Millennials are yesterday's news. Tomorrow belongs to the old.
The world's biggest spenders are people nearing retirement and the elderly, notes the McKinsey Global Institute in a report. And as population growth slows, those 60 and and older will drive consumption -- the life-blood of the global economy -- around the world. In places like China and Western Europe, over the next 15 years older consumers will account for as much as 60 percent of spending -- three or even four times the rate of consumption growth for younger people.
"The glamorization of youth by marketers and advertising buyers is a vestige of the past," said Richard Dobbs, a director with the research firm. "The real power globally lies with the 60-plus age group who will contribute more than one-third of global consumption growth."
This shift largely stems from demographics. In the U.S., the 65-and-over set is expected to nearly double over the next three decades, to 88 million, according to Census data.
Most other countries are also rapidly going gray. As of 2015, 617 million people, or 8.5 percent of the world's population, were at least 65. By 2030, that number will swell to roughly 1 billion people, or 12 percent of the global population, estimates show.
For businesses, adapting to that trend is critical. Companies spent vast amounts of time and money trying to divine shifts in consumer tastes and preferences. But in the years to come the biggest changes in how people shop and consume will likely be driven by more tangible factors. Along with the aging consumer, those include the ongoing global mass migration to cities and the ratcheting down of global economic growth.
One notable feature of older people -- they shell out more on products and services than any other group, according to McKinsey. Not surprisingly, much of that spending is on health care. In developed countries, the typical 60-year-old spends $8,200 on health services, compared with $3,000 for 30-year-olds.
But older people are also the biggest consumers when it comes to other products, from housing, food and transportation to books, entertainment and personal care items (see chart above). Half of all Americans riding Harley-Davidson motorcycles are baby boomers, McKinsey notes in emphasizing the purchasing power of older consumers.
Overall, retired and elderly people in advanced economies spend around $39,000 per year, compared with $29,500 for 30-to-44-year-olds.
The firm also point to another potent economic trend that businesses and consumers must grapple with: inequality.
"While many in the 60-plus age group are wealthy, others have not saved sufficiently to see them through retirement," the report states. "Income inequality in the United States has always been highest among the elderly and has been increasing among those aged 65 and older since the 1980s."