Craig Eichelman, the state director for AARP in Missouri, noted other potential challenges facing companies.

“If someone who is 65, living in Rochester, New York, and working as a pharmacist at Walgreen’s tells them, ‘The winters here are kind of rough; I’d like to work six months of the year in Florida,’ right now, that kind of thing might not happen. A CEO has to ask himself: ‘He can walk and retire, but
he’s valuable to me—what am I going to do to accommodate his need?’ ”

In a world flush with pharmacists, it’s no big deal. In the face of a shortage, it’s a very big deal. Eichelman similarly noted the case of a chief executive at a large manufacturing plant in the state who lost his best shift manager, at age 55, because of the caretaker demands involving two parents with Alzheimer’s.

“As I was talking with him, the light bulb kind of went off for him,” Eichelman said, “and he asked himself: ‘What are we going to do to address things like this?’”

With the numbers drop-off from Boomers to GenXers, he said, “I’m hinting around at a worker shortage, which is kind of ironic in today’s economy, but it puts older workers in the driver’s seat. Some will continue to work because they have to, some because they want to, but most of them will retire differently than their parents did.”

The looming question for employers, he said: “How much value do you put in that older worker; what are you going to do differently to accommodate their needs?” The payback for those who answer correctly will be a cohort of workers who have lower rates of absenteeism and turnover, plus better interpersonal skills and an ability to deal more effectively with customers and clients.

“The evidence is unbelievably huge,” Peter Cappelli, of the Wharton School of Business’ Center for Human Resources, said in a recent report published by the school. “Basically, older workers perform better on just about everything.”

David Ekerdt, of the Gerontology Center at the University of Kansas, noted another area of change: knowledge transfer processes. Thanks to digital warehousing, the raw knowledge of how to do something—pump repair, for instance—might be more readily available today than ever before. But “knowledge itself might not be the issue,” he said, “the question may be, will the oncoming cohorts have the people skills, the organizational loyalty, the problem-solving skills to apply that knowledge?”

With those issues in mind, Ingram’s identified some of the business sectors likely to see the most profound changes over the next 20 years—and likely to face long-term change again at that point, too. Because that’s when Generation X, only a little more than half the size of the Boomers at 43 million in number, begins its own push into the retirement years.

HOME REMODELING

It’s called Aging in Place, and it’s picking up more momentum in home remodeling. Basically, it’s the life calendar reverse of child-proofing a home: Making it safer and more navigable for seniors so they can defer decisions about senior living centers as long as possible.

It involves projects like doorknob replacements (levers are far easier to grip for arthritics), widened doorways that accommodate wheelchairs and walkers, adjustable kitchen countertops, shower seats and grab bars in the bathroom, stair lifts indoors and ramps outdoors. And that’s just a start.

How big, potentially, is this market? “Almost limitless,” says Mike Dodd of LifeWise Renovations in Prairie Village. “If you look at the demographics of what’s happening, it’s just astounding.” Baby Boomers, he said, are living longer and healthier, and as a result, “we’ve got a built-in marketplace that’s going to do nothing but just grow.” That’s because 90 percent of today’s seniors say they’d much rather stay in their homes than opt for other senior-living arrangements. And the costs, while significant, make renovation an easy choice for many when weighed against the national median price in a senior-care setting: $40,000 or more for a single year of assisted living in a single-occupancy unit.

SENIOR LIVING

Not everyone can stay at home as they get older, so big changes are coming to the senior-living sector, as well. Just not as fast as they are to other parts of the business world. That’s why companies that are able to look over the horizon, even if they haven’t been in this line before, are moving to position themselves for what’s still to come.

Hunt Midwest, for example, has entered the field, breaking ground on two Benton House senior-living centers, with plans for two more—projects worth a combined $32 million. Benton House at Shoal Creek, the first of those, will be a 500-acre master planned community.

Those kinds of amenity-rich settings will redefine the industry. “Everybody thinks assisted living is the way it’s going to be, but that group going in—when they do go—will be very demanding,” said Cheryl Smith, president of Kansas City Home Care. “They’re going to want a lot of amenities, a lot of services for their money. They’ll want nice places, gourmet food, cocktail hours, access to golf.”

Senior care, then, will reflect the kind of active lifestyle that many older Boomers have been practicing since the first running shoe came out. But, as Smith notes, a lot of would-be players have jumped into the senior-housing game too early.

Assessing the active nature of older Boomers, she said, “I’ve never known anyone who said, “Well, I’m 70 now, I’m in great health, I think I’ll sell everything I have and go into senior living. The wave is coming, but they’re the healthiest 65-year-olds the country has ever had.”

GERIATRICS

In 1998, the nation had an estimated 9,000 physicians practicing geriatrics, medicine tailored to the needs of seniors. By 2006, the figure had fallen to 6,700. Today, the American Geratrics Society counts among its members 6,000 physicians.

Medical groups predict that the nation would need 36,000 more geriatricians by 2030 to deal with that patient load. That simply isn’t going to happen: Between 2004 and 2008, the Journal of the American Geriatric Society says, fewer than 320 physicians entered geriatric medicine fellowship training—fewer than 80 a year. Nationwide.

Already, the nation is in dangerously short supply of these specialists, the geriatrics society says, and older Americans are seeing non-geriatric physicians in vastly disproportionate numbers. An estimated 80 percent of the nation’s children are treated by pediatricians, while the numbers are reversed for older patients—only 20 percent are treated by geriatricians.

Ekerdt, of KU’s Gerontology Center, said that this rising cohort of patients would be more actively engaged in their own health care. “I think we’ll see more consumer-directed care,” he said. “People are getting more information on their own cases, treatments and medical devices. Patients are going to become partners of health-care professionals, and that may change the practice a little more.” He also noted that Boomers need to be addressing significantly higher costs for health care into their retirement years.

LEISURE AND TRAVEL

The Greatest Generation is fading away. That has produced the greatest intergenerational transfer of wealth the world has seen since, oh, maybe the pharaohs. A not insignificant share of that befell Boomers, who themselves are assuming the mantle of Wealthiest Generation Ever.

And because so many of them are committed to remaining active in retirement, the broad sweep of leisure-related industries is expected to benefit: cruise lines, airlines, hotels, RV camps, restaurants and more are all likely to benefit from a class of retirees with both disposable income and perhaps a more valuable commodity—time—on their hands. Already, even though they make up just one-fourth of the nation’s population, Baby Boomers account for more than one-third of leisure travel. That figure is headed nowhere but up as retirement beckons, professionals say.

TRANSPORTATION SERVICES

Here’s a connection a lot of us don’t make: The Baby Boomers were born right about the same time as the nation’s interstate highway system. The automobile defined their existence in ways it hasn’t for succeeding age cohorts that today talk of the Prius and the Smart Car. The Boomers grew up in an era of the V-8 engine and curb weights of nearly two tons. The car gave them mobility, it gave them an identity. Even in the face of age-related decline in driving skills, they won’t give up their keys easily.

When they do, there will be a spike in demand for transportation—and let’s face it, most American cities lack the kind of public transit that will accommodate the mobility needs of this set.

INVESTING

Leading-wave Boomers have been working for more than four decades, saving, investing and strategizing for 2011. Now, much of their aggregate $6 trillion in investments may follow a different strategy, financial professionals say. At the same time, an even bigger aggregation of wealth will be flowing down to them as the last remnants of the Greatest Generation fade out, passing along an estimated $7 trillion. The effect on investing has already been felt.

“Boomers seem to be more global in their approach to investing,” says W. Hunter Wolbach, vice president of investments for UBS Financial Services. While their parents were more limited in international equity exposure, he said, Boomers welcomed new investment opportunities abroad, and new investment tools at home, an embrace of alternative investments that is expected to continue.

One other impact he notes is the coming switch from wealth-accumulation strategies, with their primary goal of funding a retirement income, toward a more conservative risk tolerance and wealth preservation. Then again, he said, wealthier Boomers may seek to create a wealth legacy to last subsequent generations, which could mean an increased appetite for risk and structuring their portfolio more like an endowment or institution with a multi-generational time horizon.

“Either way,” Wolbach said, “the coming transfer of assets from the Greatest Generation to the Boomers will be one of the more significant opportunities in the financial planning industry.”

OUTDOOR LIVING

A healthy embrace of the outdoor life right at home is expected to keep pushing patio and deck construction and remodeling, along with sales of swimming pools, outdoor furnishings, and gardening, landscaping services and accessories.

Boomers experiencing the empty-nest syndrome have already shown a bent for downsizing their homes, but that’s the indoor piece. Companies specializing in outdoor living are still seeing brisk sales, driven in part by a housing market that has prompted more people to improve what they have rather than buy.

And companies that have long focused on indoor furniture have added outdoor segments, creating more competition, greater selection and better value for those amenities. Nearly half of the upscale home owners in one study said they were opting for decks, patios and porches rather than large lawns, extensive landscape planting beds and their associated maintenance, and builders in some parts of the country are touting improvements in outdoor living space as “non-heated” square footage.

A final driver in this sector: Price. A well-appointed outdoor living area can be constructed for as little as one-fourth the cost of a major kitchen renovation.

INSURANCE

Every day, more people show up at Cary Hall’s insurance office seeking quick—and cheap—fixes to their retirement health-insurance needs, he says. For those age 62–65 who are seeking a bridge between workplace-sponsored health insurance and Medicare, the reality is unforgiving and expensive. “It’s tragic, because we get that every week,” says Hall, owner of Benefits by Design in Overland Park.

The complexities of arranging for Medicare coverage alone—and the frustrations of dealing with bureaucrats increasingly overwhelmed by new applicants every day—can be exasperating, he says. He cited the case of one woman who’d spent five hours on the phone being bounced from one Social Security operator to the Center for Medicare and Medicaid Services and back, just to achieve something a broker might have handled in 45 minutes. But increasing demand for that kind of assistance will put pressure on the insurance industry, too, Hall acknowledged.

His advice to anyone over 50: Think now about long-term care, about health-insurance coverage that goes beyond Medicare, even about life insurance—yes, it can still be purchased, and for less than one might think—and other products. But you’re taking a risk, he cautions, trying to navigate all of that on your own.

 

Return to Ingram's August 2011