What Is 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, making this demographic group a rich target for companies catering to its wants and needs. The term "boomernomcs" originates from the title of a 1999 book by William Sterling and Steven Waite.
- Boomernomics is an investment strategy based on the economic impact of the aging baby boomer generation.
- The term "boomernomics" was coined by authors William Sterling and Stephen Waite in their 1999 book on the topic.
- The baby boom generation is projected to hold around 50% of wealth in the U.S. by 2020 and strategies based on this trend have been a popular topic for years among various investment gurus and advisers.
Boomernomics is a buzzword originating from the title of a 1999 book by investment advisers William Sterling and Steven Waite, Boomernomics: The Future of Your Money in the Upcoming Generational Warfare. The concept of boomernomics is simple: The economic impact of the large demographic age cohort known as the "baby boomers" can form the basis of a successful investment strategy into industries and services that will benefit from the changing consumption patterns of this generation as they age and enter retirement.
This is essentially the same idea that has been widely described and discussed by other authors and investment gurus, including Ken Dychtwald's Age Wave Theory and the demographic investment strategies advocated by investor Harry Dent. Boomernomics in particular predicts that the retirement of the Baby Boomers will involve a period of intergenerational conflict (as well as conflict between the more and less successful members of this generation) over economic resources, rising taxation, and lower historical returns on major asset classes.
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 might have a parent or parents, uncles, aunts, and other relatives who are 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 drinks; and perhaps housing at an active adult community. Healthcare spending is a significant non-discretionary category for baby boomers.
However, 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 getting elbowed 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.