VITAL STATISTICS

Boomers' booming finances

SV: How will demographic trends influence the banking and financial services industries?

Francese: The largest 10-year age group in Rockingham County and New Hampshire are people 45 to 54 years old. They represent a quarter of all adults and that is way up from the past. Fifteen years ago they were, at most, one out of six.

The reason that is so important is that household income peaks at that age. That means there is likely to be a record large percentage of the adult population making a six-figure income and concerned about their looming retirement. This suggests a very high demand for retirement planning services and long-term money management over the 10- to 15-year time horizon.

Anyone working in financial services and banking has to be aware of just how many of these baby boomers have an extremely high level of anxiety about whether they will have enough money to retire when they reach 66 or 67 years old.

If you want a financial fright go to the Social Security Web site and see what your check is going to be when you turn 66. People who have done so say it barely covers their property taxes and is not likely to significantly contribute to maintaining their lifestyle.

The bottom line is that retiring baby boomers have to rely on their ability to make money now and manage their assets. There is a lot of confusion and anxiety in this area and that creates an opportunity for people offering financial planning services. Financial management services will be a very important industry going forward.

SV: What other age groups will influence the financial services market?

Francese: What is useful to look at for the county and state is the number of 65- to 69-year-olds. The number of people in that age group is projected to double in the next 10 years, which will be far and away the fastest growth of any age group. So the number of people in this traditional retirement age band will rise more than 100 percent at time when overall population growth will be in single digits. In Rockingham County this means the present 12,000 people 65 to 69 years old will rise to more than 24,000 by 2015. That's an enormous change.

Many of these folks making the life transition from working to retirement will probably want someone to help them to manage finances to make sure they don't withdraw too much money during the first few years. It is at the transition point from work to retirement when people often go in and talk with a financial adviser and say, "OK, you've got to help me figure out how to draw down in a prudent fashion so it will last for as long as my wife and I are alive." That's a fairly complicated issue that creates a need for post-retirement planning.

While we expect this age group to double in our county and in the state it may grow even faster here on the Seacoast because there are at least 7,000 people who own second homes in the area. Many second home owners on the Seacoast come to visit periodically with the idea that when they retire they are going to live here full time. We may have an influx of people of retirement age who were not year-round residents here before.

If they make the transition from visitors to permanent residents they will probably want to change banks and bring assets to Seacoast New Hampshire or southern Maine. That suggests a rising need for advisory services for people who live off their investments and must manage those investments in a prudent way. I would think employment in that part of the banking and financial services sector will likely rise as well.

SV: How can financial services companies appeal to this demographic?

Francese: I can't emphasize enough the importance of simplicity.

Look how complex credit cards have become, for example. Credit cards are becoming like cell phones in that they are much more complicated than they need to be. The mature market segment is generally interested in simplifying their life and not making it more complex.

Complex financial products with lots of features and benefits may appeal to younger and more mobile consumers. But it is my belief that financial products or services that are uncomplicated, easy to understand and easy to access are more likely to be popular with older consumers wishing to simplify their lives.

SV: Is there a downside to this?

Francese: The wealth we see around us in homes and other venues is very highly concentrated. The top 20 percent of income recipients take home 50 percent of all consumer income. Households in that top 20 percent have an average household income that is four times that of the other 80 percent, a record income disparity according to the Census Bureau.

For many households in that majority 80 percent retirement is not just anxiety producing but a serious problem. Working people who are not able to save for retirement because they don't make enough are most likely to have to keep working many years beyond the traditional retirement age.

There will probably be thousands of people in their 70s on the Seacoast who will be either looking for work or working every day. It's harder to get a job when you're 70 than when 30. It's also harder to go to work every day and stay healthy. I think we are going to have to acknowledge the fact that for a variety of reasons substantial segments of the elderly population will have to find work. I hope there are enough jobs for them.