New Beginnings: Investing in Digital Solutions for Boomers’ Second Lives
By: Winnie Lau, MBA Associate, with contributions from Team BBGV
Historically, each new generation of consumers differs in its values, adopts new behaviors, and embraces different brands. This post will explore a significantly overlooked and underserved generation: Baby Boomers — consumers between the age of 55 and 74. As a culture, we group seniors monolithically, but “Fifty-five plus” is actually two groups with differing desires and needs: Baby Boomers (born 1946–1964) and Traditionalists (aka: The Silent Generation, born 1928–1945). This post is focused on Boomers.
UNDERSERVED MARKET & OPPORTUNITY
Baby Boomers, born between 1946 and 1964, are the rising generation of seniors and they differ from their predecessors more profoundly than perhaps any two sequential generations. 10,000 Baby Boomers are turning 65 every day — a trend that will continue until 2030. They are an active group who spend more time on personal errands and household activities than media & entertainment. They are still focused on generating income over full-time retirement, bypassing the porch life and senior communities favored by Traditionalists. And they are the first technologically savvy generation of seniors: they discover new products and information online rather than via word of mouth; 87% have a mobile device and 68% have a smartphone that they use on average for 5 hours a day, comparable to the 5.5 hours that millennials clock in. Yet Boomers often find that smartphone apps and digital solutions — even those that purport to solve a problem they face — are not designed with them in mind.
At BBG Ventures, we see an immense opportunity for startups to tackle the unique needs of these underserved consumers by innovating in the areas of personal finance, jobs, healthcare, and wellness. We’ve been encouraged to see some new tech-enabled startups helping Boomers embrace a second life, by maintaining a healthy lifestyle, managing their spending, and developing financial stability. But we were curious about the unique pain points Boomers experience and whether current tech offerings sufficiently address them.
To better understand the behaviors and stressors that older adults experience, we conducted a nationally representative survey with 534 participants. Our survey panel consisted of individuals across the ages of 55–85+, split evenly by gender, and across different ethnicities (61% White, 22% Black, 6% Asian or Pacific Islander, 4% Native American, 2% Hispanic or Latinx, and 5% Other). We targeted Boomers across a representative mix of US geographies (27% Southeast, 21% Midwest, 20% Northeast, 19% West, 14% Southwest.) and different size communities (e.g. metropolitan cities, metropolitan suburbs, small towns, rural). The majority of respondents live in the suburbs, rural areas or cities (in that order). Our survey panel also consisted of participants with varying levels of income to better understand the pain points across different household income thresholds.
The results helped us identify areas of opportunity for startup innovation and venture investment and refined our thesis for evaluating Boomer/eldercare startups. With the shift to more digital solutions during COVID, Boomers are embracing digital alternatives for healthcare and financial services more than ever before. Here are our thoughts about the long-term impact of that shift.
Based on our survey, conversations with founders in this space, and research, we believe that Boomers are in search of digital solutions that enable “New Beginnings.” Many Boomers who’ve left lifelong careers are not retirees, but rather second careerists — a topic we will cover in depth in a future post. Some are 1099 freelancers working for companies such as Taskrabbit, Uber, or HelloAlbert, and an integral part of the gig economy. Others are turning an interest or skill into part-time work as accountants, substitute teachers, pet sitters, or Etsy sellers. Many do not identify with existing, outdated communities (e.g. AARP) that were designed for their predecessors, and they are often overlooked by companies and analysts focused on the future of work. They need digitally-native platforms that will allow them to be more productive, more financially secure, and more informed and proactive about their health.
Personal Finance and Second Careers: Finding Fulfillment & Financial Stability
Rising healthcare costs coupled with the uncertainty of social security benefits are contributing to Boomers’ apprehension over their retirement plans. With increased life expectancy and costs of aging-in-place, 43% of respondents said finances were a top concern. These concerns were further exacerbated by COVID-19, which forced many Boomers to tap into their retirement savings. They are acutely aware of the financial pressures associated with maintaining their quality of life and are seeking digital solutions to help ensure financial stability.
Because of that, most people are choosing to work for as long as possible. 65% of respondents are looking for alternative avenues of income post-retirement while 23% want to better understand how to save enough money. Today, nearly a third of gig economy workers (1099 contractors) are over the age of 55, and will seek fintech solutions to help manage their income or grow their solo businesses post-retirement. Companies such as Stir (revenue management and analytics platform), Boost (“quickbooks” app for the side-hustler), and Karat (black card for creators) are solving this problem for Gen Z creators and freelancers, but the equivalent back-office tools do not exist for Boomers. And while our survey was not designed to address FoW for this segment, the fact that so many Boomers continue to work at 55, 60, 65, even 70, says that there is also a need for a monster.com or indeed.com for this generation.
Boomers are also seeking tools to help navigate their unique financial challenges pre- and post- retirement. Existing consumer fintech solutions (e.g. Wealthfront, Acorns, Personal Capital) have failed to understand Boomers’ unique needs and UX/UI preferences, while traditional financial services platforms (e.g. Medicare, Vanguard, AARP) have failed to innovate and adapt to the digital-savvy nature of this underserved consumer. We are encouraged by companies like Silvur (retirement score & store) and Retireable (digital access to retirement planning) that are leveraging technology to prepare Boomers for retirement and creating personalized plans to improve financial security. We continue to look for companies that use technology to democratize financial services and help Boomers manage their income and savings through retirement.
Healthcare: Aging Empowered
As the pandemic accelerated healthtech adoption, telemedicine services among Boomers increased 300% — a permanent shift in how this generation accesses healthcare. But preference for accessing health services is still inversely correlated with age, with 71% of Boomers preferring to visit a doctor’s office compared to 42% of Gen Z and 47% of Millennials. This is largely because Boomers believe that the level of care they need is better addressed in person, or because they have a general distrust of telehealth’s capabilities. But while only 19% of Boomers prefer using video for healthcare, 58% of Boomers are willing to use it and may well get more comfortable with it over time.
64% of our survey respondents indicated that proactive and preventative healthcare is their top concern. These trends are consistent across all age groups (55–85+), gender, income levels, and ethnicities. As more Boomers choose to age in place, they will demand innovative solutions that improve quality of care to support life in later years. While healthtech companies like Bold offer a digital health and fitness platform to prevent chronic health problems, it currently focuses exclusively on the oldest senior citizens. We believe there are opportunities to create a Bold for Boomers, a health club or social platform to help them maintain a healthy lifestyle. We are following a very new entry, Wellen, whose personalized approach to strength-training and balance is more aligned with a boomer lifestyle.
Given the 195% increase in healthcare costs over the last 20 years, 48% of respondents want to better estimate their healthcare needs so they can proactively plan for expenses and use healthtech services to reduce unnecessary medical bills. 64% of Boomers said that telehealth video appointments should cost less than in-person visits, compared to only 34% of Gen Z and Millennials, indicating that Boomers see virtual care platforms as a way to make their healthcare dollars go further.
Additionally, we see immense opportunities in wearable devices and diagnostic tests for home use, paving the way for better remote patient monitoring and care. Where is the Oura for Boomers that tracks key health information (e.g blood pressure, sleep data, oxygenation, steps, resting heart rate, and heart rate variability); measures results against other users in similar age bands; and can be shared directly with doctors or family members? With recent CMS regulation urging the implementation of APIs to modernize data exchange across healthcare stakeholders, health data from disparate sources will become more accessible. This increasingly tech-savvy population noted in our survey that they want the ability to access all their medical information via a centralized platform.
After noticing a disconnect between the number of digitally-savvy Boomers and the minimal amount of venture funding allocated towards them, we are looking to invest in startups that can effectively cater to these underserved consumers.
How to win over this customer segment?
Startups in these spaces need to be intuitively designed and built with Boomers in mind. To date, companies such as Wealthfront (Personal Finance) and Classpass (Health & Wellness) have largely ignored the unique needs of this customer segment. Unlike Gen Z and millennial-focused companies that offer a clean UI/UX with a seamless customer experience, products catering to Boomers remain largely uninspiring, offline-only, or with dated design practices.
As seen by the chart above, cracking the code on design for this generation is challenging — as is marketing. Only 3 percent of advertising is targeted to consumers over 55, yet they spend 2X more than those born after 1997 and their online spend grew 53% y-o-y in 2020. Based on our research, we have identified a few factors critical to capturing this customer segment:
- Addressing Privacy Concerns: 69% of Boomers surveyed are apprehensive about using digital products and services due to privacy concerns. Startups that target them need strict privacy controls and an onboarding process that addresses and alleviates such concerns.
- Designing Simple & Accessible UI/UX: Boomer-focused startups must develop a differentiated UI/UX design that is intuitive for over 55s. Respondents noted that the product should be simple to navigate, easy to learn, and if possible, include accessible instructions. While millennials prefer a clean and simple design with a quick onboarding process, Boomers prefer more details and how-to tutorials. Many digital solutions assume familiarity with current app protocols or demand a steep learning curve, either of which can make adoption challenging for Boomers.
- Utilizing a Differentiated Customer Acquisition Strategy: Traditional digital marketing strategies and customer acquisition funnels may not work as effectively for Boomers. According to our survey, the best way to reach Boomers is through television ads (72%), search engine optimization (68%), and word of mouth (59%). Facebook ads (24%) are 30–50% as effective. Given that 22% of respondents are apprehensive about digital products/services and 29% of them find it difficult to learn about companies , startups need to be more thoughtful about their GTM plan. That may include partnerships with offline community groups such as church groups, community centers, and neighborhood associations. For Boomers who don’t currently use many digital products, 71% of respondents said they are more likely to adopt them if they are more convenient than physical alternatives. Understanding why Boomers choose to adopt digital solutions will be critical in attracting and retaining this customer segment.
At BBGV, we are looking for companies that understand Boomers’ needs, especially those that are broadening access to healthtech solutions or utilizing technology to improve financial planning and stability. We are looking for founders who intuitively understand this customer; solutions with the potential to fundamentally replace outdated incumbents; and brands with whom Boomers feel proud to be associated. As we continue to explore opportunities for Boomers to successfully navigate their second act, we would love to chat with founders working on innovative platforms, apps or communities within consumer fintech, job search, reskilling, and health & wellness.