Australia, like the rest of the developed world, is coming to grips with an ageing population as the baby boomer generation moves through their life cycle. And just like they did in their teens, as parents and now as they head into and towards retirement baby boomers are going to fundamentally transform the world around them and the economy in which we all live.
The Australian census in 2011 showed there were approximately 3.7 million Australians over the age of 65. This represented around 16% of the population but Senator Mitch Fifield, the Assistant Minister for Social Services, said recently that by 2050 it is estimated that approximately 23% of the population will be over 65 and there will be more than 50,000 Australians over 100.
This demographic shift fundamentally changes demand for some products and services. Here are 5 big trends that will flow as a result of this big shift in the population pyramid.
Health and lifestyle
The boomers are one of the most affluent and active generations ever to walk the earth. They will want their many years of retirement to be happy active years. So the quality of services that they want as they age – and as they have an increased political and consumer cloud – is crucial.
You may have already seen older Australians in your gym over the past few years. Expect this to continue and expect research dollars increasingly pushed toward arthritis and obesity research.
Healthcare is a sector set to grow, so expect more floats and more investment opportunities for companies such as Japara and Lifehealthcare Group Ltd as new players list on the ASX.
The housing market
Other companies such as Lifestyle Communities Limited, also listed on the ASX and in the business of providing affordable housing for older Australians in Victoria, are occupying what is likely to be another growth area in the economy.
But it’s not so easy to source the land to build affordable housing estates according to Lifestyle Communities Managing Director Joe Kelly who told the Sydney Morning Herald recently: “Not enough homes of the right size, with the right fittings and location, particularly in Melbourne’s middle-to outer-ring suburbs is preventing many of Australia’s retiring boomers – those born between 1946 and 1964 – from moving out of the family home they have lived in for decades.”
But not everyone wants to head into an over-55s community or retirement village – many Australians having built a life surrounded by family and friends simply don’t want to downsize. They want to stay where they are.
Research conducted by Professor Bruce Judd for the Australian Housing and Urban Research Institute showed that despite “the apparent under-utilisation of their dwellings… the majority of older people regard their house as suitable for their needs and utilise excess bedrooms to accommodate temporary residents, visitors and to pursue a range of retirement activities.”
This research also showed that more than 90% of older Australians would consider in come health care to help them stay in their dwelling – which means the rise of private in home health care comes can’t be far behind.
Eventually though, more than 50% recognise that they might just need to move out and into a retirement village.
The grey nomad movement – older people touring the country in retirement, perhaps in a camper van – has been growing slowly over the past decade. The growth rate in domestic overnight stays has been just 1% per annum over the past 10 years, according to Tourism Australia research, but that might be about to change as the boomers leave the workforce.
Take the experience of Peter Moeller, Manager of the One Mile Beach Caravan Park in Port Stephens, NSW. He says older Australians are increasingly important to occupancy rates. “We run close to 100% in holiday periods, which the older travellers avoid, but outside these times they are a core component of the park’s occupancy. Increasingly too they are looking to do more and more and are really interacting with the beach, the local community and putting a lot of dollars back into the community.”
Travel sites dedicated to older Australians like The Grey Nomads Website are springing up. Greynomads says it is the site for you if “you are one of the growing army of grey nomads discovering, or hoping to discover, the joys of the open road in this wonderful country”. This has the potential to transform the demand for the types of short-stay accommodation and travel experiences away from more youthful hostels with beer and cheap bunks towards wines and cheeses and double rooms.
As the population ages so does the impost that older Australians and the need to care for them have on the Federal budget. One option looking likely is increasing in retirement age, over time, from 67 to 70 years of age.
It is a simple recognition of the changing shape of the Australian workforce and the fact as we age, so then the ratio of workers to retirees falls. In 2007 there were five workers for each older Australian but by 2056 this ratio will fall to just three.
The good news is that older Australians will be in demand and are a resource that Australia will increasingly need in the years ahead. Workplaces will adapt to the changing make-up of their employees.
Financial advice and estate planning
Tying all the trends up and allowing people to travel, to make the decision to stay in their home, downsize or move into a retirement village to help pay for care is going to be the advice of a good and trusted financial planner.
There’s a challenge in tying up all these trends. Balancing the decisions to keep working, travel, or downsize the home will require, in many cases, the advice of a good financial planner.
Add to the mix superannuation, part time work into older age and 15 or 20 plus years in retirement means that older Australians are going to need solid advice to give them the best chance of preserving their lifestyle amid the dwindling ability of the age pension to meet retirees’ financial expectations.
As they age, but are likely to be asset rich, older Australians are going to need to consider what happens after they die. It’s not an easy topic to consider but at some point older Australians need to sit down and plan for it.
Once again a trusted financial adviser and a solid will which takes into account the wishes of the person when they pass away, balances out family tensions, and can withstand possible challenges in court is a must.
It’s a slightly depressing way to end what is most likely to be an ageing and retirement period of life that is likely to be a lot of fun for the boomers. But is something that needs to be addressed – the sooner the better.
This information does not take into account your investment objectives, financial situation and particular needs. Before making any investment decision based on this information, you should consider talking to a financial adviser, and assess whether the information is appropriate to your particular investment needs, objectives and financial circumstances.
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