Recruiting Retirees Calls for Careful Planning: Retirees Are on the Move, and They Are Taking Their Spending Power with Them. Many Rural Communities Intend to Benefit from This Migration by Appealing to Seniors with Active Adult Communities and Other Amenities

By Howell, Sibyl | Partners in Community and Economic Development, Summer-Fall 2006 | Go to article overview

Recruiting Retirees Calls for Careful Planning: Retirees Are on the Move, and They Are Taking Their Spending Power with Them. Many Rural Communities Intend to Benefit from This Migration by Appealing to Seniors with Active Adult Communities and Other Amenities


Howell, Sibyl, Partners in Community and Economic Development


According to the Pew Research Center, the graying of the baby boomer generation will create an 18-year surge of retirees. Beginning in 2006, economists anticipate about 4 million people will retire each year. They project at least 400,000 a year will move to another state, bringing on average $320,000 to purchase a retirement home.

More than half of total U.S. consumption can be attributed to this diverse crowd of highly educated retirees, who part with about $2.3 trillion annually. According to USA Today, baby boomers' large disposable incomes have been fueled by increasing home equities resulting from ballooning property values, fat 401k funds and inheritances.

Projections indicate that as many as 20 percent of the 70 million retiring baby boomers will migrate. To capture some of this mobile wealth, many rural communities are including plans to recruit retirees in their economic development policies in hope of boosting local economies. Disadvantaged rural areas characterized by a low-skilled labor force and significant unemployment stand to benefit from the service and retail jobs that retirement communities generate.

Three types of retirees tend to migrate. The first are seeking amenities such as warmer climates, lakes, beaches or mountains. The second type, return migrants, move back to their home states to be closer to relatives. Dependency migrants, the third type, move to be closer to families or others who can help care for them. Communities seeking to attract retirees typically target couples in good health who possess above-average disposable incomes.

What communities stand to gain

Immigrating retirees can spark growth in multiple markets. Industries as varied as housing, entertainment, banking, financial services, transportation, health services, insurance, utilities, household goods, and food all stand to gain from an influx of well-heeled seniors.

Since most retiree income is from transfer payments, pensions and other non-wage revenue, it is not affected by economic downturns. An expanding tax base provides municipalities with more funding for state and local services, with little or no strain on social services, criminal justice services or schools. Finally, retirees exponentially boost a community's tourism industry.

A 1986 study by the Federal Reserve Bank of Kansas City found that retirement-based rural communities have out-paced all others in per capita income growth. Non-metro counties identified as retirement sites have also witnessed the largest increases in personal income and employment. The study found that retirees' incomes have a high multiplier effect on employment in local economies since their disposable wealth is largely used for goods and services. The economic impact of one new retiree household is equal to 3.7 new manufacturing jobs, according to economists Green and Schneider in a 1989 study. They attribute the disparity to "leakages" in wage employment such as federal and state income taxes and income exported to commuters.

Retiree recruitment efforts in the Sixth District support the notion that migrating seniors can benefit local economies. Mississippi has led the way with its official retiree attraction program, Hometown Mississippi Retirement. The major component of the program is the "certified retirement city" where the state screens cities on certain criteria such as affordability, low taxes and quality medical care.

According to a 2005 study by Mississippi State University, the program has cost the state $200,000 per year, but has netted nearly 7,500 additional retirees. …

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Recruiting Retirees Calls for Careful Planning: Retirees Are on the Move, and They Are Taking Their Spending Power with Them. Many Rural Communities Intend to Benefit from This Migration by Appealing to Seniors with Active Adult Communities and Other Amenities
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