Retirement isn’t what it used to be. In the golden era of retirement, retirement began at the stroke of midnight on your 65th birthday, launching you into the full time pursuit of bridge tournaments, lawn bowling or the senior centre’s book club. But this era is rapidly becoming a thing of the past. For many people, retirement is far more than slowing down and just enjoying the evening sunset. The new retirement, or Retirement 2.0 as some in the industry have coined it, is more a vibrant transition from full time traditional work to “life’s work”, such as starting a business, being a part-time consultant, working with a non-profit organization, or studying abroad, to name a few.
No longer is retirement so much about “taking it easy” but more a chapter in life where a little more flexibility affords a person an ability to tackle meaningful pursuits whether that be a second career, a new business or charitable efforts. Sure, travel and more “me-time” is certainly in the cards, but compared to 50 years ago, retirement isn’t about stopping, it’s now more about starting something new.
I recently spent some time analyzing the account packages for the top 100 credit unions as well as seven banks (Big 5, ATB, CWB). For the FIs I reviewed there seem to be four general approaches to senior’s banking:
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The review shows that a majority of credit unions still have a dedicated seniors account. Some are opting to provide a discount on packages or providing free chequing across the board. Almost one third have no specific offer for seniors. When you look at the banks, most are taking a similar approach and offering discounts off their various chequing packages.
Reflecting on my review an important question comes to mind:
Given that retirement and the lifestyles of our most mature demographic groups have changed, why are a majority of credit unions, and some of the smaller banks, still trying to meet the needs of this group with banking products that were designed decades ago?
I’m calling into question the relevancy of the “Golden Account”, an account that was designed when seniors’ lifestyles and needs were very different than they are today.
Seniors/retirees are now:
- More affluent
- More digital
- More mobile
- Living longer, more vibrant lives
- Working more
- Running more businesses
Todays seniors/retirees are more affluent
Many discount programs, including senior’s bank accounts, were designed in the 1960s and 1970s where senior’s poverty was a grave concern. In the 1970s nearly 30 per cent of all seniors were considered poor, but fast forward to today and this sits at 5.2 percent1.
Today’s seniors/retirees are more digital
Seniors today are going digital, including using social media more and more. The over-65 segment is the fastest-growing segment of internet users in Canada according to Statistics Canada2
Between 2013 and 2016, internet use rose from 65% to 81% for those 65 -74 and from 35% to 50% for those over 752.
34% of Americans ages 65 and up use social media like Facebook and Twitter. 35% of seniors under the age of 75 use social media 3
Today’s seniors are more mobile
Seniors are mobile with rapidly increasing adoption of smartphones and tablets.
Roughly 42% of U.S. adults over 65 own a smartphone and 32 percent own a tablet, more than double than 2013, according to Pew Research.3
Today’s seniors/retirees are living longer, more vibrant lives
According to statistics Canada, the average expected lifespan increase by 6.2 years between 1981 and 2011 and it has increased 30 years since 19004. Seniors are just healthier and life post-65 is full of vitality and vibrancy. There is just more opportunity and more time to be fully engaged in life’s pursuits.
Today’s seniors work more
Whether it’s because they are helping their adult children financially, still dealing with the financial ramifications of a divorce, didn’t save enough for retirement or just working to be socially and mentally engaged, seniors are working more and more.
As reported by Rob Carrick, “Employment income was the main source of income for 43.8 per cent of seniors who worked in 2015, up from 40.4 percent in 2005 and 38.8 percent in 1995, according to Statistics Canada.” He goes on to further say, “In 2015, 53.5 percent of men and almost 39 percent of women who were 65 worked at some point in the year.5
Today’s seniors run more businesses
For many business owners, their 65th birthday is not a trigger to slow down. More than one in ten small businesses in Canada are owned by someone 65+ and more than that for medium sized businesses.
11.8 per cent of small businesses (1 – 99) are owned by 65+ whereas 14.2% of medium businesses in Canada (100 – 499 employees) are owned by 65+ 6
Three steps to more effectively meet the banking needs of seniors
I think it is safe to say that the lifestyle and needs of seniors have evolved considerably over the past few decades yet many credit unions, and a few smaller banks, are still trying to meet the needs of their most mature members with an account that was designed years ago. One “Golden” account package is not enough. The needs of the senior group are not homogeneous. So let’s design our account packages to meet these diverse needs.
Here are my recommended steps to help align your account portfolio to the needs of today’s seniors:
1. Grandfather Golden Accounts if applicable
As part of a holistic account review and redesign process, if your current seniors account offer is out of step with the needs of the modern senior, consider grandfathering your existing golden members.
2. Simplify your account schema with account packages, add Retirement 2.0 benefits where applicable
Based on your FIs growth strategy (e.g. acquisition focus versus share of wallet) and desired member behaviors (e.g. more deposits) redesign your account portfolio with simplified account packages and bundles in line with those strategies and desired behaviours. Based on your member acquisition stance, consider market-competitive unlimited chequing and for some FIs set on aggressive acquisition, consider a free chequing approach. Consider including the bundling of some Retirement 2.0 benefits in one or more accounts such as US ATM fees, US Debit, etc.
3. Include seniors discounts across all packages
If free chequing isn’t part of your strategy, include senior discounts on each package. Ensure that for at least one of your packages the senior discount brings the monthly fee to zero. If you are leveraging a multi-product rebate strategy, give your seniors tailored criteria as they may not have the same needs as younger demographic groups (e.g. less need for loans and mortgages).
Of course strategies and priorities are different for each credit union or bank and applying these guidelines will be different for each. However I do believe that by applying these general steps credit unions and niche banks will go to market with an account schema that not only meets strategic goals but also more effectively meets the needs of the new senior navigating Retirement 2.0.
1 Peter Shawn Taylor, “Why Seniors Shouldn’t Get Discounts”, Macleans, Updated Feb 5, 2014
2 “Life in the fast lane: How are Canadians managing?, 2016”, Statistics Canada, November 14, 2017
3 Monica Anderson, Andrew Perrin, “Technology use among seniors”, Pew Research Center, May 17, 2017
4 Ted Bruce, David Peters, “Canadians Are Living Longer Than Ever – But There’s A Twist”, Huffington Post, November 11, 2016
5 Rob Carrick, “A new retirement era: How many years past 65 will you work?”, The Globe and Mail, November 30, 2017
6 “Key Small Business Statistics”, Government of Canada, June 2016