Mature African American couple on deck of a cruise ship, looking out into the ocean
There are three big – and almost unbelievably common – mistakes that companies and their marketers make with respect to retirees and older customers generally.
First is ignoring them in pursuit of the youth market. Americans age 50 and up make up 46% of the adult population, and they account for 56% of total consumer spending. Yet an AARP study found that they are only 15% of the people depicted in media and commercials. This is a kind of ageism by omission, not to mention a missed opportunity. Retirees are today’s biggest untapped market that’s hiding in plain sight.
The second mistake is assuming that retirees are all in decline, slowing down, moving to the sidelines. In fact, most of today’s Boomer retirees are gearing up, making retirement the occasion to explore new interests, even reinvent themselves. Most retirees are enjoying life and are taking advantage of their newfound freedoms. Happiness and contentment, which typically dip in middle age, actually reach new peaks in most people’s 60s and 70s.
We touched on those two mistakes in our previous post. Here we explore the third – assuming that all retirees are the same.
If we gathered a group of 65-year-olds, their situations, experiences, and interests would be all over the map. One could be a newlywed, another recently widowed. One might be going back to college, another could be starting an encore career in teaching. One is very happy to be empty nesting, another is happy to have their children and grandchildren move in. One is scraping to get by, another is a millionaire and starting a foundation. And, of course, with many variations and gradations in between.
Older Americans don’t want to be painted with one brush, in particular the brush called “age.” Age has always been a simplistic way to characterize customers, or citizens for that matter. But with the wide variety – and age range – of retirees today, it’s simply obsolete. Age isn’t a leading indicator, it’s a misleading indicator.
You don’t have to take our word for it. Nadia Tuma-Weldon, global director of McCann Worldgroup Truth Central, shared a lesson from their “Truth about Age” study: “We found that age is no longer a reliable predictor of just about anything. Age doesn’t predict your style, health, aspirations, how you date, or how you behave.” Colin Milner, founder of the International Council on Active Aging, adds, “The research shows that no two individuals experience aging in exactly the same way or at the same rate. Consumers expect products and services to be ‘about me.’” And Paul Irving, who chairs the Milken Institute Center for the Future of Aging, told us, “Older adults are as diverse and complex and different as any other part of the population, and in many ways more so because their tastes and understandings are refined by a lifetime of experience.”
A first step toward appreciating the variety of today’s retirees, then individualizing products, programs, and services for them, is basic market segmentation. Over the years, we have developed, tested, and refined a segmentation of retirees by lifestyle. It recognizes patterns in the psychographics of retirees – their attitudes, aspirations, priorities, and needs. To round out the portraits, we looked at what each segment has in common in terms of demographic, financial, and other background. We named the segments Ageless Explorers, Comfortably Contents, Live for Todays, and Worried Strugglers. Which one are you? Which one would you like to be?
Ageless Explorers see retirement as a time of opportunity and personal growth. They tend to be accomplished in their lives and careers, and retirement presents the chance to do even more. They have no intention of winding down. They are the most likely to start businesses in retirement or to teach part-time. They tend to plan ahead, including about their activities and ambitions in retirement. And they’ve prepared financially, saving for retirement for an average of 25 years.
Most Ageless Explorers are energetic, optimistic, confident, and independent as well as social. Their leisure activities include learning new things and continuing to explore their own potential. Many of them see retirement as a time to give back, or give back even more, to their communities. They tend to be healthy, but even with health challenges are determined to stay active. Ageless Explorers reject the life-of-leisure view of retirement in favor of exercising their freedom to choose new paths and continue to make the most of life.
Comfortably Contents have also accomplished a lot in their careers, but they approach retirement with the more traditional view that it’s the reward for a life of hard work. They’re not so much winding down as shifting gears and priorities away from productivity at work – to family, fun, adventure, and relaxation. If they work a bit in retirement, it’s mainly to stay active and social. Like Ageless Explorers, most are financially secure, having saved for retirement for an average of 23 years.
Comfortably Contents view themselves as responsible, capable, disciplined, and ambitious. They are the most likely segment to say they’re very happy, healthy, and having fun in retirement. They are also the most interested in exotic adventure and extended travel. They may be especially doting as grandparents. Comfortably Contents have played the game of “you worked hard to earn your retirement,” and they’ve played it well. Now they see retirement as theirs to enjoy.
Live for Todays
Live for Todays have led active and varied lives and want to do the same in retirement. Even more than Ageless Explorers, they seek personal growth and ongoing reinvention. They like challenges and changes, and they’ve changed relationships, jobs, and locations more than most. They’re spontaneous more than planners. Live for Todays tend to be free-spirited, versatile, and experimental. They are most likely to say they never feel old inside. They want to do it all in retirement – family fun, new friends, volunteering, taking classes, traveling, trying new pursuits.
However, here’s the catch. Because they’ve been so busy living for today, these older men and women often can’t afford the life they’re living and are struggling to stay afloat financially. Many of their wishes for an enjoyable retirement are frustrated by their finances or their health. They worry about money and wish they’d planned better, because they don’t have all the freedom and flexibility needed to enjoy retirement to the fullest.
Worried Strugglers are the least ready and able to enjoy retirement. Either because of bad planning or bad luck, they enter their retirement years with insufficient financial resources. As a result, they’re far more limited in their ambitions and activities. They have done relatively little planning and financial preparation, so they’re more likely to need a paycheck in retirement, but also more likely to have retired early due to health problems. They rely the most on Social Security.
Worried Strugglers report being more anxious, less active, less healthy, and less happy than the other segments. Some may feel they’ve been dealt a bad hand, but most persevere and think of themselves as pragmatic, as survivors. The annual getaway aside, their leisure sphere tends to be close to home. Family and friends are central to their enjoyment and often their support. For Worried Strugglers, retirement is not the “golden years,” but instead a constant challenge and often unpleasant experience.
Roughly 20% of retirees fall into each of the first three segments, which leaves more than a third in the Worried Strugglers category. As we’ve discussed these four segments with pre-retirees and the newly retired, for obvious reasons, nearly everyone says they don’t want to spend their later years as Worried Strugglers, or even Live for Todays. But their actions belie their desires when they pay insufficient attention to the two big variables of health and finances. Too many are lax about diet, exercise, and monitoring their health. And only one-fourth of working Americans, including those nearing retirement, are on track with the recommended amount of retirement savings. Being an Ageless Explorer or Comfortably Content isn’t a last minute choice, but instead is the outcome of life choices that reflected responsible spending, disciplined saving, and a willingness to delay gratification.
A Portrait of Four Retirements
Psychology: Optimistic and confident
Retirement means: Opportunity and growth
Preparation for retirement: Career-long
Leisure in retirement: Learning and giving back
If they work in retirement: Accomplishment and enjoyment
Psychology: Capable and ambitious
Retirement means: Enjoyment and reward
Preparation for retirement: Career-long
Leisure in retirement: Travel and adventure
If they work in retirement: Activity and society
Live for Todays
Psychology: Free-spirited and exploring
Retirement means: Growth and reinvention
Preparation for retirement: Not a life priority
Leisure in retirement: Trying to do everything
If they work in retirement: Supplemental income
Psychology: Insecure and pragmatic
Retirement means: Constraint and adaptation
Preparation for retirement: Inadequate
Leisure in retirement: Close to home
If they work in retirement: Necessary income
This is the second in a 10-part series on “The Future of Retirement” that we will be posting over the next several months. If you are interested in better understanding what’s ahead – we invite you to check out our new book What Retirees Want: A Holistic View of Life’s Third Age.