks in this life stage are starting to realize they have some catching-up to do with their investments and retirement savings.  But each of these expenditures is nonetheless, “discretionary.”  That’s the best way to describe the Age of Increased Equity.

Marketing Implications:  Life for many people age 45-59 looks a bit different today that it did just five or six years ago.  Their post-recession realities have them revisiting how much equity they have in their home and other hard-earned investments.  (A lot of us have some catching-up to do!)  They’re helping adult children get on their feet under economic circumstances that seem more difficult than when they themselves were that age.  (I don’t mean to speak for all Baby Boomers, but when I reminisce, I’m more inclined to think of things like the moon landing and rock & roll, rather than the oil embargo of the mid-seventies and the stagflation of the late 70s and other woes.) 

Few people age 45-59 were born into technology… they’ve had to adapt.  They’re competing with a younger labor force that has never known a world without the personal computer.  They’re likely to plan on working longer to compensate for shrunken investments and the fear that social security won’t survive their full lifetime.

In spite of all the challenges they face, the Age of Increased Equity has earned the right to indulge.  Nicer cars.  Nicer homes.  And not just travel… but experiences.

Is this a group you are (or should be) selling to?  Have you stopped to think about—or better yet, talk to them about—what their preferences and priorities are?

Mike Anderson, for The Marketing Mind consumer trends blog, service of The Center for Sales Strategy.  

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