How to Invest in Seniors

Investing in Seniors

The connection between aging and the economy—that people who live longer also work longer and buy more over their lifespan—informs the investment strategies for many people looking to invest in seniors.

What is the Senior Market?

Investing in the senior market means keeping an eye on the businesses that support and serve the world’s aging population, from Baby Boomers to centenarians. With 750 million seniors in the world now, a number that may grow to 1 billion by 2030, there are plenty of opportunities to invest in the health and well-being of those over the age of 65 (1).

When considering the economic impact of senior citizens, it all starts with “the longevity economy”: people who live longer also work longer and buy more over their lifespan. Longer lifespans are good for the economy.

The catch, of course, is that longer lives don’t necessarily mean healthier lives, which is putting demand on the healthcare system now and into the future. People interested in investing in seniors often look to healthcare first and for good reason: innovations abound, from tools that help manage chronic conditions to medications that fight diseases and other initiatives that help keep seniors healthier for longer.

Aging isn’t what it used to be. In 1920, the life expectancy in the US for men was 53 and for women, 54. Life expectancy in 2017, almost 100 years later, was 79.6. By 2060, life expectancy is expected to reach 85.6 (2). By 2060, it is anticipated that there will be nearly 95 Americans who are 65 or older (3). What does that mean for the economy? It’s not all bad.

For one, seniors are working longer than ever. The labor force participation rate for people 75 and older is predicted to grow from 8.9 percent in 2020 to 11.7 percent by 2030. Baby Boomers will be at least 65 by 2030, contributing to the projected 9.5 percent of the labor force who will be older than 65 (4).

That growth in part is because the senior population is more educated than ever before, with some senior members still driving the economy with new and innovative ideas. For example, people between ages 55 and 64 made up nearly 26 percent of new entrepreneurs in 2017, according to the Kauffman Foundation. In 2007, that figure was only 19 percent (5).

Despite the truth of “you’re only as old as you feel,” aging comes with an entirely different set of needs, from healthcare to living to travel (for those seniors able to make the most of their retirement). For people interested in investing in seniors, several trends create meaningful as well as profitable opportunities for a next investment.

You don't need to be an expert to invest.

Why Invest in Seniors?

Investing in seniors makes sense—especially when thinking long-term. A surge in senior spending will accompany the growth of the aging population, approximately $15 trillion annually on healthcare, pharmaceuticals, and medical technology by 2030 (6). Along with healthcare titans like UnitedHealth, investors track tele-health companies like Teledoc, senior living real estate, and even THOR and Carnival, as retirees start to travel again after the pandemic.

Senior care will require lots of money, which is an opportunity for the healthcare sector, particularly as healthcare innovations provide more personalized and efficient care.

Seniors may be healthier than they used to be, but they still spend the most on healthcare. In 2019, almost half of all health expenditures among US adults ages 65 and older made up the top 10 percent of total health spending (7).

Trends such as improving preventative care will likely be a primary focus of most health systems. Lots of Baby Boomers have chronic conditions, and so from treating diabetes and high-blood pressure to Alzheimer’s and osteoporosis, healthcare systems that make preventative care more effective and efficient will help decrease the rate at which chronic conditions deteriorate and more expensive healthcare issues develop.

With the swell of the senior population, telehealth and connected health are helping to push healthcare industry growth. These have the potential to help the healthcare system manage the senior population and have a big impact on health outcomes.

Remote monitoring devices (RPM) designed for older adults significantly decrease the number of readmissions and prevent medical emergencies, and improve both self-management of care and communication with clinicians. Serving the needs of health-conscious baby boomers could also be an area of growth. (In other words, not just Ensure and medication but nutritional supplements and exercise companies.)

As the number of seniors grows, so too will efforts to vaccinate them. This is good business for the drug companies that manufacture vaccines, as well as essential for the health and well-being of the world’s populations. The COVID vaccine, which could potentially be added as a recommended annual vaccination, is one of many vaccines recommended for the elderly, from seasonal influenza among others in the U.S. to regular booster shots against tetanus and polio around the world.

Even during the Great Recession, the housing and care markets for seniors remained resilient. They combine real estate, hospitality, and need-driven services, which helps these markets stay less volatile than the commercial real estate market (8).

Baby Boomers are choosing to “age in place” rather than move to a senior living facility, particularly because of increased preventive care and better management of chronic conditions. Of course, not all seniors will be able to stay home even if they want to. Elders generally move into senior living facilities at age 83 (9). In 2029, the oldest of the baby boomer generation will turn 83, at which point the senior living industry can anticipate an influx of demand.

Older people in retirement may have more wealth—and time to spend it. With older travelers spending more on travel (10), the travel sector could continue to right itself after the pandemic lockdowns and grow, from cruise companies to RV manufacturers.

In addition, major players in the seniors market could be retail and logistics, with seniors increasingly comfortable with online shopping and rapid advances in automation technology that help maintain seniors’ independence, from autonomous cars to digital assistants.

How to Invest in Seniors

Investors interested in the seniors market can look at specific companies poised to benefit from the complex needs of the aging population. They can also look at funds that involve companies across sectors, from healthcare to tech to travel to pharmaceuticals. A search on Magnifi will allow investors to find the funds that help them invest in this growing and ever-essential market:

References:

Versace, Chris and Mark Abssy, “Investing in an Aging Population Amid a Structural Shift in Demographics,” February 4, 2022, Nasdaq.com, https://www.nasdaq.com/articles/investing-in-an-aging-population-amid-a-structural-shift-in-demographics
Medina, Lauren, Shannon Sabo, and Jonathan Vespa, Living Longer: Historical and Projected Life Expectancy in the United States, 1960 to 2060, February 2020, U.S. Census Bureau, https://www.census.gov/content/dam/Census/library/publications/2020/demo/p25-1145.pdf
2020 Profile of Older Americans, May 2021, The Administration for Community Living, https://acl.gov/sites/default/files/aging%20and%20Disability%20In%20America/2020Profileolderamericans.final_.pdf
“Number of people 75 and older in the labor force is expected to grow 96.5 percent by 2030,” November 4, 2021, TED: The Economics Daily, U.S. Bureau of Labor Statistics, https://www.bls.gov/opub/ted/2021/number-of-people-75-and-older-in-the-labor-force-is-expected-to-grow-96-5-percent-by-2030.htm
Fairlie, Robert, Sameeksha Desai, and A.J. Herrmann, 2018 National Report on Early-Stage Entrepreneurship, 2019, Kauffman Indicators of Entrepreneurship, Ewing Marion Kauffman Foundation, https://indicators.kauffman.org/wp-content/uploads/sites/2/2019/09/National_Report_Sept_2019.pdf
Versace, Chris and Mark Abssy, “Investing in an Aging Population Amid a Structural Shift in Demographics.”
Ortaliza, Jared, Matthew McGough, Emma Wager, Gary Claxton, and Krutika Amin, “How do health expenditures vary across the population?,” November 12, 2021, Peterson-KFF Health System Tracker, https://www.healthsystemtracker.org/chart-collection/health-expenditures-vary-across-population/#Share%20of%20total%20health%20spending,%202019
“Financial & Investment Overview,” accessed December 7, 2022, National Investment Center for Seniors Housing & care (NIC), https://www.nic.org/analytics/senior-housing-investment-returns/
“Senior Housing and Assisted Living Investors,” accessed December 7, 2022, Haven Senior Investments, https://www.havenseniorinvestments.com/investors/
“Travel Statistics by Age Group 2020-2021,” accessed December 7, 2022, Condor Ferries, https://www.condorferries.co.uk/travel-statistics-by-age-group