In case you’ve missed it, we’re getting older.
The Baby Boomers born between 1946 and 1964, the ‘never trust anyone over the age of 30’ generation, are now within reach of retirement.
As a nation and as consumers our aging is creating vast demographic and social changes in the marketplace.
Within the last few years, those consumers age 45 and better have become a major economic force.
In 2001, this group was responsible for 52 percent ($2.28 trillion) of the total consumer spending in the U.S. ($4.36 trillion).
According to the federal government’s Consumer Expenditure Survey, these so called ‘older consumers’
held a majority percentage of the market in the key monitored categories of food, housing, health care, transportation, personal insurance and pensions.
Unfortunately, being a smart consumer in the current marketplace is becoming a more demanding challenge on a daily basis.
The rate of change faced by consumers is constant and quick.
The process of decision-making has become more difficult and complex, and for many, their basic money managing skills are limited.
Recent studies suggest three essential reasons exist for these increased challenges:
- Level of financial literacy - We’ve discussed it numerous times, but to make informed, smart choices consumers must be knowledgeable.
Low levels of financial and consumer literacy makes financially secure decisions difficult at best and at worst, impossible.
- Increasing complexity of products and services - Consumers have more choices today than ever before.
Although without an understanding of pricing, contract terms and conditions, and being able to discern the most appropriate products and services for their needs, consumers are left blind and unaware of the consequences of their decisions.
One simple illustration of this is the various products, services, and regulations involved in the wireless communication industry.
- Less time and more decisions - While the decisions to be made have become more complicated, more consumers (including the ‘older consumers’) are working now than ever before, as well as, working longer hours (American workers work more hours per week than any other industrial society).
The commitment involved in these work demands sharply limits the time to accomplish any research into the choices and decisions they must make as consumers or for comparison-shopping, not to mention special circumstances that can further complicate these time issues.
Without the time to make quality choices that fit the consumer’s short term and long term financial goals, efforts to improve consumer information and financial literacy provide insufficient advantage in the marketplace.
There are some recommendations to help consumers overcome these obstacles.
First, a focused effort by product and service providers, industry organizations, federal and state policymakers to boldly improve product information, labeling, and disclosures by making them more accurate, useful and easier to understand.
Consumers can encourage this focus by patronizing organizations that provide such information in clear, concise, and understandable forms.
In addition, the focus and effort begun toward increasing financial literacy through the Financial Literacy and Education Improvement Act of 2003 should give attention to the needs of all consumers but especially to Baby Boomers.
It is important to remember, regardless of how many educational opportunities are presented to consumers, if the outcomes, behaviors, or choices do not change, no learning has occurred, and no improvements have been made.
It is through focused attention on preferred outcomes of enhanced money management skills and wealth-building behaviors that these educational efforts will empower consumers toward improved financial choices and decisions to meet the challenges of the marketplace.
