THE FUTURE IS FEMALE, SAYS MIT AGELAB DIRECTOR
June 6, 2018 by Joseph Coughlin, MIT AgeLab
Why It Matters
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Women are the chief Wealth + Health decision makers of their households.
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Women are especially influential in health spending.
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Financial professionals who want to stay relevant should think about female clients’ lives, specifically from their perspective.
The forward-thinking financial professional should always be working to expand her mental model of her typical or even her “ideal” client — to be ready for whoever walks through the door. My question is this: Are advisors fully keen to the needs, desires, and expectations of what I call, in The Longevity Economy, The Ultimate Consumer?
The conventional wisdom of marketing says the 18- to 34-year-old male is the most coveted demographic. But the demographic that companies should really be focusing on — particularly those companies whose business revolves around the domains of Wealth + Health — is the older female consumer. In the longevity economy, women over 50 have an outsized and overlooked influence as consumers across all domains, but none more so than in planning and spending for health care.
Women are the healthcare influencers
Between the two genders, women are by far the bigger players in the healthcare landscape, for a few reasons. To begin with, women use healthcare services more often than men, most significantly so during working age, when they bear the costs of child care, but also from age 65 and onward, both on a per capita basis and as a result of being the larger share of the older population.
More importantly, though, women are the predominant healthcare influencers, “the chief medical officers” of the home. Females make 80% of all healthcare decisions in the household: They are in charge of not only themselves but often their children and even their spouses. This means that not only are women the primary controllers of healthcare dollars, they are also the ones most likely to seek out and gather health and wellness information for themselves and their loved ones, whether from a doctor, the internet, or from other professional resources.
Women are the caregiver corps
Part of why women dominate healthcare decisions is they are the nation’s caregiver corps. In fact 66% of informal, unpaid caregiving is done by women— typically the eldest adult daughter of an ailing parent. The responsibility of caregiving provides many women a level of insight and realism into what they have to plan for in retirement that would be difficult to find in any other experience: They have seen older age at its most difficult, and the extent of the frictions it produces both on the self and on one’s finances.
Women are around for longer (and do more)
What has historically made the coveted 18-34 demographic so coveted? Because they tend to be the most flippant with their money, for one, but also because, by the simple virtue of their placement in time, they have the most “lifelong” value as customers. Snare an 18-year-old’s loyalty, and you will have a customer for 50-odd more years.
This simple, brutal sort of math applies in a different way to the older female consumer. A healthy, college-educated woman in her 50s has a life expectancy of about 85 years, compared to 76 years for the average American male. Her “retirement years” are likely to span two decades, if not more. Those two decades may wind up spanning many different sorts of lives — comprising different wants, different needs, different homes, different social ties, different sources of meaning.
Women are more likely than men to spend time living solo in older age, either because of the death of her husband or a divorce (women are less likely to remarry after a later life divorce than when they are younger — often because the prospect of “taking care” of a new husband has very little appeal). And a woman living solo will face different challenges — and get her support from different places — in older age than one living with a partner.
Older women are also supporting and fulfilling themselves in ways that are very different from their forebears. They are running Airbnbs, getting involved with nonprofits, and increasingly becoming sellers and providers, not just consumers. Increasingly, older women are going to be starters of second careers and participants in new economic arrangements — and their finances will accordingly be more colorful.
What financial professionals can do
Financial professionals who want to more effectively connect with and serve their female clients should think about the outsized authority and distinct challenges that women have as they age, particularly in the domain of health care. Women have a disproportionate level of authority in making health decisions for a household. In their role as caregivers, it may be that women are more likely to know firsthand the challenges that come with getting older. And women live a wider variety of lifestyles in older age and have a longer “retirement timeline” than ever before.
The importance of making sure that women possess the financial literacy skills they need to properly manage their money, in the domains of health care and elsewhere, should be clear. The power that older women have on the longevity economy should not be taken lightly, and financial professionals that wants to be relevant now and into the future should think specifically about her perspective and trajectory — because the future is female.
Things to Consider
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Since women can influence decisions across multiple generations, build a connection with the woman leading the household.
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For more on unlocking the fast-growing market of older Americans, read The Longevity Economy.
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Check out this infographic for more on women and retirement.
Transamerica is proud to financially support the work of Joseph Coughlin and MIT AgeLab
