Academic journal article Forum for Applied Research and Public Policy

The Retirement Rush

Academic journal article Forum for Applied Research and Public Policy

The Retirement Rush

Article excerpt

Communities seeking to attract migrant retirees may not reap an economic windfall from the baby-boom generation.

People who can afford to move upon retirement, purchase a new home, and settle into a new community are for the most part comparatively affluent. They have money to spend taking in the local sights, eating out, furnishing their homes, and landscaping their yards. Yet they typically require relatively little in the way of local publicly provided services such as schools.

Recognizing this potential source of income, in recent years, many state, county, and municipal governments have been increasingly interested in the role that retirees can play in the economic development of their communities. In some instances, retirees moving into an area can provide an infusion of external funds into a locality's existing economic base and stimulate growth in employment and income. It is hardly surprising, then, that many localities have embarked on attracting retirees as a nonpolluting source of sustained economic growth.

While much has been written on the causes and effects of elderly migration, there has been surprisingly little attention paid to longer-term issues associated with the phenomenon. Most theoretical and empirical work implicitly assumes that communities can use this strategy with little fear of failure; all they need to do is have, or be willing to provide, the amenities--mountain, lake, or ocean views; golf courses; yacht clubs; and cultural attractions--thought to be essential to a retirement Mecca.

Yet this strategy requires the host locality to make a long-term commitment to constantly rejuvenate the retiree population. Otherwise, the young, healthy, affluent retirees of today might evolve into older, sicker, poorer retirees of tomorrow. To avoid aggregate aging by the population of retirees, a new stream of migrants is needed. It would therefore be wise to urge caution on the part of communities blindly embarking on a course of mining gray gold.

Post-war Surge

We initially became aware of the changing nature of retirement destinations in the early 1990s. [1] These changes occurred as awareness of the business potential of retirement migration spread. As the World War II generation--which was enjoying unprecedented wealth--began to retire, its members were naturally lured by sunnier climates. Historic retirement communities in Florida, Arizona, and California grew up because of their advantages such as climate, social and recreational amenities, and low tax rates and cost of living. More recently, some emerging retirement communities in Sunbelt and coastal states have opted to take a more aggressive course and have essentially marketed themselves to retirees. Ten states, including North Carolina, Georgia, and Virginia, have emerged as the principal states of destination for retirees. [2] Since the early 1980s, economists and gerontologists have analyzed the virtues of, and outlined strategies for, recruiting retirement migrants. [3] North and South Carolina have pro duced magazines aimed at people of retirement age, extolling the virtues of retirement in the state. Alabama set up a program called Alabama Advantage for Retirees, within the Alabama Department of Economic and Community Affairs, to promote the development of retirement communities and to recruit retirees.

Those who would vie to lure retirees, however, should keep in mind two factors that may affect the economic viability of historic and emerging retirement communities. First, the baby boom was preceded by two and a half decades of low fertility and limited immigration. Therefore, the number of workers approaching the traditional retirement age of 62 to 65--the average age, since the early 1980s, at which Social Security retirement benefits have kicked in--will continue to ebb for the next decade or so. Those born in 1946, who constitute the leading edge of the baby boom, will likely work for another 10 to 15 years. …

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