Today’s Retirees Face Unprecedented Challenges: Part Two

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This is part two of a two-part series that explores the unique challenges facing today\’s retirees that earlier retiree generations did not have to worry about. Part One delineated six new challenges:

  1. The rising numbers of retirees burdened with mortgage and rent payments
  2. The inability to earn interest on low-risk savings, such as savings accounts, CDs, and Treasury bills
  3. More dependence on Social Security as company-sponsored defined-benefit pensions become obsolete, and most 401(k) accounts fall short of financial goals
  4. Loss of buying power due to rising prices, which hit retirees with fixed incomes harder than others: prices for food are up 14 percent in just the past three years
  5. The inability of families today to care for elder members who are incapacitated-especially considering the increasing numbers of elders with Alzheimer\’s
  6. Explosive levels of scams and fraud targeted at seniors

In Part Two, let\’s take a look at what this means for businesses and at some ways that businesses can help today\’s retirees deal with these unprecedented challenges.

Boomer Mantra: Shop \’til You Drop, Still in Play

The good news for retailers is that Boomers, today retirees, invented \”shop \’til you drop.\” They grew up wearing the latest fashions, pursuing the latest gadgets, switching cars every few years and trading-up homes. Many Boomers still find shopping to be appealing and exciting, and while they may slow down a bit and become thriftier as they age, they are not likely to stop shopping just because they are older. Now retired, most Boomers are ready to celebrate their new-found freedom by starting new businesses, volunteering in their communities, taking that trip of a life-time, and hosting family holiday gatherings. They will remain active and social as long as they can. Only when serious health issues emerge-usually in their late 70s or early 80s-will they begin to slow down. Businesses should tap into the senior active life style in a positive way. They should also realize that marketing to those ages 65 through the 70s will be radically different from marketing to those who are older.

Middle-class Retirees Becoming Polarized

Businesses should take notice that while past retiree generations were more homogenized, today retirees are stratified across a retirement spectrum.

Retirees in poor families often live in more traditional multi-family settings, where shelter, in-home elder care (as well as child care), and meals are provided. Access to SNAP and other food assistance programs, as well as Medicaid, renders assistance. At the other end of the retirement spectrum, the wealthy will be secure in their retirement, with or without Social Security.

It is the retiree middle class that is becoming polarized in retirement. Middle class retirees are splintering into two segments. Segment one is those who own their homes and are free of shelter debt, and who, because of long-term employment may have employee-sponsored defined-benefit pensions-in addition to Social Security and their own savings. By retiree standards, they are well-off and most will enjoy a secure retirement.

In contrast, segment two is made up of today\’s middle-class retirees who still have mortgage payments or rent, and who do not have company provided defined-benefit pensions. Even if these retirees have accumulated some 401(k) investments and savings, they are more dependent on Social Security, and their retiree budgets are more sensitive to unplanned expenses. Many of these retirees are just getting by day-to-day, with a high risk that they will outlive their savings.

This polarization has caused conflict in some situations. For example, over the past decade, many retirees turned to condominiums as a favored style of retirement living, with townhomes being especially popular. But in some instances, retirees who were able to sell their prior homes and pay cash for their townhomes and who also had lucrative traditional pensions in addition to Social Security and savings, came into conflict with retirees, who still had mortgage payments and were more dependent on Social Security. Without mortgage payments, retirees in the former group often favor expensive upgrades and optional improvements that result in special assessments and frequent dues increases. This puts stress on the budgets of retirees with mortgage payments and who more dependent on Social Security. Concerns about the high level of financial uncertainty associated with condominium living have resulted in a retiree exodus from some of these developments.

Senior Discounts Build Loyalty

For years, senior discounts offered by retailers and other businesses have been a boon for retirees. But recently, some of these discounts are disappearing. For example, Publix grocery stores, recently eliminated its 5 percent Wednesday Senior discount, offered in the southeast for a decade or more. Perhaps in some cases discounts are being eliminated in part due to the misperception that most retirees are wealthy and do not need discounts.

The perception of all retirees as millionaires is so pervasive that there have been reports of older customers, who have been distressed by large bills-such as those from car repair, dental visits, home repair and veterinarians-being told that if they do not have the money, they \”can always get it from their 401(k) accounts.\”

The reality is that most retirees need and would appreciate discounts which businesses could easily provide. Kohl\’s, CVS and some other retailers do offer a senior discount day. AARP also offers a range of discounts, including restaurants, consumer goods and even travel excursions. Senior discounts are good ways to build loyalty, and often they can increase store traffic on off-days.

Home Delivery Key to Retirees\’ Aging at Home

As retirees age, delivery of groceries, medications, daily meals and other goods will become essential. And while this works well now in large urban centers, the retail industry has not yet figured out how to make this work in suburban locales, where distances are greater, while providing timeliness and affordability. Visions of millions of drones making home deliveries all over the country, may one day become a reality, but that world is not here yet. Home-bound seniors represent a huge market for distribution of goods and delivery services, which can enable aging in place.

Car services, specifically for seniors, providing safe, affordable transportation to and from medical appointments; home assistant robots; personal health monitors and video doctor conferences, can all play an essential role in safeguarding retiree well-being.

Online retailers should find ways to make navigating sites simpler for seniors and perhaps provide special Web-site sections, targeted to older customers-for example: carefully edited footwear selections, featuring slip-on or Velcro-closure footwear, that is easier to get on and off and safer to walk in. While focused on the practical, fun items, including large-print books, audiobooks and memory-building games, could also be included. Think of a whole \”Amazon for Elders\” [but with a cool name]-taking older shoppers straight to what\’s most important for them, avoiding sifting through thousands of age-inappropriate and irrelevant offerings. Retailers might also consider providing a Seniors\’ Concierge, available to offer advice to older customers, in-store and online-for example: which light-weight vacuum cleaner works the best.

Originally 76.4 million strong, accounting for deaths to date, Boomers still number around 65.2 million, a number far too strong for retailers and other businesses to ignore. There are dollars to be made from fulfilling the needs and desires of this newest generation of retirees and helping them meet the new challenges of retirement.

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