Boomers
Older Consumers: More Clout, More Confusion
News Release
May 6, 2004
Older Americans (45 and over) control more than half of the consumer economy, but, individually, many face a variety of obstacles as shoppers or personal financial managers, a new AARP study finds.
AARP's fourth annual Beyond 50 report—titled "A Report to the Nation on Consumers in the Marketplace"—says that, as of 2001, those 45 and over were responsible for a majority (52 percent) of all consumer spending, up from 47 percent in 1984.
At the same time, Beyond 50—by AARP's Public Policy Institute—notes that today's consumers face a more complex marketplace and more time constraints than any previous generation, often leading to confused decisions.
A companion AARP national survey supports the point as many Boomers (27 percent) acknowledge that they are worse financial managers than their parents because of time constraints, the complexity of choices and the vast number of choices. (See separate release below.)
This is most noticeably true in money management. AARP's analysis of Federal Reserve Board data shows that consumers age 65 and older were more likely than others to be "lost" financial managers (those who ranked low both in assets and in basic money management skills). Nearly one-half (48 percent) of those 65 + are "lost" financial managers, compared to 38 percent of individuals of all ages.
Discussing the new report today, AARP Director of Policy and Strategy John Rother said: "It should give us pause that, while 45 and older Americans are a critical force in the economy, individual consumers face many obstacles to effective decision-making. These obstacles need to be addressed quickly."
Beyond 50 is an unprecedented annual look at the status of, and trends affecting, older Americans. In its first report, in 2001, AARP reported on the economic state of older Americans. Subsequent reports focused on health and independent living and disabilities. The current report is the first to address consumers in the marketplace.
Beyond 50 begins to address the individual challenges faced by older consumers by posing this question:
"…is spending power all that one needs to achieve what economists call ‘consumer sovereignty’ or success in choosing a product or service…?"
The report answers a resounding "no" and cites these modern day roadblocks to "consumer sovereignty":
- Less time, more decisions. AARP says that families are spending more time than ever at work, which reduces time that can be spent on other activities. Simultaneously, there is greater societal emphasis on individual responsibility. For example, Boomers are more likely than their parents to be responsible for investment decisions about their retirement savings through 40l(k)s.
- Increasing complexity of products and services. Technological advances and regulatory changes have allowed financial service providers to greatly broaden the number of choices available, even those regarding basic products such as checking and savings accounts. The report cites federal statistics showing the number of long-distance telephone companies more than doubled between 1993 and 2003. AARP also notes that one local newspaper listed 41 different loan types and 47 mortgage lenders for potential borrowers to compare.
To assist those aged 45 and older to overcome consumer "roadblocks" and gain economic security, Beyond 50 emphasizes the need for the nation to commit itself to, in addition to an increased level of consumer financial literacy, to improved consumer information; and to facilitate more consumer choice and financial service options for "isolated communities and underserved market segments."
"Recent transparency problems in the financial world cry out for reforms, starting with higher quality advice to consumers," Rother said.
AARP Poll: Many Boomers Say They Are Worse Financial Managers Than Parents
Lack Of Time A Major Problem Cited
Many Boomers, citing a "lack of time," acknowledge that they are worse money managers than their parents, according to a new national AARP poll.
The survey shows that 27 percent of Boomers—aged 40 to 57—say that they are worse financial managers than their parents, more than twice as many as the percentage of those aged 58 and over (10 percent).
The Boomers mention a variety of reasons for their alleged shortcomings, but more than a quarter (27 percent) blame the time problem. Other culprits include "no information" (11 percent) and "confusion about advice" (10 percent).
The survey, done for AARP by ICR of Media, PA, involved 1,900 individuals interviewed by phone between March 25 and April 3, 2004.
(Contact Media Relations for charts.)
AARP is a nonprofit, nonpartisan membership organization dedicated to making life better for people 50 and over. We provide information and resources; engage in legislative, regulatory and legal advocacy; assist members in serving their communities; and offer a wide range of unique benefits, special products, and services for our members. These include AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our quarterly publication for Hispanic members; NRTA Live and Learn for National Retired Teachers Association members; and our Web site, www.aarp.org. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.