'The Grandparent Economy:' Q&A with author Lori K. Bitter

Most of us reading (or writing) Grandma's Briefs are grandparents. Which means most of us here know how much money grandparents spend on their grandchildren, their parents, their children and, when there's a smidgen left, on ourselves.

Interestingly, marketers don't seem to know how much we grandparents spend on ourselves and our loved ones. Or so it seems. Perhaps they do know—some brands clearly do—though they have yet to figure out how to effectively reach us with messages on the services and products we want to see, want to use, want to buy.

grandparent economy bookAuthor Lori K. Bitter lends them a hand in her new book on the topic, The Grandparent Economy: How Baby Boomers Are Bridging the Generation Gap ($34.95, Paramount Market Publishing), which I recently received free for review.

The 138-page primer on engaging the 65 million grandparents in the United States is a must-read for marketers. And, thanks to all the graphs and stats and tidbits Bitter provides on how we boomer grandparents make a unique mark on the economy, it's also a compelling read for the grandmas and grandpas who control $3.2 trillion in annual spending.

A few of the compelling facts that stuck with me, tidbits I tagged sticky-note style while reading Bitter's eye-opening book:

  • The average age of a first-time grandparent has risen from age 48 to age 50.
  • Thirty-nine percent of grandparents have—as I do—one or more grandhildren living more than 500 miles away. (Eight percent have grandchildren living in the same household.)
  • The No. 1 reason today's grandparents take over care of their grandchildren is addiction.
  • Every person interviewed during research for the book knew an "alienated grandparent," a grandfather or grandmother cut off from contact with his or her grandchildren (frequently due to divorce situations).
  • Grandchildren are the second biggest cause (next to large health events such as a heart attack) for grandparents to change their health habits—we want to be healthier and live longer for the sake of the kiddos!

Bitter—who was raised by her grandparents and is now a grandparent herself to two young boys—sheds a brilliant light on who today's grandparents are as a whole, as well as on whom, what, and where they're placing their hard-earned dollars. With a long career focused on marketing and researching trends on aging consumers, along with writing several books on the topic and serving as publisher of GRAND Magazine, Bitter knows her stuff. Companies seeking to reach the lucrative grandparent demographic would be wise to heed the advice and information she shares in The Grandparent Economy, which was released in September.

The Grandparent Economy: How Baby Boomers Are Bridging the Generation Gap by Lori K. Bitter is available for purchase through Amazon.com (not an affiliate link) and other booksellers. Be sure to check out the publisher's website at www.paramountbooks.com/grandparent-economy.

Q & A time

lori k bitter headshotI had the pleasure of asking Lori Bitter a few questions after I read The Grandparent Economy. Here are the answers she graciously and thoroughly provided:

Why are grandparents such an important demographic for marketers?
Grandparenting is an important lifestage for Baby Boomers, the Silent Generation and the WWII generation of older adults. Each generation has approached the role differently. The Baby Boom grandparents are huge in number. By 2020 there will 80 million grandparents in the US. One in three adults in the US will be grandparents. That’s pretty compelling for anyone selling any type of product or service. Beyond the size of the market is the wealth controlled by older adults – more than 70% of financial assets. Though younger consumers may be choosing and influencing brand decisions, increasingly grandparents are footing the bill.

How does spending vary between the three grandparent generations (GI, Silent, Baby Boomers)?
The WWII generation of grandparents are savers. They experienced the Depression. They gift grandchildren consistently on special occasions and love providing big gifts when appropriate, or when parents give them guidance. The Silent generation of grandparents is similar to the WWII generation in terms of spending. Both tend to be more conservative and engage in giving by involving parents in the decisions.

Where are grandparents directing most of their spending: on their parents, themselves, or their grandchildren?
Over half of all grandparents (52%) have provided assistance to their adult children. The majority of this is emergency assistance of some type, but also includes tuition and educational expenses, the down payment on a house, and rent, utilities and groceries. The recession created a perceived “need” to do this. 45% of parents say they feel obligated to help their children get back on their feet.

More than 80% of grandparents – depending on the study – spend on grandchildren directly. The biggest surprise in our study was that grandparents who are barely covering their own needs in their retirement are sacrificing to help their grandchildren with things like clothing, health care, tuition and “extras.” One of the messages of the book is that grandparents need to make sure their own retirement is secure before spending on their adult children and their grandchildren. 

When it comes to their grandchildren, on what do grandparents spend the most money? Is there a more beneficial category for them to spend instead?
Clothing and toys are huge categories. First time grandparents frequently help with the costs of the nursery – furniture, décor and technology like monitors, motion chairs, and music. Education costs are consistent across a broad range of ages and includes everything from daycare to private school tuition to 529 plans for college expenses. Like older generations of grandparents, Boomer grandparents gift around major events like 16th birthdays and graduations. In one of MetLife’s studies 22% of grandparents worried that retirement would be jeopardized by healthcare spending on their extended family.

A full 34% acknowledge that providing financial support to their grandchildren is having a negative impact on their own financial security. Every family situation is different, so “more beneficial” is hard to determine. Think of it like the warning the flight attendant gives you on a plane – “put your own oxygen mask on first before helping other people.” That would be good advice for grandparents.

In what ways does spending on grandchildren differ depending on distance from the grandkids? 
60% of grandparents live within 50 miles of their grandchildren. They tend to be more involved in spending on daily activities and needs for their adult children and grandchildren. They are also more likely to provide regular care and spend more time.

Longer distance grandparents still give, but must wait to be asked by adult children or their grandchildren. They keep in touch via the phone, email, Facebook, and some text and Skype/FaceTime. They are also more likely to plan activities like peak vacations, family celebrations, and short trips to bring the entire family together.

Will today's parents follow the lead of today's grandparents once they become grandparents or do you anticipate a shift in what the "grandparent economy" will look like once the younger generation becomes grandparents?
Generation X tends to be more pragmatic and have less “cock-eyed optimism” than the Baby Boomers do. There is some evidence that this has made them better at planning their financial futures. They are also the first generation of digital natives to enter the grandparenting lifestage, as the older members of the generation turn 50 this year. Where Boomers focus on digital devices on tools and what they can achieve with them, younger generations see them as omnipresent ways to improve nearly every aspect of their lives.

In what ways are marketers most missing the boat with grandparents?
Most brands don’t recognize the grandparent as a consumer. It’s ridiculous. Consequently you rarely see them depicted in advertising. Frequently those who do understand that grandparents spend on their products feel they don’t need to speak to them – that they will buy based on requests from their grandchildren. But what if these companies helped grandparents by providing communication and information to them directly?

What can grandparents do to makes some noise and encourage brands to market to them more effectively and in ways that aren't offensive or patronizing?
Boomers don’t take offensive or patronizing messages well. But no generation does anymore. Social media is so easy to employ against an offending brand. 80 million people can vote with their wallets. They can be influenced by the younger generations of their families to be sure, but they still consider themselves as “head” of the family and it’s their “share of wallet” that companies seek.

Previous generations of older people seemed to be more willing to be ignored by brands. This generation of older adults won’t put up with that. They will demand recognition. Many of the start-ups that Boomers create now are their own response to not finding what they want or need in the marketplace.

What brands get it right and effectively engage grandparents?
There is a chapter of the book devoted to the topic of marketing to older adults. Brands make decisions every day about who to spend their marketing resources on. Throughout my agency career, I have supported the concept of Ageless Marketing, which is more about appealing to set of core values and being inclusive of multiple generations of consumers. That sounds harder than it is!

Recall the Apple campaign for the original iPod. The images were silhouettes of all types of people with ear buds in rocking out to their music. The concept was about having YOUR music wherever YOU go. Apple merely provides the technology to make that happen. That is an inclusive, values based campaign.

What's your goal with The Grandparent Economy?
To shine a light on the incredible financial commitment that this generation of grandparents have made to their children and grandchildren; to help companies understand the burgeoning phenomenon of multigenerational lifestyles, and the desire for less segregation and more intergenerational experiences. And the need for better strategies and marketing to effectively communicate with and persuade older adults.

What do you hope will be the take away for grandparents reading your book? And for marketers?
I hope grandparents see themselves in the stories and take a look at their own spending and retirement goals. Spoiling your grandchildren and having them in your life is one of the blessings of the third stage of life. But it should not come at the risk of your own financial security as you age. Boomers are working longer so the spending may not “hurt” right now. But five years from now when their income is more fixed and they have committed to a level of spending on their family it may begin to affect their own quality of life.

Marketers need to realize the complexity of the consumer relationship in a more intergenerational world and value the role of the influencer and the purchaser – as well as the end user – of their products and services. A big part of this is knowing how to effectively communicate with them.

Is there anything you'd like to add regarding your book and/or the grandparent economy in general?
The statistics vary, but one in ten children are reported to be living in a grandparent household. This is a completely different dimension of grandparenting and it affects about 5 million grandparent households. Sixty percent of those have two or more grandchildren living with them. The reasons range from divorce of their adult children to incarceration for addiction to loss of the family home during the recession. Sometimes a parent is present.

Regardless of the reason, these grandparents have a number of needs that are unrecognized in the marketplace, by government and by institutions like schools and daycare. Many become de facto parents quite literally overnight and must figure out how to enroll a child in school, how to become a guardian, transportation, extracurriculars and so much more. They are the true heroes of the intergenerational story.

Many thanks to Lori K. Bitter for her book and for the time she took answering my questions!

Disclosure: I received this book free for review; opinions are my own.