Invest in your parents spending your inheritance!
by Peter Switzer
Don’t worry about your ageing parents, especially if they’re baby boomers, but they could spend your inheritance. And if that should be your fate, at least invest in the businesses that might take your money!
I’m not arguing that your parents want to leave you nothing when they die, but there have been a few developments that could play havoc with your inheritance.
First, the GFC gutting stock markets has hurt super nest eggs and so many boomers could start retirement with smaller amounts in their funds.
Second, we’re living longer and drug companies are into anti-ageing products.
And third, reverse mortgages will make the spending easier.
“Most pharmaceutical companies already embrace this opportunity,” explains Brent Green, author of Marketing to Leading-Edge Baby Boomers, on the CNBC website. “That’s why they have more than 400 drugs under development to tackle ageing, with Viagra being a noteworthy and welcome early innovation.”
He penned his reaction to those who say there will be less spending by boomers because of the US recession post-GFC. Of course, some people will spend less after they stop work but I believe many baby boomers won’t rush into retirement. They will sweat on part-time working opportunities not only to build up the nest egg but to keep on living large instead of becoming a retiree.
Green says the future will bring entrepreneurs who will look at this generation as quite addicted to comfort, material things and a desire to experience the high life.
“Lockstep with boomer aging, established industries are about to grow exponentially, and new wealth will be created by enterprises yet to be conceived,” he explains. “When boomers focus their wealth on shared goals, such as the need to see the world before they die, billions of dollars will follow. ‘Generation reinvention’, as I like to call it, will answer unrequited dreams notated on countless bucket lists. Travel and tourism-related expenditures will grow dramatically. Thousands of entrepreneurial businesses will emerge.”
Green pointed to the National Geographic Society which developed a series of catered tours called Expeditions.
“These precisely engineered adventures emphasise learning, and many of the Society’s pre-eminent experts escort guests on their journeys,” he points out. “Recreational Equipment Incorporated also showcases appealing travel experiences across the nation and throughout the world.”
Here are some of the industries he suggested were well-placed to succeed in an ageing baby boomer world:
- Drug companies
- Age Management or Anti Ageing.
Age management involves novel technologies such as hormone replacement to fortify aging bodies and slow ticking time, but it’s not just Viagra-like innovations.
“This rapidly evolving industry includes modern fitness facilities, personal trainers, nutritional supplements, nutricosmetics, preventative genomics, cable TV programming about wellness, medical spas, alternative medicine practitioners, natural foods merchandisers, and functional foods,” Green says.
“Intel, the legendary computer chip manufacturer, is among a growing list of companies developing products to help people stay in their homes and avoid assisted care or nursing homes,” Green reveals. “Not only do aging-in-place technologies have important implications for quality-of-life, they can reduce national healthcare costs.”
Forrester Research tipped that in-home medical monitoring, could reach US$34 billion by 2015 as the leading edge of the generation approaches age 70.
Downsize and right-size
Green accepts that boomers in America might not buy as many second houses as once thought, but they’ll downsize and right-size.
“Many will buy cutting-edge retirement homes in active-aging neighbourhoods yet to be conceived,” he predicts. “They’ll embrace new urbanism lifestyles in big cities. They’ll be early adopters of communities wired for the future and nostalgically reminiscent of the past. They’ll refurnish their lives while reducing clutter—another emerging industry.”
They could economise to stretch out the money and buy less BMWs, and the presents to grandchildren could be less generous, but they will be looking for distinctive stuff and car makers will pick up on this and produce them.
Who knows? It could be a Prius-like car that looks good, is very green and actually saves a lot of money compared to most cars, but is also safe! Time might be running out for boomers but they want to stay in the game as long as they can!
“Those who warn of boomer economic catastrophes often look at the future through the rear view mirror,” Green says. “I propose that the boomer future is robust with opportunities.”
Reverse mortgage comeback
Finally, reverse mortgages and trading back from big homes to smaller abodes is likely to be a trend, especially in Australia where we have high immigration levels and low home building figures.
This should help home values stay high and while reverse mortgages have lost some appeal, as they were never explained properly, I suspect over time, as baby boomer money runs out and they live on, these loan products will make a comeback.
And this could KO a lot of inheritances for Gen X'ers and Gen Y'ers. That’s why I recommend that these younger Australians should become investment savvy and should watch this space.
(P.S. By the end of the week, I will get some company names on the stock market that look to be well-placed for the anti-ageing era ahead!)
Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
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Published on: Monday, February 15, 2010blog comments powered by Disqus