New research published today explores the spending habits of the over 50s and highlights the great diversity of spending patterns in later life.
Despite the assumptions made about the spending power of the older consumers it makes clear that there are many levels of behaviour when it comes to finance.
The research carried out by the Longevity Centre UK ad the Personal Finance Research Centre, carried out over a year, has identified six groups based on their main patterns of expenditure.
- Conservative Consumers – not surprisingly, is the largest group, comprising 46% of older households. The striking feature about this group is that they spend far less on non-essentials than older households as a whole.Their average weekly spend on recreation and culture is only £20, compared with an overall average of £33; and £10 per week on eating out compared with £19 overall. These tend to be older households: 22% of them are headed by someone aged 80 or over, compared with 15% of all older households. The majority (56%) said their main source of income came from welfare benefits.
- Foodies – account for 19% of older households. They have very high expenditure on food, spending on average £58 per week compared to £34 for older households generally. They may like good food and home entertaining, or they may have special dietary requirements that increase their food bills.They are relatively well off: only 18% are in the lowest household income band, and they are more likely than the average older household to live in a large house.
- Socialites – comprise 12% of older households. At £405 per week, their overall average expenditure is the highest of all the groups. Their high spending on eating out, holidays and recreation (£131 per week) also marks them out.They are a fairly young group, with three-quarters aged under-65, and are also relatively well-off – more than half of these households are in the highest income band.
- Burdened by Bills – account for 11% of older households. They are distinct because they spend a very high proportion on housing, fuel and power (£4 in every £10, which is twice the average). Most of this goes on housing costs, which is likely to be rent payments as 70% live in rented homes. Like the Conservative Consumers, this group tend to have low incomes.
- Smokers – comprise 9% of older households. Most notably, 15% of their total average expenditure is on tobacco and alcohol, amounting to an average of £36 per week, £28 of which goes on tobacco. They are one of the younger groups, with 62% aged under-65, and they are more likely to rent their homes than own them.
- Recreation and clothing – is the smallest group, accounting for 4% of older households. Like the Socialites, they are a high-spending group, averaging £392 per week. At £65 per week, they spend more on clothes and shoes than all the other groups combined. Their spending is also above-average on recreation and culture (£65 per week). Most of this group is aged under 70; half of them are in the highest income band.
There is always talk of the potential spending power of the older consumer, especially the ‘Baby Boomers’.
But this research highlights that the over half of older consumers are “Burdened by Bills” or “Conservative Consumers” and that relatively low levels of spending are not atypical amongst older people, particularly among the over-80s.
This only serves to highlight the great diversity of spending behaviours in later life – indeed at any age!
It certainly supports the idea that there is no such thing as ‘the older consumer’ – something that policymakers, service providers should all bear in mind.
So why are older people continually categorised by their age?
This is a strong message to policy makers, service providers and marketers to not just lump the over 50s in one group and to be aware of the diversity of our generation’s significant spending power.
by Tina Foster