[Senior Trend] The Era of 'Young Seniors' Becoming Healthier and Wealthier

Professor Mauro Guillen of the Wharton School in the United States emphasized in his book The 2030 Shift that the global axis will shift over the next decade, and the ‘elderly’ are a group that deserves special attention. He also noted that those aged 60 and over own more than half of the world’s assets. The British weekly news magazine The Economist also forecasted in its 2020 Global Economic Outlook that “The decade of the ‘young old’ begins,” predicting that a healthier and wealthier senior generation will dominate consumer goods, services, and financial markets in the future. Currently, the world is focused on the trends of the MZ generation (Millennials + Generation Z) in developing products and services, but in reality, the generation with the largest population base, asset holdings, and purchasing power is the new senior generation.

Nevertheless, there remains a strong perception that elderly people rely solely on ‘pension income’ or social security systems and live frugally. While some seniors live difficult lives, there are also affluent seniors. Due to aging, our life cycles have changed, and accordingly, a new senior generation has emerged. In this regard, the book 2020 Senior Trends presents an interesting case from Japan. A survey was conducted across all age groups, categorizing people into four groups: ‘money-rich,’ ‘time-rich,’ ‘money and time-rich,’ and ‘no leisure.’ The age groups with the highest number of respondents answering ‘I have both money and time’ were those in their 50s and 60s. There was a reaction that this only applied to the wealthy and that the senior generation generally has many in absolute poverty. However, the purpose of the research institute conducting this survey was not to check whether there were wealthy people or not. It aimed to observe what phenomena appear by generation as our life cycles lengthen. More specifically, it sought to confirm how the senior generation lives a different life cycle compared to the younger generation actively working.

Let’s also look at ‘time luxury.’ The senior generation tended to integrate work and life, resulting in frequent overwork and less time with family. Seniors who spent their youth in Korea’s growth period were always busy, chased by work, and ‘time poor.’ Although various conditions change after ‘retirement,’ being able to use ‘time’ freely is a significant change. They can now engage in activities or consume during weekdays and off-peak seasons. When retired seniors were asked what their greatest luxury in life was, they said it was “cheering with friends over beer in the middle of a weekday afternoon” and having pleasant conversations. In the Jongno area, there are bars that open from 3 p.m., bustling with seniors. There are also stories of seniors who conquer famous restaurants nationwide or famous mountain courses like a challenge, or who walk all the local trails by region. Of course, variables exist, such as whether they have family members requiring care or their own health condition.

The topic of ‘money-rich’ cannot be omitted. Situations where large sums are spent on supporting children’s tuition or living expenses or caregiving are exceptions. Generally, people finish paying off housing loans in their 50s, retire in their 60s, receive severance pay, and start pensions, leading to financial comfort. A major difference from previous senior generations is their attitude toward ‘money.’ The traditional senior generation viewed ‘severance pay = money to be saved and left untouched’ or ‘money to be inherited by children’ and rarely used it. ‘Senior = frugality.’ The new senior generation wants to ‘grow their money and spend on themselves.’ In 2022, Hana Financial Management Research Institute published a report titled Financial Services Desired by New Seniors. Surprisingly, they were open to using mobile-based fintech and actively engaged with new financial trends. While they valued ‘principal protection,’ ‘regular income generation,’ and ‘liquidity,’ they were familiar with financial products and had a strong investment mindset. They held savings for retirement or severance pay, so they had relatively abundant liquid assets and were interested in structures that generate small but continuous regular income. They engaged in real estate rentals, tax-saving angel investments, and dividend-type stock investments.

Even if they are rich in money and time, the senior generation is a ‘veteran’ in economic and consumption activities, having been active for a long time. They do not spend money recklessly. They basically consume ‘selectively.’ They spend money only on what they truly need and want. Although some purchases may seem expensive, if they believe it is worth it, they open their wallets. They attend concerts of their favorite singers and go on dream trips even if they are far and costly. They purchase high-end cruise trips, premium fishing rods, or luxury bicycles. According to various surveys, seniors primarily want travel and relaxation. Next, they spend money on hobbies, health care, and food. After that comes ‘savings and asset management.’

Senior-tailored products and services are still relatively lacking. What is our perception of seniors when the market specialized for the new senior lifestyle opens? Are they incompetent and impoverished, or competent and wealthy? Passive or active?

Lee Boram, CEO of Third Age