The Eternal Youth Fallacy in the Face of a Pandemic: Senior Spending Patterns and the Silver Economy in the United States

Abstract

Population ageing in the United States has resulted in a substantial increase in retiree households. Understanding consumer behaviour among older individuals is crucial for assessing their well-being and living conditions. This study emphasises the importance of recognising the unique needs and preferences of older consumers, as their consumption patterns have a significant influence on household expenditures. While the stereotype of frugal retirees has evolved and active seniors are now portrayed as high spenders, the Covid-19 pandemic highlighted seniors' practical and realistic approach to their spending and challenged the popular notion of a lifestyle of forever-young seniors. Seniors still prioritise essential goods and services. During the pandemic, health-related expenditures increased, and they adapted their leisure activities to home-based alternatives. Our study investigates whether pre-retirees and retirees have shifted from prioritising retirement savings to focusing on essential needs like healthcare and housing, or whether they are allocating resources for experiences and travel to enhance their quality of life before and after retirement. Seniors exhibit distinct consumption patterns, with higher expenditures on health, personal care, and leisure activities than younger age groups. Consequently, businesses and policymakers need to develop strategies that account for the diverse consumption patterns of seniors, rather than assuming they will adopt the preferences of younger generations. The silver economy represents a dynamic and expanding market, particularly in the health and social care sector, offering substantial opportunities for investment.