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Baby Boomers and Finance - US - January 2010

Baby Boomers have long been an attractive target for consumer marketers due to the sheer size of this generation and its substantial spending power. As members of the Baby Boomer generation move closer to their retirement years, they are losing some of their allure to consumer marketers, but they represent an increasingly attractive target for financial services marketers.

Baby Boomers face unique challenges and opportunities at this stage of their lives as a result of profound changes in technology, workplace policies, economic conditions, healthcare and public policy. The impact of these changes affects different subgroups of this generation in different ways, which vary depending on the individual’s economic situation, lifestyle, and attitudinal outlook. Understanding the impacts of these changes as well as how different segments of Baby Boomers approach their diverse situations can help financial services firms target products and services to meet evolving needs. In addition, an in-depth examination of Baby Boomer attitudes as they relate to their financial affairs can also provide valuable input to understand ways in which to help these pre-retirees with their financial planning needs.

This report seeks to address these questions and more:

  • What are the unique challenges facing Baby Boomers?
  • How has the economic crisis impacted these middle-aged Americans and how will it impact their retirement plans?
  • What financial products and services are of greatest interest to Baby Boomers?
  • What are the most cutting edge ways to reach this market?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Advertising and promotion
            • Abbreviations and terms
              • Abbreviations
                • Companies mentioned in this report
                • Executive Summary

                  • Industry overview
                    • Market size and forecast
                      • Competitive context
                        • Marketing channels
                          • Market drivers
                            • Leading companies
                              • Advertising and promotion
                                • The consumer
                                • Insights and Opportunities

                                  • What are the unique challenges facing Baby Boomers?
                                    • How do Baby Boomers differ in their approach to financial matters?
                                      • What financial products and services are of greatest interest to Baby Boomers?
                                        • What are the best ways to reach this market?
                                          • What are important differences that exist within the Baby Boomer market, demographically and attitudinally?
                                          • Inspire Insights

                                              • Retirement won’t come easy
                                                • Baby Boomers face the new normal
                                                • Market Size and Forecast

                                                  • Key points
                                                    • Baby Boomers lead for assets and financial product ownership
                                                      • Figure 1: Financial product ownership, by head of household age group, 2007
                                                      • Figure 2: Mutual fund ownership, by generation, 2009
                                                    • Banking product ownership indicates opportunity for growth
                                                      • Figure 3: Banking products currently owned: baby boomers indexed to total, April 2008-June 2009
                                                      • Figure 4: Banking product ownership for baby boomers by household income, April 2008-June 2009
                                                    • Investment product ownership also indicates opportunity for growth
                                                      • Figure 5: Investment products/accounts currently owned: baby boomers indexed to total
                                                      • Figure 6: Investment product ownership for baby boomers by household income, April 2008-June 2009
                                                    • Most Baby Boomer households are in debt
                                                      • Figure 7: Type of debt, by age group, 2007
                                                    • Baby Boomers are expected to continue to lead in net assets
                                                      • Figure 8: Share of net worth, spending and income by generation, 2006 versus 2015
                                                    • Baby Boomers are about to shift assets from accumulation to income
                                                      • Figure 9: Retirement assets used for retirement income, by asset segment, 2007
                                                  • Competitive Context

                                                    • Key points
                                                      • Baby Boomers continue to be of interest to financial service firms
                                                        • Figure 10: Direct mail, e-mail, print campaigns mentioning “baby boom/baby boomer/boomer”, October 2008-September 2009 versus October 2007-September 2008
                                                      • Mutual fund companies are developing products to meet the changing needs of Baby Boomers
                                                        • Annuity sales are expected to increase rapidly as Baby Boomers reach retirement age
                                                          • Figure 11: variable annuity sales, by top 10 issuers for 2007 and for 2008
                                                        • Banks are also vying for annuity revenues
                                                          • Figure 12: Annuity fee income top 10 bank holding companies: Q1 2009 versus Q1 2008
                                                        • Banks are promoting reverse mortgages as a source of retirement income
                                                        • Marketing Channels

                                                          • Key points
                                                            • Baby Boomers are not technology-averse
                                                              • Figure 13: Percentage of Americans online, by age, September 2009
                                                            • Baby Boomers are online to gather information, shop, and conduct financial transactions
                                                              • Figure 14: Online activities, by generation, 2008
                                                            • Affluent Baby Boomers are especially likely to access the internet daily
                                                              • Figure 15: Daily consumption of selected media, Boomers and Boomer Elite, 2007
                                                            • Boomers are still the TV generation
                                                              • Figure 16: Average number of hours spent per month watching TV/using internet, by age, May 2009
                                                          • Market Drivers

                                                            • Key points
                                                              • Baby Boomers will soon swamp the ranks of Seniors
                                                                • Figure 17: U.S. population estimates, 2009
                                                              • The Great Recession has taken a toll on Baby Boomers
                                                                • Figure 18: Investment losses, by age group, March 2009
                                                                • Figure 19: Impact of recession, by age group, March 2009
                                                                • Figure 20: Percentage of people who have thought about delaying retirement in past year among adults 18+ with full-time jobs, March 2009
                                                              • Retirement confidence has eroded compared to 10 years ago
                                                                • Figure 21: Confidence in financial aspects of retirement in 2009 versus 1999 among workers 25 and older, percentage very confident, 1999 and 2009
                                                              • Only a minority of workers are covered by pensions
                                                                • Figure 22: Number of retirement plan active worker participants, 1980-2004
                                                              • Annuity sales are expected to increase rapidly as Baby Boomers reach retirement age
                                                                • Figure 23: Annuity sales: fixed versus variable, 1999 through 2008
                                                              • Reverse mortgages currently appeal to a small group
                                                                • Figure 24: Whether plan to use home equity to fund retirement among adults 45-64 by age and household income level, October 2009
                                                            • Leading Companies

                                                              • Key points
                                                                • Bank of America is the most frequently used bank by Baby Boomers
                                                                  • Bank of America is capitalizing on its Merrill Lynch acquisition to target affluent Boomers
                                                                    • Other large banks seem to be taking a more generalized approach
                                                                      • Credit unions see an opportunity in the wake of greater risk aversion among Baby Boomers
                                                                        • Fidelity leads among mutual fund companies
                                                                        • Advertising and Promotion

                                                                          • Key points
                                                                            • Solving anxieties around retirement is a major theme in advertising to Baby Boomers
                                                                              • Figure 25: AXA Equitable 800 pound gorilla TV ad, 2009
                                                                            • Ads urge Baby Boomers to face up to retirement planning
                                                                              • Figure 26: Ameriprise Dennis Hopper TV ad, 2009
                                                                              • Figure 27: Prudential Retirement Red Zone TV ad, 2009
                                                                            • Some ads use nostalgia for the ’60s and ’70s
                                                                              • Figure 28: Geico survived the ‘60s tv ad, 2009
                                                                            • Targeting boomers with print and direct mail
                                                                              • Figure 29: BankAmerica credit card acquisition direct mail ad, November 2009
                                                                              • Figure 30: The Hartford Insurance direct mail acquisition ad, 2009
                                                                              • Figure 31: 21st Century insurance direct mail acquisition ad, 2009
                                                                              • Figure 32: Chase AARP co-branded credit card acquision direct mail ad, 2009
                                                                              • Figure 33: American Express direct mail acquisition ad, 2009
                                                                              • Figure 34: CUNA long term care insurance direct mail ad, 2009
                                                                            • Reverse mortgage companies have been targeting older homeowners with direct mail
                                                                              • Figure 35: Financial freedom print ad, 2009
                                                                              • Figure 36: Bank of America print ad, 2009
                                                                              • Figure 37: Wells Fargo print ad, 2009
                                                                              • Figure 38: Financial freedom print ad, 2009
                                                                          • The Consumer

                                                                            • Key points
                                                                              • Baby Boomers were especially hard hit by the economic downturn
                                                                                  • Figure 39: Economic outlook: baby boomers indexed to total, April 2008-June 2009
                                                                                • Baby Boomers are juggling many financial concerns
                                                                                    • Figure 40: Financial concerns (top 2 box - very concerned and concerned) by age and household income, October 2009
                                                                                  • A majority of Baby Boomers do not have an adequate safety net
                                                                                    • Figure 41: Concerns about adequate safety net and impacts of job loss among baby boomers, 2009
                                                                                  • Middle-aged Americans are experiencing a crisis in confidence about their retirement prospects
                                                                                      • Figure 42: Respondents very confident (top box) about finances in retirement, 2009
                                                                                    • Retirement savings for many Baby Boomers are well below needed levels
                                                                                        • Figure 43: Total assets in household’s retirement accounts by age and household income, October 2009
                                                                                      • Erosion of retirement confidence has put retirement plans on hold for some Baby Boomers
                                                                                          • Figure 44: Employment/retirement plans at age 67, 2009
                                                                                        • Many Baby Boomers are rethinking retirement
                                                                                            • Figure 45: Retirement plans among U.S. adults 45-64, by age and income level
                                                                                          • Baby Boomers are ratcheting up savings to make up shortfalls
                                                                                              • Figure 46: Steps taken or plan to take as a result of economic crisis, 2009
                                                                                            • Most can’t rely on substantial pensions or an inheritance
                                                                                                • Figure 47: Whether expect to receive a pension among adults 45-64, by age and household income level, October 2009
                                                                                              • Many have not done retirement planning
                                                                                                  • Figure 48: Retirement planning among U.S. adults 45-64, by age and household income, October 2009
                                                                                                • Boomers rely on a variety of sources for financial information
                                                                                                    • Figure 49: Sources of financial information among Baby Boomers 45-64, by gender and age, October 2009
                                                                                                    • Figure 50: Sources of financial information among adults 45-64, by household income, October 2009
                                                                                                  • Independent advisors are the most trusted source of retirement planning advice
                                                                                                      • Figure 51: Most trusted sources of financial advice among Baby Boomers, by age and household income level, October 2009
                                                                                                    • The vast majority of Baby Boomer women participate in decision-making about retirement savings
                                                                                                        • Figure 52: Who in household makes decisions about retirement savings among adults 45-64, by gender and age
                                                                                                        • Figure 53: Financial attitudes among women ages 45-64 versus 65 and older, April 2008-June 2009
                                                                                                      • However, Baby Boomer women express less confidence about financial matters than men
                                                                                                        • Figure 54: Attitudes about financial information among Baby Boomers, by gender, 2009
                                                                                                    • Cluster Analysis

                                                                                                        • Key points
                                                                                                          • Formulators
                                                                                                            • Lighthearts
                                                                                                              • Informals
                                                                                                                • Cluster characteristics
                                                                                                                  • Figure 55: Baby Boomer finance clusters, November 2009
                                                                                                                  • Figure 56: Retirement planning activities, by Baby Boomer finance clusters, November 2009
                                                                                                                  • Figure 57: Sources of information used, by Baby Boomer finance clusters, November 2009
                                                                                                                  • Figure 58: Concerns about retirement, by Baby Boomer finance clusters, November 2009
                                                                                                                • Cluster demographics
                                                                                                                  • Figure 59: Baby Boomer finance clusters, by gender, November 2009
                                                                                                                  • Figure 60: Baby Boomer finance clusters, by age group, November 2009
                                                                                                                  • Figure 61: Baby Boomer finance clusters, by household income group, November 2009
                                                                                                                  • Figure 62: Baby Boomer finance clusters, by Hispanic origin, November 2009
                                                                                                                • Cluster methodology
                                                                                                                • Appendix: Trade Associations

                                                                                                                  Companies Covered

                                                                                                                  • America's Community Bankers
                                                                                                                  • American Association of Retired Persons (AARP)
                                                                                                                  • American Bakers Association (ABA)
                                                                                                                  • AXA (USA)
                                                                                                                  • Bank of America Corporation
                                                                                                                  • BITS
                                                                                                                  • Consumer Bankers Association
                                                                                                                  • Credit Union National Association
                                                                                                                  • Employee Benefit Research Institute
                                                                                                                  • Greenfield Online
                                                                                                                  • HSBC USA Inc.
                                                                                                                  • Independent Community Bankers of America
                                                                                                                  • Investment Company Institute
                                                                                                                  • JPMorgan Chase & Co
                                                                                                                  • KeyCorp
                                                                                                                  • LIMRA International
                                                                                                                  • Lincoln National Life Insurance Company (Lincoln Financial Group)
                                                                                                                  • McKinsey & Company
                                                                                                                  • Merrill Lynch & Co. Inc
                                                                                                                  • MetLife, Inc. (Metropolitan Life Insurance Company)
                                                                                                                  • Pacific Life Insurance Company
                                                                                                                  • SunTrust Banks Inc.
                                                                                                                  • The American Financial Services Association
                                                                                                                  • The American Savings Education Council
                                                                                                                  • The Financial Services Roundtable
                                                                                                                  • U.S. Bureau of Labor Statistics
                                                                                                                  • Wells Fargo & Company

                                                                                                                  Baby Boomers and Finance - US - January 2010

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