The business of ageing
Population ageing is often characterised as a drain on government finances, a growing burden on the community that requires cost containment or an increase in taxes. We need to look at the other side of this debate and better understand how ageing is creating new markets for goods and services here and worldwide. According to Ageing Asia, Baby Boomers in the Asia Pacific will hold around US$3 trillion in household savings by 2017. Their spending will drive growth in industries such as healthcare, housing, wellness, technology, transportation, tourism, education and finance. Population ageing profoundly influences household and individual consumption patterns and the policy and investment decisions of government, non-government organisations and the private sector. This is giving rise to growth in demand for a wide range of goods and services that respond to people’s needs and desires as they age – a sort of mature economy. A strong government and community focus on positive ageing is helping to shape this demand, creating new businesses and jobs in a diverse range of sectors both here and overseas. The mature economy is underpinned by policy changes inspired by the active ageing and age-friendly design movements. The introduction of policies like Consumer Directed Care and the National Disability Insurance Scheme are opening up new sources of financing consumption in these areas. Active Ageing focusses attention on functional capacity over the life course. In older age, this involves maintaining independence and preventing disability, along with rehabilitation and ensuring quality of life. The active ageing agenda provides a foundation for transforming the way we design and deliver goods and services for the mature age population. The age-friendly cities movement targets the design and maintenance of public spaces and buildings, transportation, housing and community support and health services. Equally, the movement focusses on social participation, respect and social inclusion, civic participation and employment, and communication and information resources. The South Australian Government has developed a series of agefriendly guidelines with specific reference to each of these. There is significant potential for businesses to develop new industries in response to this. The guidelines assist by identifying areas of demand for age-responsive goods and services. The current retirement incomes reform agenda is seeking to extend the longevity of people in the workforce, by extending the age pension eligibility age and proposing changes to the superannuation preservation age. It is anticipated that longer working lives will reduce pressure on the age pension, sustain people at working life income levels for longer (even if this does reflect a transitioning from full- to part-time) and enable people to save more towards supporting their own retirement. To sustain rising workforce participation rates for older people, we will need to design, construct and support more age-friendly working environments. This will require the involvement of architects, interior designers, physiotherapists, occupational therapists, medical practitioners, social workers, engineers, builders and many others in the development of integrated solutions. The magnitude of demand that will be generated by the mature economy is linked to older people’s growing share of the population and their increasing wealth or ‘spending power’. While older people tend to have lower incomes than their younger counterparts, they generally have greater household net worth (taking into account assets and liabilities) and report less financial stress. Superannuation is helping to a degree to support the financial strength of over 65s and is projected to grow strongly over time. However, based on existing income data for the over 65s, it is considered likely that the majority of households, particularly singles, will only be able to afford a modest level of spending in their retirement years. Overall, the evidence suggests that the strongest markets in the mature economy are related to health-care and spending on nondiscretionary items such as food and energy utilities. Although spending on discretionary items does trend down with age, significant new market opportunities are likely to arise where products and services are targeted and marketed appropriately to older consumers. The evidence indicates that older households are in a stronger financial position than they have ever been, indicating that they are more likely to spend more on high priority products and services. A recent global survey of businesses by Ageing Asia has identified significant growth opportunities in the areas of healthcare and pharmaceuticals, leisure and tourism and financial services. In addition, opportunities exist for specialised companies targeting older consumers (e.g. medical device manufacturers – hip and knee joints; and assistive technologies – wearable sensors, health and wellbeing apps). To realise these opportunities, investments will be required in research and development, mastering age-sensitive marketing and advertising techniques, and rethinking corporate strategies and business models in recognition of different demographics. Markets opening up in healthy ageing will span a wide range of products and services designed to help older people to maintain health, wellbeing and optimal functional capacity. There will be growing opportunities in the management of health, including health literacy and medication management, in healthy eating, physical activity, falls prevention, alcohol and tobacco use, and opportunities for social, economic, cultural, spiritual and civic participation.