Outline


I.     The Babyboomers in Sheer Numbers
a.     Generation Explosion
i.     The signicance of 1946
ii.     Amazing Multiples
b.     The Pharmaceutical Industry and the Boomers
i.     Viagra
ii.     Celebrex
II.     The Younger Baby Boomer
A.     Beating the Boomer Rush
i.     Boomer Demands and Soaring Prices
ii.     77 Million to Retirement
iii.     Sport Utilities, Rock and Roll, Mutual Funds, and Everything Else
iv.     The In’s and Out’s with Baby-Boomer Buying
B.     Boomer Economics
v.     Retail Stores and Party Stores are Having a Blast
vi.     Online Boomer Shopper
vii.     Cruiseline Boomers
III.     Baby Boomer’s Retirement
A.     77 million will retire by 2010
i.     Strain on nation’s retirement system
ii.     Planning for retirement
iii.     After work
iv.     Long – term care
IV.     Long – Term Care
A.     Medicare is not enough
i.     Nursing home costs
ii.     Overwhelming costs
iii.     Long – term care insurance
iv.     Self Pay
v.     Medicare
V.     Long – Term Care Insurance
A.     Not always what you pay for
i.     When does it come in effect
ii.     Buyer beware

EXECUTIVE SUMMARY


Thesis Statement

What make the baby boomer generation a marketer's dream and Medicare's nightmare?


Purposes of the Report

     The purpose of this report is to (1) discover the Baby Boomer and discuss briefly on how they came about. (2) What effects have Baby Boomers made in the economy, and (3) what does all this have to do with health care and retirement? Between 1945 and 1960 bears the largest generation in US history and the one that has had the greatest influence on US economy. Baby Boomers will continue to do so for another estimated 35 years. If generation X is smarter than the critics claim them to be then there might be some wealth to be made of the 77 million boomers who are on standby for the next flashy fad to arise on the market.



Baby Boomers: Marketing Gold

     77 million Boomers to arise havoc and economic chaos as they march forth into retirement and do—well, pretty much what they did to Davy Crockett coonskin hats, rock & roll, college, Ford Mustangs, mutual funds, and everything else that’s been in their road. When Boomer demands slam into the markets, prices often soar (until the fad fades away). Nothing stands in their way, and if you stay a little bit ahead of their game it can be an excellent place to be if you know where they’re going.



Baby Boomers: Health Care and Retirement


     Today’s elderly make up 13 percent of the total population, but by 2030 today’s
aging baby boomers will comprise a whopping 20 percent of the population. 77 million
people will retire by the year 2010, placing a tremendous strain on the nation’s retirement
system. This predicament, of course, will also mean an increase in the need for long-term
care service. At the present time, Medicare covers only sixty percent of long-term care
costs. A recent AARP report indicated that today’s Medicare recipients spend more than
1/3 of their yearly income for health expenses not covered by Medicare. Many baby
boomers who are financially secure now may find themselves in the same situation when
they reach retirement age.



BABY-BOOMER – MARKETING GOLD

INTRODUCTION
The Baby Boomer generation a marketing dream, but is it destined for a retirement nightmare? What spawned this generation? How has the pharmaceutical industry profited from its numbers? What consumer goods are affected by its buying habits? Who has benefited in the past and now in the present? Who will still be working after 2010? Financially, how is the boomer generation prepared for retirement? What is the risk of long term care insurance?
     The year 1946 marked the beginning of the largest generation in history, which extended through 1964. American soldiers began returning home from World War II and the baby boomer generation was born. Over the span of 18 years, there were approximately 78 million births. In 1957, the baby boomer birth rate reached its peak at an average of 3.8 children versus only 1.9 children today (Swinyard & Rinne). The baby boomers make up one third of the total U.S. population. Can you say, “target market”?

The Younger Baby-Boomer and Economics

Sometime around 2010 and 2015, over 77 million baby-boomers will start to slam into retirement along with their Davy Crocket Coonskin hats, rock and roll, college, suburbia, mutual funds, sport utility vehicles, and everything else that’s been in their way. When boomer demand slams into the market place, prices soar (until the fad passes). Nothing stops the baby-boomer. There is somewhat of a bright side to all the spending and boomer traffic. Being just a few steps ahead of the boomer can make an individual very well off if you know which way they are headed. Boomers have always acted this way. Still the largest generation in the United States has been shifting markets ever since the diaper and baby food industries in the late 1940’s (Geoffery 59-64). Construction of elementary facilities exploded for municipal budgets—Los Angeles was spending $1 million a week on new schools in the mid-1960’s (Geoffery 59-64). After that happened, the boomer moved on abandoning a huge amount of those facilities. When younger boomers wanted cars, the Mustang and Camaro were considered a phenomenon and as the boomer herd passed so did the sales. Suburban homes in beautiful areas were next since boomers were doing the family thing. Prices on suburban homes exploded in the 80’s and as usual; when the boomer left, so did the sales.
     Baby-boomers have dominated American culture for nearly five decades. Likened by demographers to a pig moving through a python, boomers account for one third of Americans 80.6 million of the 250 million U.S. residents (Rinne p64). With this in mind, the market place can be a wonderful place to be in terms of the seller. Boomers have an enormous history for spending. One of the hottest attractions for the spending boomer is the internet. Based upon research by Greenfield Online, 85 percent of internet users are now shopping online and that baby boomers (age 35-54) are leading the pack by 48 percent (Czark p18). Retailers are also adjusting to the boomer frenzy. Retailers are now focusing their stores as discount stores to the baby-boomer. In 1961, total discount store sales comprised 5 percent of total U.S. retail sales, or 4.4 Billion. Today, just three discounters such as Walmart, K-Mart, and Target capture that portion of retail sales with the combined volume of 100 billion (Rinne p64). Party supply stores are also another type of retail store that is starting to grow. An article in Business Week states that superstores such as Party City, Factory Card Outlet, and Paper Warehouse are growing fast (Nanette p103). Baby-boomer parents seem to be throwing large elaborate parties for their children. This type of retailing has also raised special events like NCAA basketball and football championships into party occasions (Nanette p103). An article in Advertising Age says that Royal Caribbean will fund $80 million in media, advertising, and campaigns to entice as many ever spending boomers as possible. They want flashy commercials to show more emphasis on the exotic lands other than just what is available on the ship itself. Last year baby-boomers made up over 50% of the 3 billion in sales and plan on increasing sales by 21% (Chura, Goetzl p3).

Baby Boomers Retirement and Health Care


     Today’s elderly make up 13 percent of the total population, but by 2030 today’s

aging baby boomers will comprise a whopping 20 percent of the population. 77 million

people will retire by the year 2010, placing a tremendous strain on the nation’s retirement

system. This predicament, of course, will also mean an increase in the need for long-term

care service. At the present time, Medicare covers only sixty percent of long-term care

costs. A recent AARP report indicated that today’s Medicare recipients spend more than

1/3 of their yearly income for health expenses not covered by Medicare. Many baby

boomers who are financially secure now may find themselves in the same situation when

they reach retirement age (Committee on Aging 7).

The baby boomer generation is aging and the pharmaceutical industry aiding and abetting every step of the way. “The fastest-growing group is aged 55-64, projected to increase by over two-thirds by 2010.”(Wallace). Pfizer pharmaceuticals introduced Viagra, a erectile dysfunction drug, which was an immediate success that just kept going and going. Due to its popularity and profitability, Pfizer stock price doubled in less than a year. There have been over 30 million Viagra prescriptions written to over 10 million men.(Pfizer.com) “Viagra shows what can happen in business when a fundamental demographic shift coincides with advances in science and technology.”(Wallace)
     Celebrex, an arthritis inhibitor, is another of Pfizer’s all stars in which they co-promote with Pharmicia. There are over 450,000 prescriptions written for Celebrex a week and there have been more than 29 million prescriptions written for almost 10 million patients. (Pfizer.com) Arthritis, in its many forms, has afflicted generations and the baby boomers are no exception. Celebrex has been the most successful U.S. product launch in history. (Pfizer.com) This is only a few of the many drugs pushed toward this aging generation.
     According to the Special Committee on Aging, the 1998 average cost of nursing

home care was about $40,000 per year. Today’s costs have risen to $50,000 per year.

With costs this high, retirees will quickly exhaust their savings and eventually must rely

on Medicare to cover their nursing home expenses.

     With the approaching retirement of the baby boomer generation, it is essential that

the public be educated about planning financially for potential long-term care and that

legislative policy makers provide incentives for this kind of planning. Private sector tax

options such as IRA’s and 401(k)’s are an indication of incentives to save, but more

options must be developed if we are to be prepared for the future demand on long-term

care. This tremendous increase will require a mix of both public and private sector

initiatives. Self-pay, Medicaid, or insurance can cover long-term care.

     Increasing life span means more people will require long-term care and for a

longer period of time. “Medicare, as it is currently structured, cannot absorb 77 million

new beneficiaries, much less begin to take care of the costs of the baby boomers’ long-

term care needs” (Committee on Aging 7). While historically, the majority of Medicare

expenditure has been for nursing home care, the recent shift in funding has been toward

home and community based care. The number of home health visits doubled between

1989 and 1996 (Committee on Aging 10).

     The fact that baby boomers have had fewer children themselves means there will

be fewer family members to provide unpaid caregiving. Private long-term care insurance

was introduced nearly 25 years ago, but sales of this product have been limited. Some of

the reasons for low sales are lack of awareness of Medicare’s limitations on long-term

care coverage, their affordability, and their value relative to the premiums charged for

them (Committee on Aging). Long-term care insurance allows for choice in type and

level of care received, prevents people from becoming a burden to their families, and

preserves their independence as well as their assets (Lilienthal 1).

     Although more and more insurance companies are offering long-term care

policies, the consumer should be aware of their limitations. Some policies require a

waiting period of a year or longer after a chronic illness before coverage begins, or

sometimes the coverage does not begin until the patient has reached a state of dependence

on others to bathe, dress, feed, and administer medication to them. The consumer should

also be aware that some policies only cover the cost of a nursing home today. With the

cost of inflation, long-term costs in 10 years may increase by one-third or more. Also,

medical procedures may become available in the future that are not covered by current

policies. Before purchasing an insurance policy, consumers should check for exclusions

and clauses that may limit their coverage (Lilienthal 2).

     According to Brian Goebel, retiree plans will become increasingly expensive

because of “longer life expectancy, the discovery of new treatments for diseases and

illnesses associated with old age, earlier retirements and cost shifting by the Medicare

program to private sector plans” (Goebel 2). At a recent hearing on the future of long-

term care for baby boomers, Senator James M. Jeffords reported that ongoing chronic

illness and disability will consume the major part of health costs in the future, rather than

acute care needs.

Marketing gold for the ever spending baby boomer is indeed a focus for the medical doctor, pharmaceutical industry, and retailer. To the business owner of any type of sales and services, being just two steps ahead of this generation can reap huge benefits real fast and not necessarily over a long period of time from what his history shows.

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