Demographic Trends, Part One: Age Distribution

As consumers age—and we do—their spending patterns change, and as their expenditure patterns change, so does their use of credit. A recent article in American Demographics traces the anticipated changes in the age distribution in the U.S. from 1997 to 2002. The analysis is based on the Bureau of Labor Statistics 1997 Consumer Expenditure Survey (the most recent available) and from projections by TGE Demographics. 

The “baby boomers” are those persons born between 1946 and 1964. By 2002, baby boomers will be aged 38 to 56. Households headed by baby boomers comprise the bulk of those in the age brackets 35 to 54 shown in the accompanying exhibit. In the natural course of things, these baby boomers produced “echo boomers,” a group of about 72 million people between the ages of 5 and 22. The number of households headed by someone under the age of 25 is expected to increase by 600,000 between 1997 and 2002.

In between the baby boomers and the echo boomers are the “baby busters.” This group is made up of those aged 25 to 34, plus a small portion of those aged 35 to 44. The table shows a decline in the proportion of the two household groups 25 to 34 and 35 to 44. 

Distribution of Numbers of Households by Age Group, 1997 and 2002

Since expenditure patterns vary among the different age groups, the next issue is which age groups should be targeted for marketing financial services associated with the products and services they are likely to buy. For example, the portion of households less than 25 years of age will rise very slightly from 1997 to 2002. However, since these households are just beginning their careers and are in process of forming families, they are generally on tight budgets. It is small wonder that by 2002 they will form about 7.3 percent of all households, but account for only 3.9 percent of total expenditures, as shown in the table below. 

At the other extreme are household’s aged 45 to 54, all of whom are baby boomers. This group will make up 20.2 percent of households in 2002, but will account for 26.2 percent of household expenditures. As noted in the article, “these notoriously self-absorbed boomers are preparing for life after work and parenthood, when they will have even more time to focus on—what else—themselves.” For example, the 20.2 percent of households in this age bracket are expected to account for 27.2 percent of expenditures on food away from home. It seems reasonable that Discover is actively seeking to have its credit card accepted at restaurants.  (See “Credit Card Results” in Product Trends."

Distribution of Households’ Expenditures by Age Group