As demographers and market analysts have been trumpeting for years, the baby boomers — who have transformed virtually every life stage they have gone through — are now entering their retirement years.
The oldest boomers have already turned 65, and some 10,000 more will turn 65 each day of the next 16 years. And while many analysts have already turned their attention to how boomers will alter retirement, most boomers — as well as many older members of Gen X — have already reached, and begun to change, another significant life stage: grandparenthood.
When viewed as a single market, the expanding population of American grandparents represents perhaps the single largest — and wealthiest — consumer market in the nation. Its members have significant buying power and a willingness to spend, especially on their grandchildren. In helping to provide childcare services, gifts, and financial assistance, they are serving not only as generous benefactors to their grandkids, but also, for many families, as a financial safety net for both their grandchildren and their adult children.
3 KEY FINDINGS
- American grandparents, already more than 65 million strong, are one of the fastest-growing segments of the population.
- Boomers and Gen Xers are beginning to change the expectations and behavior of grandparents.
- American grandparents have amassed — and continue to amass — considerable wealth, and they want to share a significant portion of it with their grandchildren while they are alive to see its effects.
3 DRIVERS OF GRANDPARENTING SHIFTS
While grandparents have long shared their time, money, and wisdom with their children and grandchildren, the focus and extent of their generosity is currently undergoing a transformation. This change in the nature and practice of grandparenting is the result of demographic, social, and economic factors.
- Longer life expectancy. Life expectancy jumped more than 20 percent between 1940 (63.5 years) and 2010 (78.3 years). Longer life expectancy means that within most families, three generations are now sharing more of their lives than ever before.
- Focus on health. Coupled with longer lifespans is a focus on health among all American adults, young and old. As a result, many American grandparents are vibrant and healthy, and are interested and able to participate in the lives of their grandchildren in a more active way than previous generations could.
- Redefinition of retirement. As baby boomers approach and reach age 65, they are redefining “retirement” to include full- or part-time work, volunteerism, new leisure pursuits, and often an adventurous spirit. This gives them both greater financial resources and new interests to share with their grandchildren.
3 TRENDS CHANGING AMERICAN GRANDPARENTS
Driven by the factors above, grandparents are today taking a more prominent role both in their grandchildren’s lives and in the American economy. According to AARP, nearly nine in 10 grandparents today feel they play a very (59%) or somewhat (30%) important role in their grandchildren’s lives.
And the vast majority of these grandparents see passing on values, helping their grandchildren’s moral and spiritual development, and raising awareness of family history as key aspects of their role. At the same time, the amount of money grandparents spend on their grandchildren has grown significantly since 2000, implying that their role increasingly goes beyond that of nurturer and family historian to include more practical and financial components.
Trend 1: The American grandparent population is booming. The number of American grandparents is growing rapidly, as the children of baby boomers — and the children of the oldest members of Generation X — are having their first children. Indeed, more than 20 million babies were born in the Untied States between 2007 and 2011. While this number is low by historic rates, the overall size of the US population and the boomer cohort, as well as the fact that American seniors are living longer, mean that the number of grandparents is at an all-time high.
Trend 2: Grandparents are getting older — and younger. As life expectancy rises, America’s grandparents are living longer than ever before. In fact, many grandparents are now living to ages that are significantly older than those reached by their own parents and grandparents. At the same time, however, grandparents as a group are getting younger. Since 1990, the share of grandparents who were under age 65 has been steadily increasing. In 2005, for the first time in decades, more than half (51.4%) of American grandparents were under age 65. And by 2010, that share had climbed to 52.6 percent of all grandparents.
Trend 3: Generational shifts in grandparenting. As noted above, more than half of all grandparents (52.6%) were 65 or younger in 2010 — meaning that the majority of US grandparents are no longer members of the Senior generation (born 1925–1945). Instead, boomers — plus a much smaller number of Gen Xers—make up the majority of American grandparents today. (Although not all boomers are grandparents, the youngest boomers turned 47 — the average age at which people become grandparents — in 2011.) This marks a significant generational transition that will accelerate in coming years.
3 BUSINESS IMPLICATIONS
- With the growing size of the grandparent demographic and its large share of American assets and spending, companies should consider ways that they can more directly target grandparents as a distinct market. This might include developing products and services to serve the unique needs of grandparents who are caregivers or who live in multigenerational households, as well as targeting them as the financers of big-ticket purchases for their grandchildren (and even their kids).
- Grandparents Day — the second Sunday in September — has been a holiday since 1978, yet few people seem to recognize it, much less celebrate it. With grandparents taking an increasingly prominent role in both their children’s and grandchildren’s lives, there may be an opening for brands to elevate the importance and prominence of this holiday on family calendars. This would yield clear opportunities for a range of companies — greeting card companies, florists, confectioners, restaurants, and others who have benefited from the ascension of Mother’s Day and Father’s Day — to publicize Grandparents Day as a special occasion on which to honor and celebrate grandparents.
- Since dining out is the second most popular activity for grandparents and grandchildren to share, restaurants and restaurant chains may want to introduce special offers that target grandparents (or grandchildren). Special “grandparents-eat-for-half-price” or “grandchildren-eat-free” deals may appeal to the growing grandparent market in general and to those who are primary caregivers in particular.