2/13/2013 4:30 PM ET|
How boomers will shift the economy
As people age, they spend differently than when they were younger. Knowing which industries will benefit could help you grow your nest egg.
In the year 2000, approximately 2.5 million Americans turned 65. This year, more than 3.5 million Americans will pass that milestone. And the number of people joining the ranks of the elderly will keep increasing, at least for the next 20 years, as more and more baby boomers hit their 60s, 70s and 80s. By 2030, the over-65 crowd will expand to 72 million people, up from 40 million in 2010.
The increasing numbers of recent retirees, along with the hordes waiting at the gates, give politicians headaches as they try to figure out how to finance Social Security and pay the health care bills covered by Medicare.
But for those of us looking to invest in the American economy, this burgeoning population means an increasingly lucrative market for products and services focused on the elderly. By the time they're done, some 78 million baby boomers will have survived millions of hip replacements and heart transplants, swallowed trillions of Advil and Viagra pills, and consumed billions of boxes of bran and packages of prunes.
Despite the faltering economy of the past five years, American seniors are richer than ever, in large part because more older people, especially older women, are working than in previous decades. According to a 2012 report from the Federal Agency Forum, the number of senior citizens living in poverty has declined from 15% to 9% since the mid-1970s, while the proportion of older Americans enjoying a "high income" increased from 18% to 31%.
So even while the burgeoning number of retirees will strain government resources, they will provide enormous moneymaking opportunities for public companies. These people will travel. They will move to warmer and friendlier climates. Many will manage their individual retirement accounts and 401k's through financial institutions. They will buy long-term care insurance, pay rent to senior citizen facilities and drop an average of $8,000 per funeral.
At least one financial firm -- JPMorgan -- has taken the trend seriously enough to create an "Aging Population Index" of stocks expected to profit from baby boomers. The list comprises more than a dozen individual companies, from drugmaker Celgene to hotel chain Wyndham Worldwide. These stocks may or may not be good investments. Unless you read their balance sheets and income statements and know something of their plans, how would you know?
The smart way to invest in baby boomers is to identify a trend, then let a reputable expert pick the specific companies that will likely benefit from those prevailing winds. Here are three ideas:But with 78 million baby boomers retiring, can you be wrong?
It doesn't take hard-won experience to realize that older people use more medical products than younger people do. The average 70-year-old gulps about three times more prescription drugs than the typical 40-year-old. Vanguard offers the mutual fund Vanguard Health Care (VGHCX), managed by Jean Hynes, that provides intelligent and low-cost exposure to the industry. Fidelity has its FidelitySelect Pharmaceuticals (FPHAX) and FidelitySelect Biotechnology Portfolio (FBIOX) funds, the latter helmed by Rajiv Kaul. There are also several medical care exchange-traded funds, including Vanguard Health Care (VHT).
Finance and insurance
Retirees are increasingly responsible for their own savings, income and financial futures. Money managers are developing more and more products to meet this need, including annuities, reverse mortgages and other asset management tools. But again, are you in a position to know whether JPMorgan or Morgan Stanley is the better investment (or even know the difference between the two)? Vanguard has an ETF, called Vanguard Financials (VFH), that invests in more than 400 financial stocks. Schwab also has a financial mutual fund; the Burnham Financial Services (BURKX) fund is another possibility.
Older people may not buy that many jeans or video games, but they do purchase personal care products, including wrinkle creams, special cleansers and adult diapers. Vanguard offers an ETF called Vanguard Consumer Staples (VDC). The Rydex Consumer Products Fund (RYPDX) is another choice. These funds invest in companies like Procter & Gamble, which cooks up the fiber supplement Metamucil, and Kimberly-Clark, which deals out Depends.
There's no guarantee that investing in any of these funds will produce better results than putting your retirement savings in a low-cost index fund. But with 78 million baby boomers retiring, can you be wrong?
More from US News & World Report:
- Senior employment driven by choice, not need
- The 10 best places to launch a retirement career
- 10 places with great retirement benefits
VIDEO ON MSN MONEY
People - let me tell you something!! In 1968 I came home from Viet Nam and got a job paying 2 dollars an hour ($80 a week)!! Within 20 years my salary was $60,000 per year plus expenses, and I traveled the world. I sued nobody, filed no discrimination claims, didn't march for any minimum wage demand groups, complained plenty to myself, thought about things - and improved my talents to the point where I was in demand in the marketplace!!! Something I don't see today!!! I see workers demanding that Wal-Mart pay a Chinese coolie an oil rig workers salary, and a bunch of morons demanding so much more than they are worth - both to the employer AND the consumer!!!
Do you people have any idea why I go to Wal-Mart to shop??? It's because this is supposed to be a free country, and I should enjoy paying $5 for a $3 item, instead of $10 for a $3 item at mom & pop's store if I choose!!!
FREEDOM OF CHOICE!!!
You union pukes don't believe in that do you???!! You believe it's your way or the highway (or a hole in the desert)!!!
ALL YOU ARE DOING TODAY IN A FEW WORDS IS TRYING TO TURN EVERY HUMAN BEING'S IDEA OF WHAT SHOULD BE INTO YOUR IDEA OF WHAT SHOULD BE!!
I nearly puked today watching some negro ranting about Wal-Mart not paying a livable wage!!
That negro needs to bring his level of talent, intelligence, character, guts, brains, and charisma to a level that is in demand in today's world, and I mean world - THE WHOLE EARTH!!! THIS IS NOW A GLOBAL ECONOMY!!! WAKE UP NEGRO - - THE WORLD HAS A PLACE FOR YOU IF YOU HAVE A TALENT FOR IT!!!
NATURALLY - I'M LOOKING FORWARD TO LOTS OF THUMBS DOWN ON THIS - BUT I UNDERSTAND WHY!!! ALL YOU HAVE TO DO IS LOOK AT THE STATE OF THE UNION AND YOU WILL SEE IT!!!!!
If washington hadn't been stealing our money for years, there wouldn't be this problem. They still regard it as their money.....not ours.
It's sickening how they have failed us. And now, they have the damn "gull" to blame seniors as if it was their fault for getting old, and wanting to retire. I want obama to put that 700+ billion he stole from medicare (for his failed obamacare,) right back where he found it. No one authorized him to do as he pleases with OUR money!
I'M SO TIRED OF WATCHING YOU NEGROES WHINE AND MOAN!!
IF WE TREATED THE GERMANS LIKE YOU TREAT US WHITE AMERICANS WITH YOUR RACIST CRAP - GERMANY WOULD BE GONE OFF THE FACE OF THE EARTH.
THE GERMANS KILLED, PERSECUTED, MURDERED, TORTURED, AND PLUM SHOT MORE WHITE AMERICANS THAN ANY NEGRO THAT WAS EVER ENSLAVED, KIDNAPPED, INCARCERATED, BOOTLEGGED, BAMBOOZLED, OR JUST PLAIN OUTSMARTED!!!
YOU NEGROES ARE STARTING TO CONVINCE ME THAT YOU ARE MORE PREJUDICED THAN THE KKK EVER WAS!!!!!
What a load of ****!
During his golfing vacation at Martha's Vineyard - President Obama had been slicing off the tee on every hole.
He asks his Scottish caddy if he has noticed any obvious reasons for his poor tee shots, to which the caddy replies:
"Aye, there's a piece of shyt on the end of yer driver. "
The President picks up his driver and cleans the club face, at which point the caddy says:
"No, the other end."
The only reason the government even cares about baby boomers is that all that taxed income is drawing to a close. This liberal government does not care about the elderly... if your not paying taxes and are too old to work they are pretty much waiting for you too die or report to a termination chamber. But notice how liberals work...they think the bankers they bailed out are going to help this crappy government.... when all they have done is screw them and the elderly...its called a reverse mortgage.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.