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It's no secret that we live in a youth obsessed culture. All you need to do is turn on a TV or open a magazine to have that idea slammed in your face. But now as the first wave of baby boomers are hitting what used to be known as the retirement years, everything is changing. Corporate America is starting to wake up to that fact, that people over 50 are sitting on roughly $7 trillion.

Excerpts of their conversation will appear on our May 6, 2005 show, but much of their discussion has never aired. Here is the rest of it:

KEN DYCHTWALD: I think it's critical to point out that the boomers will most likely not retire as most people expect, that what the boomers are seeking I believe is a continuation of connection and engagement, work on their own terms, maybe part-time work, working on projects, maybe even downshifting from being a corporate CEO to joining the Peace Corps. The boomers have looked at their parents' generation of retirement and believe it's not for them.

KAREN GIBBS: So, Ken, what has changed then when you look back at what our parents used to do and now what we're doing? What's different?

DYCHTWALD: Well, our moms and dads I think largely viewed life as an Everest climb, that you spend your first 50 years going up, you reach the summit, you took a look around, you enjoyed the fresh air, and then you descended. And so the idea was that maturity was a time of loss, retreat, moving to the sidelines.

The boomers have no intention of playing the second half of life out that way. They want to be in center stage. They want to continue to break through into new opportunities in their lives. And where our moms and dads, having been raised in the shadow of the Depression, tended to be frugal throughout their years, the boomers have always been very keen to spend. That's a concern, of course, about whether or not they'll be able to save enough to stop working, if they ever wish to. But this will be a more active spending, more youthful, mature generation than our parents were.

GIBBS: How about the old term, brand loyalty? Does that still apply now to boomers?

DYCHTWALD: No, and brand loyalty is sort of a nutty idea. The idea is that, and it really holds the whole world of modern advertising and marketing together, and it's the notion that between your 15th and about 25th birthday you're making all of the major decisions about who you're going to be for the rest of your life. And included in that is all of the brands that you like or prefer and will keep using, so if you like this kind of toothpaste when you're 18, you'll use it when you're 80. If you drive that kind of car when you're 21, you'll never change brands.

Well, when you have a generation of people who like to try new things, who have changed their majors in college, who've changed their marriages several times, who've changed their careers multiple times, this is a generation that will continue to seek out new products, new adventures, new experiences. And so the whole idea of brand loyalty in maturity is dead.

GIBBS: Bill, what does this push, this momentum that baby boomers are bringing to the marketplace, mean for corporate America?

WILLIAM STERLING: Well, you know, I think Ken hit it on the head earlier when he said if you look back at history, what happened historically when the boomers moved into different phases, usually there was such a big amount of people, that there was a big demand, a boom for any product that they were basically moving into. So in the '50s and '60s, as you mentioned, Gerber baby food was a great growth stock then, because all these babies arrived. They had to restructure, though, in 1964 when the babies went away because of the birth control pill.

So, you know, if you look also at history, if you look in the '60s, the boomers were growing up and hanging around bowling allies, so Brunswick was a great stock then, you know, bowling, things for kids to do. In the '70s, the boomers had moved into sort of leaving school, getting married, forming households, so the '70s and '80s were about consumer durable purchases, a real estate boom associated with the housing needs of that generation. So what we're trying to do is look ahead.

GIBBS: You talk about all the things that have changed, but are there any areas that have not changed that kind of transmute through time?

DYCHTWALD: Well, I think the body declines with age, and as much as the average boomer would like to be 90 and look and feel like they're 30, they will find themselves as they mature with hypercholesterolemia, osteoarthritis, osteoporosis, difficulty with metabolism causing them to gain weight. I mean, and so you can either say, well, that's the reality of aging, or you can head into it sort of the boomer mindset, which is the desire to shrink those problems. And if you consider that, you then see $1 trillion worth of opportunity in pharmaceuticals and cosmeceuticals and nutriceuticals and anti-aging spas and hormone treatments and liposuction and cosmetic surgery.

So the whole idea is that while we might have a different spirit of life as we mature and a different set of hopes as to how we're going to live, when it comes to the human body, there are certain realities that the boomers are going to have to contend with, but will probably spend money against, and companies will respond to them by putting in front of them extraordinary breakthroughs.

STERLING: What hasn't changed is people get old, they slow down, they retire, but what has changed is really the pattern of getting old. People are staying healthier even into their later years. Life expectancies, the average life expectancy now of somebody who reaches retirement age of 65 I think is close to 19 years or so.

DYCHTWALD: That's exactly what it is.

STERLING: That's much, much longer than it was in the past. And many of those later years can be healthier. In fact, even though the number of people 75 and up is very small as a percent of the population, you can almost be assured that will be the fastest growing segment of the population over the next 20 years because of the intersection of the demographic patterns plus increasing life expectancies, partly thanks to the biotech revolution. You have this, you know, much improved life expectancy.

So all the economists who crunch the numbers basically come up with an inescapable conclusion, that the unfunded liabilities of the United States Social Security and Medicare system are huge relative to the projected path of tax revenues, so that the only way to deal with that is either scaling back a bit on the benefits side and/or somehow improving, increasing tax revenues, i.e. raising tax rates on people or - and this is probably the most important safety valve - changing the retirement age from 65 or even the early 60s to something closer to 70, which is basically being scaled in in the Social Security system. But it seems inevitable that some combination of those remedies is coming, whether politicians are willing to admit it or not.

I would point out the (importance of) echo boomers themselves. The second largest demographic area is the children of the boomers who are now basically mid-teens to mid-20s. College-related expenses, low, sort of low-end real estate I think could do very well against the backdrop of this. I think the echo boomers themselves are something like 90 million plus, although it was spread out over a longer period of time, so it didn't have quite the sort of shock effect on the economy that the original baby boom had.

DYCHTWALD: I've been in this field now for 30 years, so I can, I feel like an old timer in a way. I can remember 15 years ago there were only two ads on all of television that had anyone over the age of 50 in them, and that was Mrs. Olsen (for) Folgers coffee, and Mr. Whipple, the guy that squeezed toilet paper.

Now you're turning on your TV in the evening, and I'm sure surrounding any show that your viewers are going to watch tonight, you're going to see a lot of silver hair, you're going to see a lot of multigenerational ads, you're going to see companies beginning to realize that either their target audience is older and they ought to start appealing to them or maybe their target audience is multigenerational, and why exclude people just because they happen to be over the age of 50?

I think the era of youth-dominated advertising is coming to an end, and I think you're going to see more maturity or more multigenerationality in all the ads, and this never existed before, so this represents sort of a new era of learning how to do it.

And by the way, I think the pharma companies are actually leading the pack in targeting that audience because 74 percent of all pharmaceutical products are consumed by people over the age of 50, and they know who their target audience is.

STERLING: Just to follow on to that, you know if you look at Super Bowl ads - I haven't done a scientific study of this - but Super Bowl ads, now every other ad seems like it's from a mutual fund company, because aging boomers need to worry about their retirement nest eggs, and that's undoubtedly going to be a big growing market, what to do with all those assets that Ken mentioned.

But, you know, 20 years ago probably for every mutual fund company ad that you see now there was a beer commercial back then, but our demographic work says that beer consumption actually may have a rough patch here because the biggest beer drinkers are actually those from their sort of early 30s to mid-40s. That group in the population is declining right now.

DYCHTWALD: On the other hand, you're seeing more people buying expensive wines…

STERLING: Wines and spirits.

DYCHTWALD: Or spirits, so you're seeing the desire to get a little inebriation going has not gone away, but the young guys in the bar drinking beer all night is giving way to the sociable 50-year-olds enjoying a fine bottle of wine over a great dinner.

So you're seeing the migration of a generation not giving up its desires and appetites, but moving towards products and shifting that make more sense to them at this moment. They're moving away from their little start-up automobiles and they're buying luxury cars. They're moving away from their start-up homes and they're remodeling their expensive homes. They're moving away from inexpensive watches to more elegant gifts to their loved ones and their families.

STERLING: Oddly enough, when I did these demographic studies on a detailed product-by-product basis, it was new carpets actually showed up as one of the greatest products based on simply, I think, because people in their 50s do remodeling projects. They don't necessarily want to move to a new home. In fact, the projected moving rates are going to go down because the people who move are those in their 30s and maybe early 40s, but if you stay in your home, you want it to be nice, and that's why I think the demographics for kind of ongoing remodeling projects being a big deal are pretty supportive.

DYCHTWALD: One of the things that happens to people in their 50s is that their kids leave home, and so all of a sudden we have this phenomenon of empty nesting, which has really never been written about.

Normally, we think you go from being a young adult to a retired elder person, but empty nesters all of a sudden have seven nights a week for free. They have a home that they can redo. They can take vacations that don't have to be in alignment with their kids' school vacations. Empty nesting provides discretionary time. It provides freedom for the first time in most people's lives, and I think the phenomenon of empty nesting itself, multiplied by tens of millions of households, is going to create an enormous push in industries like home remodeling and others that you can imagine as well. Adult education, too, evening lectures, workshops, extended vacations, archeological digs.

GIBBS: Well, when you're seeing this type of shift, Bill, then there's got to be then a loser somewhere. What sectors would you be avoiding as you see this demographic shift take hold?

STERLING: Well, two big themes that show up negatively in our work are what I'd call 30-something spending, and that can encompass things like winter sports. You know, aging baby boomers, and this is statistics, too, most of them may think they still want to go to a ski resort, but at the end of the day, they're much more likely to take an ocean cruise. So the winter sports area, sports admissions tickets in general, look like they'll suffer just because of the relative dearth in those in their sort of middle age, as opposed to advanced middle age.

The other major area would be what we call kid stuff. Because of this boom bust and echo pattern, when we look at where the slowest growth in the population is right now, it's really in the sort of under-15-years-of-age group, but especially under 10-years-of-age. I wasn't all that surprised recently to hear that Toys 'R Us is actually getting out of the toy business, because the toy business on my work shows up as one of the most dull businesses from a demographic point of view, you know, looking ahead.

So it's these two broad themes, the industries that cater to the sort of mid-30s to mid-40s or industries that cater to kids.

DYCHTWALD: There's another flip to that, which is that if you're an employer, let's say you're a great company like Wal-Mart and you employ 1.2 million people, if you're finding that the number of young adult consumers is declining, that's one thing. But if you're finding that the number of young adult workers is declining, that's a whole other thing, so companies that rely on young workforce talent are going to also be challenged over the next decade or so as they find it harder and harder to find those young people to work in the McDonald's stores or to do the call center activities. And so companies are either going to have to hire older people, which they have been disinclined to do, or they're going to have to pay more for those young people or they're going to need to outsource. And so in examining the economic impact, it's not just the consumption patterns, it's the ability for companies that use large labor forces to stay in the game at competitive rates.

STERLING: I'd pick up on that theme further, because I would say, first of all, that's not just a U.S. trend. That's a global trend. Workforce growth around the world is projected as slow, both in the developing, emerging markets as well as the mature industrial societies. And so basically labor is going to become more of a scarce factor in production.

But the flip side of that is the cost of capital, especially technology-related capital, seems like it's cheap and getting cheaper every year thanks to the miracles of the computer processing and telecommunications industries and the like. So if you've got scarce labor and expensive labor but capital that's getting cheaper and cheaper, despite the tech wreck and the boom and bust we had in technology, we think longer term that argues for companies being pretty aggressive about substituting cheap capital, cheap technology for expensive labor.

So I think the prospects for an investment-led sort of long-term boom here with technology coming back shouldn't be dismissed, because it ties into the demographics simply because there will be this relative scarcity of workers that companies are going to have to work around. I'll give you a very simple example. You go to an airport now and you check in at one of these little robots, right? The television screen. I did a little estimate, I figure it costs maybe 30 or 40 cents an hour to operate those machines, and they're replacing full-time workers who have union benefits, call in sick, etc. So there's a big shift going on simply because companies are finding this new technology so affordable relative to the shrinking workforce and the fact that labor is scarce.

GIBBS: Which brings us to the echo boomers, the children of baby boomers. It doesn't look like the outlook for them is very bright.

STERLING: Well, I wouldn't say that. In fact, you know, one of the best arguments I've heard for saying, "Well, why should all the young kids be picking up the retirement expenses for this aging baby boomer generation?" is because they'll be richer than any generation in history in terms of the productivity has been improving in recent years. Real wages tend to follow productivity. So I wouldn't say it's a dim outlook at all.

Oddly enough, though, from a demographic point of view, I have seen an observation made that the worst year in the last century to have been born was 1961, because you were at the tail end of the baby boom. So the tail end of the baby boom was kind of in a position of, you know, as I heard it put once, that life is like a movie theater, and those who get there first get the best seats, so it was the older baby boomers who got the best jobs in corporate America, filled out the top of that pyramid.

DYCHTWALD: Got into colleges, in their choices, got the first houses at low rates.

STERLING: The tail end of the baby boom actually maybe had it roughest of anyone, but they also will, you know, they're going to face, they're going to be at the tail end of this whole crunch that Alan Greenspan described for retirement financing where they are probably going to have to be working longer. They are going to have their benefits come under the gun the most. The front end of the baby boom I don't think is going to experience that as much.

DYCHTWALD: I would add to Bill that my kids are 14 and 17, and I think there's a fabulous generation of these kids. But to the extent that part of what they're going to have to put their money aside for each week is to support this elder generation, which is going to be huge, it's going to put a strain on them. And whether they like us or not will be a key ingredient, because right now there's a huge degree of regard and respect for today's elders, but the boomers have always been sort of poked fun of and criticized, and the question is to whether or not a young generation, which will have a different racial and ethnic makeup than today's older generation, whether or not that new young generation will be so willing to support so many boomer elders for so long. And I think that the average boomer would be wise to expect to fund your own retirement and don't count too much on the government or younger generations to pay your way to your country club. I just don't think that's a likely scenario for the future.