In the past decade, a lot has been written about the need for credit unions to pursue younger consumers. With an average member age of 47, experts have recommended that credit unions take strong measures to draw in younger Gen Xers (ages 46-49), Millennials (ages 29-45) and older Gen Zers (ages 18-28).
The pundits contend that the Baby Boomers (ages 61-78) and older Gen Xers (ages 50-60) will eventually exit the scene, and there will not be enough people from the younger generations to make up for the loss.
This is a valid concern, and credit unions should work to attract younger members. However, such efforts must not cause the credit union to neglect its most immediate, lucrative market: 50+ members.
Understanding the 50+ Demographic
The 50+ demographic has two defining features. First, they have had decades to accumulate assets; second, they are retired or close to it. As a result, they are transitioning from a savings to a wealth-preservation mindset. At the same time, the 50+ cohort wants to both enjoy retirement and provide a legacy for younger generations. This provides a massive opportunity for credit unions to be trusted financial partners supporting this generation in reaching their life goals.
50+ priorities cover a wide range.
- Second Homes – After years of saving, some in the 50+ group want to realize a lifelong dream of owning a second home. This may be for leisure or setting the stage for an eventual home in retirement.
- Helping Children – It’s no secret that younger generations missed out on the long stretch of financial prosperity enjoyed by the 50+ crowd. As a result, many parents are helping their adult children financially.
- Downsizing/New Homes – Many over 50 are empty nesters or close to it. This prompts consideration of downsizing and moving to a new home.
- Vacation Spending – Travel in retirement is a common dream. Getting the most out of travel spending without breaking the bank is a goal for many in the 50+ demographic.
- Starting a Business – People with years of career experience may devote their energy after age 50 to starting a business. This takes serious planning and financial resources to maximize the chances for success.
- Refinancing - Some approaching retirement feel nervous because they have not saved enough. In these cases, freeing up cash to “catch up” becomes a priority. Refinancing may provide the necessary breathing room.
Why 50+ is Important for Credit Unions
Why should credit unions pay attention to the 50+ population?
- Large Proportion of Existing Members - As noted above, the average age of credit union members is 47, which suggests that quite a few existing members fall into the 50+ category. Making sure these members are enthusiastic fans will bear fruit simply due to their sheer numbers. Conversely, not paying enough attention to them could cause a significant retention problem.
- Lots of Life and Money Left - These days, the label “older adult” doesn’t necessarily mean these members become ultraconservative in life and in their finances. Indeed, most adults aged 50 and over see themselves as active in both mind and body and are willing to consider putting their money into innovative solutions from a trusted financial partner.
- Loyalty and Trust - Looking across the age ranges of all members, older members tend to be more loyal. Credit unions can leverage this existing loyalty as a springboard into even more profound levels of commitment. With greater commitment comes higher wallet share.
Benefits to the Credit Union
Catering to the needs of the 50+ market can bring many benefits to the credit union.
- No Acquisition Costs – Since the focus is on existing 50+ members, the credit union does not need to spend money on bringing them in; they’re already there.
- Lower Risk Profile – Older adults tend to have a lower risk profile. For example, credit scores tend to increase with age, leading to more secure lending and investment by the credit union.
- Opportunity for Diversified Services – As noted above, the 50+ group has numerous priorities that make them candidates for various products and services. A credit union could even expand its service offerings to meet the unique needs of this age group. For example, retirement planning and wealth management could be two new growth areas.
- Influence With Younger Generations – With their wealth of experience, 50+ members can be ideal ambassadors for credit unions. In many cases, their adult children seek out their advice on financial matters. Building satisfaction and loyalty among the 50+ group could then translate into referrals for new members.
The 50+ demographic represents “low-hanging fruit” for credit unions. They represent a large percentage of existing members, they have the money, present a low-risk/high-reward profile, and tend to be loyal. Therefore, credit unions should redouble their efforts to connect with these members to build on their loyalty and trust. The result will be higher wallet share and increased retention, among other benefits.