25% of Age 50-Plus Americans are Confident in Personal Finances

People aged 50-plus will generate $83 billion in revenue for the fast-emerging alternative financial services sector over the next five years, according to AARP’s Financial Innovation Frontiers report released today. The research also found that only one in four 50-plus consumers is highly confident they can meet their financial needs in the next five years.

The Financial Innovation Frontiers report demonstrates the breadth of the available market for financial solutions. The report highlights how financial services innovators can have an impact among this demographic and outlines the need for personalized multi-channel solutions to allow financial transactions when and where consumers want.

“This research shows the economic buying power of the 50-plus population who are increasingly turning to alternative financial services due to feeling that traditional bank offerings are not meeting all of their financial needs,” said Jody Holtzman, senior vice president of market innovation, AARP. “Fintech companies are hoping to tap into this market by offering digital tools to address the unprecedented financial stress and complexity faced by this demographic.”

The research found that the 50-plus segment will spend $15.3 billion in the alternative financial services sector by the end of 2017, and that number is expected to grow by a healthy 4.25 percent annually through 2021. In addition, this industry is expected to syphon off $1.6 billion from banking revenue on checking and savings, consumer credit card and lending products in the next four years in addition to $1.2 billion in organic growth.

Other key findings of the Financial Innovation Frontiers report include:

50+ consumers represent only 35 percent of the U.S. population but control more than half of the nation’s investible assets.
Many 50+ consumers are financially exposed and ill-prepared In three critical areas:

Financial fitness
Healthcare emergencies
Retirement readiness

50+ consumers are projected to lose multitrillion dollars in retirement savings by 2021 due to various burdens:

$4.3 trillion due to career setbacks
$4.1 trillion due to unplanned withdrawals
$1.3 trillion due to student debt

Financial innovators can help by focusing on the following:

Removing friction in the customer journey and enabling consumers multi-channel access
Delivering personalized service and connecting customers with advisers and a care circle at pivotal moments
Helping Americans save for retirement and coping with ongoing healthcare costs
Showing customers a comprehensive financial picture

41 percent of 50+ consumers faced a major medical event in the past five years, and 18 percent indicated they could not cover any out-of-pocket expenses from a healthcare emergency.
50+ consumers are active users of digital devices; with close to half (45 percent) consumers saying they are comfortable with mobile commerce and mobile banking.

The Financial Innovation Frontiers report can be found here: www.aarp.org/fif2017

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