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Investment Opportunities Surrounding The Aging Population

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Michael Brown

November 14, 2018

We spend a lot of time at Bowery Capital thinking about the future of the business software landscape. To date, we have written a bit about some of the swapping cycles we think remain. We have also spent a fair amount of time thinking through some of the emerging areas of marketplace arbitrage (mostly labor or supply chain) and digitization. Something that our team has been thinking about has been around the impact of technology on those that are aging out of the workforce. Commonly referred to as Baby Boomers or older, we call this group The Aging Population. Baby Boomers, children resulting from pregnancies in the immediate aftermath of WWII, are reaching the age of retirement and putting stress onto the economic backbone of US retirement. In US, the number of seniors will more than double to 80 million by 2050, with most of the growth occurring between now and 2030. To date this group has been under-invested in and we would frankly love to chat with more startups focusing on the business software side of this. The money The Aging Population spends, the infrastructure that supports them, and the effects on the younger population put this as a really interesting area for us to consider. To streamline our thoughts, we include a white paper called The Silver Economy which was written by our team. Below are some of our quick thoughts on trends, themes, and investment ideas. We would love to hear from you if you think this space is interesting and in need of support.

1. Aging In Place Continues To Be A Big Theme. According to AARP, greater than 90% of older adults state a preference to “age in place” yet there will be a major shortfall of caregivers available to take care of them. In order to keep up with rising demand, 1.6MM additional direct care workers are needed by 2022. Personal-care and home-health aides will account for 10% of the new jobs created in the US between 2016 and 2026. Currently skilled caregivers are over-utilized and underpaid leading to a 61% annual turnover rate. Aging adults desire to remain in their home will create opportunities for care coordination, care management, and tele-medicine software.

2. Keeping Seniors Active Will Be Really Important. 70 is the new 65. The retirement age has been relatively steady at 65 in the Western Hemisphere since Germany made it the trigger for government benefits in 1916 and the United States followed in 1935 when President Roosevelt signed Social Security legislation. Since then the United States’ government began to shift the retirement age. People born after 1960 will have to wait until 67 to receive benefits. Based on the age demographic and life expectancy shifts highlighted above, it seems highly like that this will shift closer to 70, whether officially by the government or unofficially by the people of the United States. As The Aging Population looks to continue working both for financial and sociological reasons, they will encounter obstacles. The need and desire for aging adults to stay in the workforce will create opportunities for skills marketplaces, senior-specific LMS, virtual work platforms, and engagement software.

3. Insuring Seniors Is More Important Now With New Tax Bill. Without a government intervention, Medicare benefits will likely be limited or eliminated altogether. Seniors will look to private insurance companies to provide coverage for medical costs. To remain competitive with their pricing, insurance companies will need to add innovative methods for determining low-risk clients. The reduction and/or elimination of Social Security and Medicare benefits and the rapid increase in smart devices and in-home sensors will create opportunities for data aggregation software and alternative health insurance benefits within The Aging Population.

If you liked “Investment Opportunities Surrounding The Aging Population” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog. Special thanks to Eric Herzfeld for his help with this post.