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Growing New Zealand’s Silver Economy
Expected to be worth $15 trillion by 2020, the silver economy is full of opportunities. The Baby Boomer generation, who are all going to be over 65 by 2029, are the healthiest, wealthiest and best educated to date. For them, retirement doesn't mean sitting quietly by the fire. They are still active consumers, volunteers and workers. The skills and economic power they have can help grow the New Zealand economy overall.
It’s predicted that nearly one-third of seniors over 65 will be part of the workforce in 2051. This will be a necessity, not only for their own financial security, but also for New Zealand’s.
Medical breakthroughs mean that people are living longer than ever before. In the past, the superannuation fund or peoples’ savings have been enough to fund a retirement, but as life expectancy pushes towards 85 and beyond, those in the 65+ age group will need to work longer for their own financial health.
More pertinent is the fact that by 2025, there will be more people aged over 65 than those aged under 14. With fewer entering the workforce, businesses will need to look to older employees as their skills and expertise will be essential in keeping the economy moving forward. The expected combined earnings of those over 65 will be $13 billion and the taxes paid add a lot to the government’s coffers as well.
Thankfully, many New Zealanders want to keep working past 65 and studies show that staying active helps people stay healthy as they age, so an aging workforce has benefits to the individual and society as a whole.
The value of elderly people as volunteers is also substantial. In fact, it’s expected that by 2031, seniors will be doing $20 billion worth of volunteer work. With families often needing both parents working, not-for-profit organisations often struggle for volunteers. Retirees often step into these roles, bringing skills from their years in the workforce to community organisations and the not-for-profit sector.
The unpaid work done by retirees in the home is also essential to the New Zealand economy. This segment of the population steps forward to look after their grandchildren, allowing parents to stay in the workforce. And as life expectancy increases, new retirees are often in the position of caring for their own elderly parents, easing the burden of Aged Residential Care facilities.
The mature cohort are also big spenders. Those aged 65 and over are the wealthiest segment of the New Zealand population, largely due to having less debt and owning their own homes. They currently spend $13 billion each year and that number is expected to rise to $39 billion by 2031.
With large numbers and money to spend, businesses need to create products and services for seniors and market them well. Along with normal things such as food, housing and clothing, many retirees have the time and money to spend on leisure and recreation. This includes travel and tourism, and many areas of New Zealand are already seeing the profits from grey nomads exploring the country and cruise ships docking in their ports.
Businesses that anticipate the needs of this cohort will also see success in the silver economy. Products that improve mobility, for example, could be expected to do well, but it’s not just healthcare; seniors participate in all areas of the economy. With marketing so often aimed at young people, businesses that recognise that one in four Kiwis will be over 65 soon and pivot their marketing to that cohort are sure to find success.
With a declining birth rate and aging population, government and businesses can’t afford to overlook the silver economy. Experts believe the older population will be a powerhouse of the economy well into the future. If businesses and governments look at the opportunities presented by this phenomenon and innovate to meet shifting needs, the economy as a whole will continue to prosper.