What is the 'Boomer Effect (Baby Boomer Factor)'?

The boomer effect refers to the influence that the generational cluster born between 1946 and 1964 has on the economy and most markets. This term first gained traction in the realm of technology and referred to the importance of simplifying the interfaces of consumer electronics to encourage the wealthy baby boomer generation to upgrade.

The term is now used to describe everything related to boomers; for example, their consumer habits, social media preferences, how marketers target the boomer generation and how the financial services sector can best serve boomers as their priorities shift later in life. The boomer effect is sometimes called the boomer factor or the boomer shift.

BREAKING DOWN 'Boomer Effect (Baby Boomer Factor)'

Following World War II, in 1946, more babies were born than ever before: 3.4 million,, which is 20 percent more than in 1945, according to History.com. This marked the beginning of the so-called “baby boom.” In 1947, an additional 3.8 million babies were born, a further 3.9 million were born in 1952 and over 4 million were born every year from 1954 until 1964. At this point, baby boomers represented 40 percent of the nations population.

Today, baby boomers hold a large amount of the wealth in North America making them a prime market segment. As they have aged, baby boomers have shaped the focus of companies. Examples are the wide range of anti-aging products that target the generation, real estate aimed at people who seek to live longer independently, investment in health care, transplants, and advanced medical technology. Baby boomers are living longer than any generation before them.

Baby boomers are also having affecting labor markets because they are remaining in the workforce for longer and holding onto jobs that would otherwise be filled by the next generation. This has had a positive impact on businesses because studies have shown a drop in productivity when boomers retire due to the loss of organizational intelligence. However, retirement at an older age may simply be delaying productivity reckoning until a future date.

Investing In the Boomer Effect

The baby boomers collectively have created trends that disproportionately benefit particular industries; therefore, investors can position a portfolio to take advantage of the boomer effect. Most of these investment opportunities are in the medical or medical services sector. Orthopedic manufacturers, affordable care homes, medical device makers, and pharmaceutical manufacturers will continue to show growth as more boomers age.

The oldest baby boomers today are already in their 60s. By 2030, one-fifth of the U.S. population will be older than 65, and some experts believe that the aging of the population will strain social welfare systems.

 
RELATED TERMS
  1. Baby Boomer

    A baby boomer is person who was born between 1946 and 1964 and ...
  2. Generation Gap

    A generation gap is the difference found between members of different ...
  3. The Greatest Generation

    The Greatest Generation is a term used to describe those who ...
  4. Demographics

    Demographics is the study of a population based on factors such ...
  5. Baby Bells

    The Baby Bells were the U.S. regional telephone companies that ...
  6. Actuarial Balance

    Actuarial balance is the difference between future Social Security ...
Related Articles
  1. Tech

    Why Boomers And Millennials' Portfolios Are Incomparable

    Discover the investment styles of baby boomers and millennials, and learn why the baby boomer portfolios are bigger and more diversified than the millennials.
  2. Financial Advisor

    Boomers: Top Tips for Shoring Up Your Retirement

    The retirement situation for most Baby Boomers isn't that encouraging. But there are actions they can take to shore up their nest eggs. Here are a few.
  3. Personal Finance

    Understanding Your Parents' Attitude Toward Retirement

    How history may impact Baby Boomer attitudes toward financial planning and retirement.
  4. Insights

    As Boomers Slow Down, Will the Economy Follow?

    Many baby boomers are working past 65, yet as they retire, the effects could be profound.
  5. Retirement

    The Generation Gap in Retirement Savings

    Baby Boomers may be closer to retirement, but compared to Millennials, they’re less likely to be on track with their savings.
  6. Retirement

    8 Retirement Income Strategies for Boomers in 2017

    Here are eight strategies that Baby Boomers can use to generate retirement income.
  7. Retirement

    Rising Debt Hindering Boomers' Retirement Plans

    Boomers in pre-retirement and retirement are grappling with debt more than previous generations, which is impacting their retirement preparedness.
  8. Personal Finance

    7 Boomer Jobs That Are Up For Grabs

    The first boomers started retiring this year - what jobs are they leaving open?
  9. Financial Advisor

    4 Boomer Retirement Basics

    Here are 4 basics for Boomers who want to get a leg up on retirement.
  10. Financial Advisor

    How Millennials and Baby Boomers Invest Alike

    When it comes to investing Millennials and Boomers are more alike than you may think. Here's how.
Trading Center