While advertisers focus on 18- to 34-year-olds, the over-50 cohort in the U.S. accounts for $8.3 trillion of economic activity—about half that of all of China.
Paul Carroll, editor-in-chief of Insurance Thought Leadership, recently sat down with Scott Frisch, EVP and chief operating officer at AARP, to discuss the power of what AARP has labeled the longevity economy. Frisch explained how companies can position themselves to take advantage of the over-50s’ buying power—and how the insurance industry can draw on their work experience at a time when the need for talent is so great.
Paul Carroll
I'm intrigued by your idea of the longevity economy—and not just because I'm part of that over-50 group you guys spend so much time working with. It just seems like a really interesting way to slice and dice the world. I live in California, where officials often brag about being the fifth-largest economy in the world if it were treated as a separate nation, but the over-50 group in the U.S. is an even more remarkable economic power.
Scott Frisch
The mission of AARP is to empower people to choose how they live as they age. Part of that mission is about getting the marketplace to think about this massive audience that we have in this country and, quite frankly, now the globe.
In the U.S., we have over 115 million people, give or take, over the age of 50. We've always tried to push the marketplace to think about that group in terms of products and services, as one example of helping people over the age of 50. But a number of years ago, we decided to actually try to quantify what the economic impact is of this massive pool of people in this country. We commissioned a study along with another group and found that the direct and indirect economic impact of this audience is roughly $8.3 trillion a year.
That number is staggering. It’s about half the GDP of China.
We all read about how advertisers will focus on the 18- to 34-year-olds, and that’s done for a reason. But the point of this study on the longevity economy is to point out that the 50-plus audience has huge buying power.
Focusing on the longevity economy has let us help other organizations wanting to focus on the 50-plus. I’ll give you an example.
Around 2015, we launched the AARP Innovation Fund, a venture fund that focused on products and services for the 50-plus, related to aging in place, access to healthcare and preventative health care. We had a very hard time finding companies to invest in within those three criteria that were looking at the 50-plus. A lot of folks said, “Wow, I never would have thought about doing this.”
Now fast-forward to today. The concept of age tech is becoming almost ubiquitous. I would guess that in any given month my team gets four or five calls from other venture funds focused on the same space. The venture space is recognizing that this population of 115 million people, plus or minus, has a huge impact on our economy, not to mention globally, and is driving capital and therefore more products and more services.
So it's been a wonderful journey to go from coming up with this concept to seeing the marketplace adopt it.
Paul Carroll
I've always found it interesting that AARP started, basically, with an insurance product. Your founder, back in the ‘50s, had a vision for teachers and how they should be able to age after they retired. She was the first woman to be a high school principal in California and was focused on them. The first thing she organized was a group health insurance product.
It seems to me that there are just massive opportunities: long-term care, a lot of things with wealth management, certainly healthcare and so on. So it seems to me that my audience in insurance really ought to be thinking in terms of the longevity economy.
Scott Frisch
You're spot on. In 1958, Dr. Ethel Percy Andrus founded AARP because she went to visit one of her teachers after the teacher retired and found her living in a chicken coop behind a house. That was the impetus. And the first thing she did was find group health insurance for retired teachers.
Fast-forward 65 years and look at what is in the marketplace today. Think about Medicare Advantage, Medicare Supplement and Medigap, of which we have all three here at AARP. Think about the life insurance marketplace, how that's changed. We have property and casualty insurance focused on the 50-plus. With all these things we put our name on—whether working with United Healthcare, New York Life, Barclays, you name it—we try to have something of value that our audience couldn't otherwise get in the marketplace.
Going from that one incident in 1958 to today is just a phenomenal story.
Paul Carroll
Let me ask you about the flip side of the buying power of this group you're talking about, because one of the big things that people worry about in insurance is the talent gap. Insurance isn’t seen as a very sexy industry, so your kids and mine aren't necessarily thinking about going into it, and there are a lot of people who are retiring. I've seen numbers saying as many as 400,000 people will leave the insurance industry by 2026 out of a population of about 3 million in the U.S. And it seems to me that this over-50 cohort, over-65 cohort, over-70 cohort has an awful lot of talent.
These days, with Zoom calls and remote work and that sort of thing, there's a lot that probably could be done to keep that talent in the industry and continue more or less uninterrupted even though there are going to be all these people leaving. I’m curious to hear how you're thinking about keeping people in the workforce, not 40 hours a week, necessarily, but maybe 20 or 30.
Scott Frisch
I don’t think the insurance industry is alone. I'm a CPA—although not practicing, obviously—and I think the public accounting industry isn’t much different. It's getting harder and harder to keep people in certain industries.
But the over-50 group may want to continue working for a variety of reasons. They may want to be part of something bigger, something that gives them an emotional lift. They may do it for financial reasons. They may do it because they enjoy the social aspect of work.
AARP has been challenging myths about older workers for years—that they aren’t as engaged, that they don’t have the technology skills—because age discrimination in the workplace is based on those myths. Study after study debunks them. Older workers provide things like mentorship, institutional knowledge and experience. Having gone through a variety of experiences throughout their careers, whatever it may have been, makes them better prepared to deal with an issue that's happening today.
When we about diversity in the workforce, age should be part of that.
Businesses need to think: How do I retain the older population in the workforce? That requires some flexibility. Technology, with Zoom and Microsoft Teams, has helped tremendously. At AARP, we offer 80 hours of caregiving leave fully paid per year for every employee, which about 45% of our people use. That's a tremendous offering that really doesn't cost that much, and supporting a multi-generation workforce is a big deal. It adds to the vibrancy of a company, the vibrancy of your workforce.
Paul Carroll
Those of us who type for a living have it easier than people who do more manual labor once we get older, but I’m certainly encouraged, in general, about the flexibility being offered in the workplace.
Scott Frisch
COVID was awful on so many levels, but there were some silver linings, the flexibility issue being one of them. I also think it got all of us used to using Zoom or FaceTime or whatever and closed the digital divide, so the myth about older people lacking technology skills is fading.
Paul Carroll
This is great. I appreciate your taking the time. The over-50 cohort is massive as a buying group and as a source of talent, so I hope the insurance industry leans into your work on the longevity economy.
For the full conversation between Paul Carroll and Scott Frisch, click HERE.
