By Carl Steidtmann, chief economist and director, Consumer Business, Deloitte Research

I don't want to achieve immortality through my work. I want to achieve it through not dying.
—Woody Allen

Mr. Allen is not alone. Most baby boomers live by the words of Bob Dylan. They want to stay forever young. They are not going quietly into the long night of middle age.  They are doing everything possible to put off the inevitable.

Over the past 50 years, American consumer culture has been focused on the glorification of youth. Wherever the boomers went, the cultural zeitgeist followed. When they were born, there was a baby boom. When they went off to school, there was overcrowding and double sessions. When they hit puberty, there was a sexual revolution. When they went off to college, there was unrest on campus. When they entered the job market, there was record unemployment. When they started buying homes for the first time, home prices soared. When they started buying second homes, real estate prices in Florida soared. Now that they are hitting the third stage of their lives in full force, they will change the whole meaning of old age and retirement. Demographics define our destiny.

As the dominate demographic force in American culture, the graying of the baby boom generation will have a profound effect on all businesses in terms of products, marketing, customer services, store design, location, work force policies and benefits. Are you ready for the change?

Boomers were supposed to start saving by now. Didn’t someone tell them? When you hit 40, you start worrying about old age and retirement. When you hit 50, you better start saving for those "golden years." Ever since the baby boomers began entering their 50s in large numbers, the economic expectation was that they would begin saving for retirement, the savings rate would go up and consumer spending would fall. The first boomers hit 50 in 1996, but savings continued to fall.

This year, with the first boomers turning 60, personal savings has turned negative for the first time since the great depression. Boomers are clearly not worried about their financial security in old age, which means that they are expecting to work much longer then previous generations. With labor shortages looming, businesses will do well to craft both benefits and work schedules to the needs of this older generation.

With their children grown, boomers will downsize large suburban homes for smaller residences that are more likely to be in urban centers. Second home ownership will continue to grow rapidly. Vacation locations in warm climates will benefit greatly. While older suburban areas will struggle, urban centers will experience a much-needed renaissance in population and economic activity. Urban businesses and real estate will experience high growth rates. States with low tax rates are also likely to benefit.

No longer tied to the home in the suburbs, home for many boomers will be where the luggage is. Consumer spending will increasingly be tied not to need, but to experiences. Spending in vacation locations will boom. Consumer spending that is tied together with older life experiences and hobbies, like grand-parenting, gardening, cooking, reading, and traveling, will do well.

The exercise boom of the 1980s has long faded. In the past decade, the average American has added 10 pounds of weight, adjusted for age. No pain, no gain, is just not a winning slogan anymore. Health maintenance will take on greater importance to aging boomers. It will affect their food choices and their medical decisions. It will even affect where they travel and how they vacation.

Whole new generations of pharmaceuticals aimed more at well-being rather than illness are going to make their way to market in the next decade. Anything that can give the boomers a sense of recapturing their lost youth will do very well.   Distrustful of traditional medical authority, non-traditional remedies or regimens that promise energy, and well being and enable self-diagnosis will also do very well.

Older consumers are more loyal but at the same time more demanding. They want less noise, less visual stimulus in their shopping experience. They will need larger print on price tags and larger in-store signage. They will want to travel shorter distances to shop and want smaller stores to shop in. Wellness, energy, travel and experience will all be drivers of consumer demand. 

Older workers will transform the work experience. They will need health care insurance and want flexible work schedules. With little savings and in better physical shape, labor force participation among those over 55 has soared in the past 20 years. It can only go higher from here.

Managing older workers and incorporating them into a multigenerational workforce will be a significant challenge for employers. Many older workers will bring a wealth of wisdom to the workplace and will want opportunities to mentor those who are younger. Still others will be resentful at having to work at an advanced age while their friends are off enjoying their retirement.

About Carl Steidtmann
Based in New York, Carl Steidtmann is Deloitte Research's chief economist and a director of Consumer Business Research.  In 2003 Dr. Steidtmann was selected as one of the 25 most influential consultants by Consulting Magazine for his work in consumer spending forecasting. He earned his Ph.D., master's and bachelor's degrees from the University of Colorado.

About Deloitte Research
Operating through a network of research professionals, senior consulting and accounting practitioners, academics and technology partners, Deloitte Research delivers innovative, practical insights companies can use to improve their overall business performance. Through its in-depth publications, surveys, reports and commentary, Deloitte Research identifies, analyzes and explains major issues that drive today's business dynamics and shape tomorrow's marketplace.

Sign up for alerts from Deloitte Research.