Now is the time

Now is the time

By Liz Koh, 
Deputy Chair, Nikau Foundation 
4 October 2017

Baby boomers are not only getting older – they are getting wealthier. As they reach retirement age, they bring along with them a tsunami of wealth that needs to be invested, spent, and finally bequeathed to their heirs or charity.

Marketers talk of the ‘grey dollar’ – the money that will be spent by aging affluent baby boomers over the next 20 or 30 years.

All over the world, businesses are looking at ways to tap into this lucrative market. In Japan, there are shopping centres designed for the elderly, with medical clinics, pension-day discounts, and leisure activities for retirees. From cars to retirement villages to food and beverages, a raft of products designed with the elderly in mind is coming to market.

What will baby boomers do with their wealth? The decisions they make about how quickly to use up their retirement capital, and where to invest the capital they retain, could have a significant influence on financial markets.

Of course, not all baby boomers are individually wealthy. Their influence in the market comes simply from the fact that there are so many of them.

One interesting aspect of the baby boomer phenomenon is the influence of gender. Not only do women live longer than men but overseas research shows that women are the key decision-makers in around 85 per cent of all consumer purchases. They also wield the greatest influence when it comes to charitable giving.

As this population bubble reaches the age when they can afford to be generous and when they will have to make decisions about what happens to their estates, women will play a key role.

Numerous studies in the UK and the US show that women are more likely to give – and give more – than men. One internationally recognised centre of excellence for this research is the Women’s Philanthropy Institute which is part of the Lilly Family School of Philanthropy at Indiana University.

Their research has shown that baby boomer and older women gave 89 per cent more to charity than men of the same age and that women in the top 25 per cent income bracket gave 156 per cent more than men in the same bracket.

Charities can expect a huge influx of money as baby boomers unload their wealth either during retirement or on death. The smart ones will be actively cultivating relationships with baby boomers to tap into their generosity, and women, particularly women in high income brackets, should be right in their sights.

To that end, the Auckland Foundation, a member of Community Foundations of New Zealand, is launching an Auckland Women’s Fund, which aims to support women’s giving and improve the lives of girls and women through its granting.

No doubt others will follow. After all, baby boomers have only three choices with their wealth – they can spend it themselves, leave it to their family, or give it to charity or community. They certainly can’t take it with them.

 

* Liz Koh is Deputy Chair of Nikau Foundation, an authorised financial adviser and author of Your Money Personality; Unlock the Secret to a Rich and Happy Life, Awa Press.