Move aside Generations XYZ, the demographic with the deepest pockets and least marketing competition is much older.
U.S. Baby Boomers were born between 1946 and 1964 in the post-World War II era, making them ages 55 to 73 today. This group controls 70% of disposable income (U.S. News) and has been / will be increasing their spending by 58% over a two-decade period (VCR).
Of course, Baby Boomers are older and notoriously slow/resistant to tech adoption — my parents, par example, still don’t have smartphones and operate a thriving small business without any office WiFi — but on a broad scale, the gap between Baby Boomers and younger generations is narrowing. Today, 88% of Baby Boomers use the internet.
Naturally, however, the population size of Baby Boomers is declining. While Millennials are still marching toward our prime, our parents will soon reach their expected lifespan.
While this paints a bleak picture for the long-term Baby Boomer tech market, the counter arguments are that (1) younger generations will adopt the Baby Boomer products of today when they reach that age, and (2) it is still a highly attractive space with untapped potential.
On the latter, I think of Baby Boomer versus Gen XYZ tech products in B2C the way I think of large enterprises versus SMBs (small- & medium-sized businesses) in B2B — the relative value of each additional user is much larger compared to the efforts of signing them up. In other words, the LTV:CAC ratio is likely greater for Baby Boomer consumers because they control much more money even though they might be slower to download an app or create a marketplace account.
Baby Boomer opportunity areas
Digging in, there are some areas where opportunity for tech innovation is especially ripe.
Baby Boomers are not well-prepared for retirement. The median 401(k) balance of someone in the 55–64 age group is $177,805 (Vanguard), translating to just $7,000 per year in retirement income (assuming the “4% per year rule”). Even when combined with Social Security income, this isn’t nearly enough for most retirees to sustain their quality of life. Worse yet, 45% of Baby Boomers report having no retirement savings whatsoever (Madison.com). As a result of this predicament, 57% of Baby Boomers say that funding retirement — i.e. tapping into that vast disposable income to save for a comfortable retirement — is one of their top financial concerns (U.S. News).
Introducing Kindur, a wealth management platform aiming to help Baby Boomers embrace modern retirement. Backed by ~$10M in Seed and Series A funding, Kindur helps Boomers create a retirement plan, invest in Kindur’s retirement-oriented portfolios, and automate streams of retirement income. Kindur charges a 0.5% advisory fee on top of typical ETF fees.
Baby Boomers spend the most of any generation across all consumer goods categories, accounting for 49% of total annual CPG sales ($230 billion) and dominating 119 out of 123 CPG categories (Nielsen). And yet, Baby Boomers are targeted by just 5–10% of all marketing efforts (AARP). Clearly, there is a huge opportunity for more product development and competitive innovation to target this underserved group.
Introducing Willow, a direct-to-consumer disposable underwear brand with a no-show design and discreet doorstep delivery. Backed by $2.5M in Seed funding from FirstMark and Founders Fund, Willow is disrupting the $2.4B U.S. incontinence market (Statista) and pricing at $55 for a shipment of 60 pairs.
By 2020, 117 million Americans will need caregiving assistance of some kind, yet the overall number of unpaid caregivers (e.g. family members) will be 45 million (AARP). On top of that, Baby Boomers have a higher divorce rate and are more childless than previous generations, meaning that that 45 million is stretched thinner and the importance of non-familial caregiving is amplified (ASA).
Introducing Umbrella, a membership-based marketplace akin to a “TaskRabbit for seniors” that connects homeowners aged 65+ to local community members able to help. Backed by $5M in Seed funding from Thrive, Sidewalk Labs, Inspired, and others, Umbrella charges $199 per year for membership and takes a 25% service fee on all transactions (VentureBeat).
What I’m excited about
Baby Boomer technologies that I personally am particularly excited about are products that tap into disposable income while requiring a limited amount of tech usage from the Baby Boomer individuals.
For example, consider startups that provide supervised spending cards. E.g. Zestful, an employee perk card provider that allows employers to offer customized perk programs by sitting between the merchant and the employee’s bank to approve transactions instantaneously. Or Greenlight, a debit card for kids that parents manage via flexible controls thereby allowing them to dictate how their kids spend allowances.
An emerging use case in this space is Baby Boomers who want to use supervised cards like these to become more involved in their grandchildren’s financial activity or to empower their caregivers to make purchases on their behalf. Once the overseer is signed up and creates the parameters, then the actual card users allocate and spend the dollars, i.e. allowing Baby Boomers to deploy their disposable income without directly partaking in each expenditure.
I realize this article comes off slightly sadistic / hedonistic as a venture capitalist searching for ways to exploit the elderly — that’s NOT my intent! Rather, I truly see the Baby Boomer generation as over-qualified and under-recognized as a formidable consumer group. *Nobody puts grandma in a corner!*