DEFINITION of Boomernomics

Boomernomics is the economy of the "Baby Boomer" generation, which can inform an investment strategy to capitalize on the consumption patterns of the group. In the U.S., those born between 1946 and 1964 will hold roughly 50% of the nation's net household worth by 2020 (source: Deloitte), making this demographic group a rich target for companies catering to its needs and wants.

BREAKING DOWN Boomernomics

A Baby Boomer economy is not difficult to imagine. In 2018, 54- and 72-year olds bracket the generational group. In 2020, they will be between 56 and 74 years old. If you are in this demographic, you have a clear understanding of what you need to spend money on and how you use your savings or discretionary income for enjoyment. If you are in your 20s, 30s or 40s, you have a parent or parents, uncles, aunts and other relatives who are Baby Boomers. If you are a young and ambitious student of business and finance reading Investopedia content, you probably have grandparents who call themselves Baby Boomers. Whatever your age, you can easily put together a list of things and services that are often consumed by this outsized group as measured by household wealth. A list could be first divided into non-discretionary and discretionary items, but the latter will be much longer. Non-discretionary items would include pharmaceuticals to relieve achy joints, high blood pressure, skin conditions, etc.; healthy food and drink; perhaps housing at an active adult community. Healthcare spending is a significant non-discretionary category for Baby Boomers, but when they are not at the doctor's office or at a fitness center, they are out on the golf links or tennis courts, sitting comfortably on cruise ships watching a show or trying to avoid elbows in the buffet line, hiking beautiful mountains around the world, or cruising the great American highways in recreational vehicles. Travel is a major theme for the demographic group, so companies that offer goods and services to this market are an important part of Boomernomics. Other discretionary spending categories could include home improvement, luxury automobiles, wealth management services and education. An investor can put together a basket of stocks based on the consumption power and behavior of Baby Boomers.