08 April, 2011

Silvertops ain't so decrepit any more

Melbourne Herald Sun, Friday April 8, 2011

These days the silvertops include Paul McCartney, Mick Jagger, David Bowie, Kim Bassinger and Olivia Newton-John. They don't look so old and doddery any more.

In fact the over-55s are a powerhouse of wealth and industry and plenty of them are still pretty cool. So we all have to rethink this demographic bundle.

Roy Morgan Research have been doing just that, looking closely and doing the maths. For a start, these days nearly a third of all Australians are over 50.

The percentage has been creeping up steadily over the past few decades. As Morgan's MD Michele Levine mused, "A change like that is substantial. I like to use the analogy of a 3 or 4 degree increase in the temperature of the ocean – it matters."

Not so long ago the worrying picture was the prospect of a land of decrepit pensioners being supported by a shrinking population of young workers. But this is not what the research is discovering.

For a start two-thirds of those pensioners have their own homes, no mortgages and they don't have kids or school fees to support any more. So even though their income might be lower - $41,000 versus $73,000 per household - they get to keep it all themselves.

They were also blessed by Paul Keating. When he pushed us all into mandatory super back in 1986, he planted the seeds of today's prosperous retirees, who have 25 years' worth of built-up capital behind them.

This kitty is now worth $1.2 trillion and suddenly our oldies don't look so old any more. Added to their properties and other savings and investments they own $3 trillion, or 49% of Australia's household wealth.

Not only that, you can't get rid of them - so long as they're standing, they keep on working. Today one third of over 55s are still working. In the past this used to drop off to below 17 per cent as people retired at 65.

It's just as well, though. There is no way Australia could have sustained the strong economic growth of the past decade without the skilled workforce supplied by the wrinkleys. (Now there's an interesting word - first coined by brash, rude baby boomers, who are ironically finding it applied to themselves.)

In giving Morgans' State of the Nation talk last week, Ms Levine pointed to feminism as a key factor: "Given the dramatic changes in women's role in society, much of the growth in workforce participation has come from women."

This wealth works as an engine for the economy. Mum and Dad can afford to get themselves a new car - pay for it on the nose. And maybe a caravan for that long-promised trip around Australia.

A new kitchen or roof, get someone in to clean the house a couple of days a week, go to the hairdresser or the theatre whenever you like - these are no longer wait-and-save or take-a-loan decisions, these are just spontaneous purchases.

We now have a sizable population of people who earn a good wage, have low costs, and are backed by substantial capital and savings. That's a marketer's dream.

As a society we have to rethink what's "over the hill". To quote Ms Levine again, "I think the evidence is still in that our ageing population represents a real asset, not a burden, and there is more potential yet to be realised."

ray@ebeatty.com

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