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Born between 1946 and 1964, today there are more than 71 million Baby Boomers in the U.S all between the ages of 56 and 75.

But they don’t just have numbers. Baby Boomers also hold the lion’s share of the wealth in this country compared to other generations, holding $59.6 trillion which is double the $28.5 trillion held by Generation X and more than 10 times the $5.2 trillion held by Millennials.

While a lot of marketing focuses on younger demographics, Baby Boomers are spending their money, accounting for roughly 50 percent of all Consumer Packaged Goods dollars. In 2019, for example, Baby Boomers led in pet spending. Baby Boomers also spend more at home improvement stores than any other generation. 

Beyond their spending now, however, Baby Boomers are anticipated to have healthcare needs and lifestyle preferences that will drive demand in the healthcare industry for years to come. Here’s what investors should know about the economic impact of Baby Boomers.

What Is the Baby Boomer market?

All Baby Boomers will be 65 or older by 2030. While Baby Boomers have increasingly longer life expectancies than previous generations, about 60 percent of Boomers have already been diagnosed with at least one chronic medical condition, such as arthritis, diabetes, heart disease, obesity, osteoporosis, hypertension and depression. These conditions typically necessitate regular doctor visits, prescription medications, and dietary restrictions. They also have the potential to result in a disability of some form.

The prevalence of chronic conditions among the Baby Boomer population translates to a need for more doctor time, more medication, and more interventions for any resulting disabilities. So, it should be no surprise that spending on health insurance, medical services, drugs and medical supplies is expected to grow as Baby Boomers age. 

According to government projections, health care spending is anticipated to grow to nearly $6 trillion by 2027. That is nearly 20 percent of the overall economy. That spending won’t all go to one place, but rather to the variety of healthcare entities and companies that support the aging Baby Boomer population. 

Why Invest in Baby Boomers?

Boomers are breaking stereotypes about aging, and that should matter to investors. 

Consider technology, for example.  While Baby Boomers tend to have a reputation for being slow to understand technology, 90 percent of Baby Boomers have a Facebook account, 67 percent of Baby Boomers own a smartphone, and the bulk of Baby Boomers also participate in some form of online shopping. 

Perhaps also surprising: more and more, Baby Boomers are moving away from cash and opting for contactless payment systems, especially in light of the COVID-19 pandemic. Not only are Boomers adopting PayPal, they are logging on to Zoom to keep in touch with loved ones. 

They are also logging on to smart devices to talk to their doctors. 

To manage their chronic illnesses in particular, especially in the age of the pandemic, Baby Boomers are opting for telemedicine visits, which are now reimbursable by Medicare. These visits are helping Baby Boomers manage things like weight, blood pressure, and avoid trips to the ER. Telemedicine visits allow users to talk with a doctor, get prescriptions, all while reducing the chance of getting COVID-19. Telemedicine also helps reduce healthcare costs by streamlining care and preventing expensive urgent care and ER visits. 

Baby Boomers tend to be well educated, and by effectively managing their conditions, they are anticipated to experience better health for longer than they would otherwise. 

Moreover, Baby Boomers generally want to be active, meaning that most aren’t spending all of their days in a recliner. 

This is creating a demand for joint replacements, and affording medical device makers and distributers a big growth opportunity. According to one estimate, by 2030, there will be a 600 percent increase in total knee replacements in the US compared to 2005. Over that same time frame, total hip replacements are expected to increase by 200 percent. In 2017 the average age for a primary total hip replacement was 65 and the average age for a primary knee replacement was 66, according to a report by the American Academy of Orthopedic Surgeons and American Joint Replacement Registry (AJRR). 

Lastly, Baby Boomers are wanting toage in place,’ or rather choose to live at home as long as possible, rather than retire to community living. With the number of Baby Boomers aspiring to ‘age in place’ spending on home improvements and more specifically home modifications (like ramps, wider doorways, and walk-in showers) that make aging in place possible is likely to continue.

The combination of aging in place, chronic conditions, and living longer will lead to an increased need for in-home care, with more and more Baby Boomers needing help with bathing, eating, dressing and walking. While no one knows when Boomers will be back on cruise ships, we do know that future healthcare needs for the Baby Boomer population are a certainty.

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The information and data are as of the February 16, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi. 

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