> The segment of the economy that is growing according to your > model (the retired) has the most to spend and will have more time to spend it,
But, in general, they don't have much they need to spend their money on, except food, health care, and a little gas. Its that young, newly married folk who usually spend the most - on new houses, new furniture, new applicances, new baby cloths and toys, new cars to hold a baby seat, etc., etc.
The retired are just as likely to sell unneed stuff and to downsize their living quarters as to buy.
They will need medical care and burial or cremation (unless they live in the hinterlands). They will consume more medication than heretofore for many reasons, including the fact that new medicines are being developed to contain, ameliorate, or cure a large number of ailments that tend to affect elderly people. Living longer, they will endure (not die from) afflictions for longer periods of time after diagnosis and use those new medications for longer terms. They will travel more while they are still able and that will require transportaion, lodging and services related to seeing the sights.
Technolgy will make organ replacement or skeletal replacement (knees, hips, etc.) more commonplace.
They will invest in securities and need financial services (banking and investment) over longer periods of time. They will (particularly female elderly, who have longer life expectancies) wind up with more $$ to devote to "good" causes, such as charities, public institutions, purchase of HPQ stock (just kidding here), etc., so there will even be a market for charitable fund services that is larger than today's. And charitable institutions are beginning to realize where they have to make the connections to benefit from that fact.
They will need, and be able to afford, more custodial care (longer period) and more upscale care. Some forms of insurance (e.g. long-term custodial care) will grow and be a profitable market for insurers.
And the elderly may even be the ultimate providers of capital for those expenditures by the more youthful! Will they buy a crib, toys, playpens, strollers, books, dwellings, or even college educations for their grandchildren? You bet they will, because they will be around longer to witness the events behind the expenditures. Some of those new tax-favored education plans (which require some entity to manage..e.g. the state or private firms) were instituted to take into account the realization that the older generation had the resources, and had the perspective, to aid their grandchildren. So they don't have to be spending on themselves to give the economy a nudge and give investors an opportunity to benefit.
The items mentioned are just the tip of the iceberg, IMHO. Changing demographics should cause investors to think about what will be different and how to profit from those changes. Think about your own situation and what effect having an elderly relative might have on your own expenditures (for them and for yourself, eventually).