THE LaTEST WOrd:
rEvIEWS Of rECENT rESEarCH aNd THOUgHT
WhaT DO WE KNOW aBOuT RETIREE
ECONOMIC DEVELOPMENT MEETS THE COMINg AgE WAVE
Erik R. Pages
President, EntreWorks Consulting
Executive Summary. What is the coming “age wave,” and what is the state of
the field of retiree attraction strategies? This paper begins with a brief look at the
numbers: the size of the coming retirement boom and what is the financial situation
facing the baby boom generation. We next look at recent retiree migration trends. We
then turn to a review of how states and localities are responding to these patterns .
We conclude by assessing the effectiveness of these programs and by providing some
recommendations for how communities can best attract, retain and engage these new
It seems like every day we get bombarded marketing themselves to current and prospec-
with new data about the profound economic tive retirees . Rural communities, especially
effects of the aging baby boom generation . those with desirable scenic amenities, have
Beginning in 2006, the first baby boomers been especially active. The field has become
turned 60 and we can expect the economic, so established that it even operates its own
demographic and social effects of their retire- trade association: the American Association
ment, work, and life decisions will reverber- of Retirement Communities (AARC) . As
ate among all of us . Economic developers can the retiree population grows, we can expect
be expected to bear a large part of this burden retiree attraction strategies to become a more
as they struggle to respond to expected labor common component of the economic devel-
shortages and provide amenities for a rapidly opment tool kit .
aging population .
This essay assesses the state of the field of
Yet, the effects of the coming “age wave” are retiree attraction strategies . It begins with a
not simply a burden . This looming demo- brief look at the numbers: what is the size
graphic shift creates lots of new and interest- of the coming retirement boom and what is
ing economic development opportunities . the financial situation facing the baby boom
Baby boom retirees will be the wealthiest generation . We next look at recent retiree
retiree cohort ever . They have money, and are migration trends . Why retirees are moving
willing to spend it . Boomers are also more and what kind of communities and amenities
mobile with greater willingness to move to are they seeking? We then turn to a review
a new area after retirement or purchase a of how states and localities are responding to
second home . these patterns? What kinds of programs and
initiatives are being deployed to attract the
States and localities across the U .S . have migrating retiree? We conclude by assess-
followed these trends, and are aggressively ing the effectiveness of these programs and
48 Applied Research in Economic Development, vol. 5, issue 3, December 2008
by providing some recommendations for cate during their retirement . The reasons for
how communities can best attract, retain and migration fall into three categories . Amenity-
engage these new retirees . seeking retirees move to be near scenic
locations or warmer climates . This cohort is
Demographics—what is the coming “age the primary target for most retiree attraction
wave” and why does it matter? programs . Return migrants move back to
The economic impact of the retiring baby their home communities, often to live near
boom generation will have a huge impact on relatives . Finally, dependency migrants move
all parts of our economy . The numbers are to be near family members who can take care
fairly staggering . By 2015, the U .S . will be of them .
home to more than 45 million households
with people between the ages of 51 and 70 The locational choices of migrating retirees
years old . This compares to about 25 mil- used to be fairly limited, with Florida and
lion for the previous generation . By 2015, Arizona among the top destinations . Today,
Boomers will control nearly 60 percent of net a much more diverse group of locations has
wealth (up from 51 percent in 2006) and ac- entered into the mix . Table 1 lists the top
count for 40 percent of U .S . consumption and states for migrating retirees .
income (Court, Farrell, and Forsyth 2007) .
As a cohort, the boomers are a major eco- arizona 24,610
nomic force . At the same time, individual Texas 18,290
retirees will be among the wealthiest in world
history . While many retirees will struggle to Tennessee 10,663
make ends meet, a surprisingly large por- georgia 9,610
tion of boomers have accumulated extensive Table 1. Net In-Migration 2000-2005 of
wealth. The affluent segment of boomer 60+ individuals . Census Bureau Data .
retirees, those with an average net worth over
$1 .2 million, will include ten million house- Surveys of retirees offer a very clear picture
holds (Court, Farrell, and Forsyth 2007) . of what motivates and interests affluent
retirees . They respond to a variety of push
Analysts expect that boomer retirees will and pull factors (Fagan 2002) . The search for
act differently than their predecessors . They a warmer climate is a primary factor, with
are more interested in remaining in the many retirees moving the Northeast and the
workforce, and, faced with looming worker Midwest to the Sunbelt . Other important
shortages, they are more likely to be in high decision factors are the presence of scenic
demand by employers . At the same time, amenities, especially in coastal locations .
boomers are showing greater interest in con- Many migrating retirees place great emphasis
sidering entrepreneurship in later life . In fact, on access to parks and recreation facilities .
recent research shows that self-employments Proximity to medical care and educational
are rising with age . For example, one-third opportunities rank high among retirees, and
of male workers between the ages of 51 and help explain the popularity of college towns
61 are self-employed (Giandria, Cahill, and as a retirement destination . Finally, retirees
Quinn 2008). do place emphasis on some financial factors,
especially property and income tax rates and
Retiree migration trends
overall cost of living .
In addition to being richer and more engaged
in the workforce, boomer retirees, especially How are communities responding?
those with higher net worth, are also more Many communities have been targeting this
mobile . Projections show that as many as market for years (Reeder 1998) . In fact, many
twenty million Baby Boomers might relo- states and regions have programs devoted to
Applied Research in Economic Development, vol. 5, issue 3, December 2008 49
the attraction of retirees . Southern states— through the state’s tourism programs . Among
such as Alabama, Mississippi, and Tennes- other states, Kentucky, Louisiana, and Texas
see—are particularly aggressive on this front . also operate similar certification programs.
The programs take many forms, ranging from
basic tourism promotion to use of tax incen- Financial incentives
tives . Most states do some sort of promotion Many states and localities also provide a host
via their tourism boards, and tout their quality of incentives to retirees . In most cases, these
of life, scenic beauty, health care quality, and benefits, such as property tax abatements,
other amenities . When its comes to taxes, are available to all senior citizens . However,
more than half of states with broad-based they are aggressively marketed to potential
income taxes offer some sort of exemption incoming retirees . South Carolina has a par-
for seniors (Murphy 2005) . Below, we review ticularly strong set of financial incentives for
some typical retiree attraction strategies . senior citizens . In recent years, the state has
undertaken a variety of efforts to reduce the
Tourism promotion tax burden on retirees . These include elimina-
Targeted tourism promotion is the most com- tion of state taxes on social security and other
monly used tool to attract migratory retirees . retirement income, reduced property taxes for
This approach makes sense as research shows retirement housing located in state enterprise
that migrating retirees generally visit an area zones, and a homestead tax exemption for
as a tourist before considering relocation senior citizens who have lived in the state for
(Chesnutt, Lee, and Fagan 1993) . These pro- at least one year . In addition, South Carolina
grams generally include investing in major residents aged 60 or older enjoy free tuition
marketing campaigns, production of market- at state colleges and universities .
ing materials, and the provision of technical
assistance to local tourism promotion efforts . Infrastructure development
The Alabama Advantage program (http:// A final category of potential support pro-
www .Alabamaadvantage .org/) is one of the grams involves the development of special-
more long-running, dating back to the 1980s . ized infrastructure for retirees . At present,
It operates a website that serves as a gateway no states are operating programs of this
to Alabama communities that are seeking to sort. However, a recent Georgia Tech study
attract retirees . It also publishes the Alabama recommends that Georgia consider new
Advantage magazine and provides informa- initiatives to help ease the construction of
tion packets and other resources to prospec- retirement facilities across the state (Georgia
tive new residents . Tech Enterprise Innovation Institute 2007) .
In particular, the report recommends that
Community certification Georgia make ease regulations related to the
Beyond basic tourism promotion, the most construction and management of Continuing
commonly used program type appears to be Care Retirement Communities (CCRCs) .
community certification. Under these pro- CCRCs are residential facilities that combine
grams, a state government agency, normally living space with the provision of extensive
the Department of Economic Development, health care services. In Georgia, like many
provides technical assistance to communities states, CCRCs are heavily regulated and have
that are then certified as “retiree-ready” com- proved quite difficult to build and manage.
munity . The Hometown Mississippi Retire- The Georgia Tech study recommends that
ment Program (http://www .visitMissis Georgia work to increase construction of
sippi .org/retire/) offers a typical example . CCRCs as a tool to attract new retirees and
At present, Mississippi is home to 21 Certi- to encourage healthy aging in place for the
fied Retirement Cities that have undergone existing population of senior citizens .
a state-sponsored screening process, and
that are now marketed as retiree destinations
50 Applied Research in Economic Development, vol. 5, issue 3, December 2008
also indicate extremely positive economic
Retiree readings effects from migrating seniors . For example,
a recent case study of the impact of new retir-
aging in Place Initiative: a joint ees in Cumberland County, Tennessee, found
program of the National association that new migrants helped contribute to new
of area agencies on aging and job opportunities, higher income levels and a
Partners for livable Communities. It large fiscal surplus (University of Tennessee
is designed to build communities that Institute of Public Research 2007) .
are good places to grow old.
(http://aipi.n4a.org/) These positive results have been generated
prior to the coming age wave . If similar (or
american association of better) outcomes are generated by retiring
Retirement Communities boomers, the economic effects will be pro-
(http://www.the-aarc.org): a trade found . At a minimum, we can expect a boom
association focused on “promoting in new retiree attraction programs .
economic development through
retiree attraction.” To date, however, retiree attraction advocates
have viewed the process as something of
Experience Corps (http://www. an E .D . “free lunch .” The message seems
experiencecorps.org): Program was to be: attract wealthy retirees, and count the
started by leadership guru, John proceeds . Migrating retirees spend money,
gardner, and seeks to encourage pay taxes, but don’t ask for much in return
community service by those over the (especially in terms of spending on new
age of 55. schools and other amenities) . As one recent
newspaper article put it, there’s “gold in
georgia Retire: To view an impressive
silver hair .”
and comprehensive program to
attract retirees, This rosy picture may suffer from several
check out shortcomings . At a minimum, it ignores po-
http://www.georgiaretire.com. tential negative economic effects, particularly
This website and program were the effect of in-migration on rising housing
developed by Triple Crown costs . For example, a study of Tennessee’s
hometowns, a partnership of three Cumberland County found that the many
south georgia counties (lowndes, benefits of in-migrating retirees also generate
Brooks, and lanier). some negative impacts such as increased traf-
fic congestion and increased land and housing
mississippi: To learn more about mis-
costs (University of Tennessee Institute of
sissippi hometown Retirement, visit
Public Research 2007) .
The impact of retirees on housing costs pres-
The pros and cons of retiree attraction ents something of a mixed picture for com-
munities . It can help generate wealth for resi-
While rigorous evaluation studies are fairly dent and businesses that are selling property .
limited, early research indicates that these On the flip side, it creates cost challenges for
state and local retiree attraction efforts seem younger workers and low-income families .
to generating positive outcomes . For ex- A more worrying set of issues concerns the
ample, a study of Mississippi’s Mississippi overall costs of supporting a rapidly aging
Hometown Retirement program found that population of retirees . Most retiree attraction
it generates a statewide annual economic efforts rightly focus on what we might call
impact of $194 million and 2,320 new jobs the “young elderly .” This group has access to
(Campbell 2005) . Community level studies financial resources, is new to retirement, and
Applied Research in Economic Development, vol. 5, issue 3, December 2008 51
is anxious for new experiences . This cohort involves a major shift in how many regions
represents the “holy grail” for economic view economic development .
developers and developers of golf courses,
resort communities and the like . This demographic evolution is natural . Our
challenge is not to stop it, but to prepare for it
Recent research offers many indications of in advance . Communities must take a long-
the positive economic impacts of relocat- term look at future infrastructure and amenity
ing retirees . USDA researchers found that needs, as well as the economic implications
non-metro retirement destination counties of an aging population . Success requires
grew much more rapidly and enjoyed higher careful planning and anticipation of the costs
per capita incomes than comparable rural generated by a population that will “age in
counties (Reeder 1998) . Retirees also help place .” Investments in new medical facili-
stimulate sectors such as real estate, health ties and other specialized amenities, such as
care, financial services, restaurants and transportation services, may be required .
Preparing for this potential economic down-
While the initial impact of retiree migration side makes sense . It makes even better sense
appears quite positive, the long-term impacts for regions to think more deeply about how
are not well understood . The “young elderly” to get “the most bang for the buck” from
don’t stay young forever . As they gradually migrating retirees . Too many communities
become the “old elderly,” their health may attract retirees who remain isolated in a
decline along with their positive economic newcomer’s enclave, and often fail to become
impact on the community . At this point, many fully integrated in the community’s civic and
retirees may depart a community to live economic life .
closer to relatives . Or, they may remain in
place but generate increased demand on local By failing to engage these newcomers in
services . In effect, the economic “free lunch” local economic activities, we do not fully
generated by migrating retirees may only capture the real benefits that could be gener-
provide a short-term economic stimulus while ated by migrating retirees . The real strength
they remain in good health . that these retirees bring comes from their
knowledge, career experiences, connections,
Unfortunately, there are few rigorous analy- and networks . Yet, economic developers
ses of the long-term economic consequences often fail to tap into this important resource .
of retiree concentrations . One recent study We must stop simply viewing as migrating
noted “the paucity of knowledge regarding retirees as a cash machine that spends money
the longer term effects of such (retiree) popu- and pays taxes. We must instead find a way
lation movement” (Serow 2003, 897-1003) . to integrate new residents into the center of a
However, some recent studies indicate that community’s economic life .
community costs for emergency medical care
run slightly higher than average . However, How can this happen? Such integration could
these higher costs may be are offset by lower take many forms. Groups like the Service
demand for other services such local schools Corps of Retired Executives (SCORE) have
(Georgia Tech Enterprise Innovation Institute long sought to tap retirees as mentors for new
2007) . businesses . Local mentoring networks could
be expanded as one means to encourage retir-
Retiree migration for the long haul ees to nurture local firms. In addition, retirees
Communities considering retiree attraction could be organized into mini-angel networks .
policies need to be fully informed about the By pooling resources, a new local source of
potential long-term consequences of these start-up capital could be generated . Finally,
initiatives . Intentionally aging a community retirees may opt to start their own businesses .
This growing boomer entrepreneur market
52 Applied Research in Economic Development, vol. 5, issue 3, December 2008
can help strengthen local economies in retire- Court, David, Diana Farrell, and John E . For-
ment havens . syth . "Serving aging baby-boomers ." The
McKinsey Quarterly 4 (2007): 104,106.
While few communities are now focused
on this challenge of integrating retirees into Fagan, Mark . 2002 . Retirement Develop-
local civic life, some places are trying to get ment: A How-To Guide Book. Center for
ahead of the game . For example, Wyoming’s Economic Development, Jacksonville State
Governor Dave Freudenthal has recently University .
led an initiative that examines not only how Georgia Tech Enterprise Innovation Institute.
Wyoming can attract retirees, but also on 2007 . Retirement Communities: An In-
how the state can assist those who want to novative Retiree Attraction and Eldercare
start their own companies (http://Wyoming . Living Strategy for Rural Georgia: 58.
ecurveFINAL 000 .pdf) . At the national level, The University of Tennessee Institute of
groups like the Experience Corps are devel- Public Research . 2007 . The long-term
oping best practices for engaging Americans impacts of retiree in-migration on rural
over 55 in community service . These are all areas: A case study of Cumberland County,
nascent programs that should offer some use- Tennessee . http://www .ips .tennessee .edu/
ful lessons in the future . userfiles/file/Impact of Retiree In-migration
on Rural Areas .pdf .pdf
As our population ages, the real community
challenge is not to simply to attract retirees . Murphy, Kathleen . "Send us your baby
Instead, it is to find the tools that create boomers, states plead ." Stateline .org .
a win-win situation where both sides are http://www .stateline .org/live/ViewPage .ac
enriched. Retirees enjoy a fulfilling period of tion?siteNodeId=136&languageId=1&co
life, with access to desired services and ame- ntentId=45531 Reeder, R . J . 1998 . Retiree
nities . Meanwhile, communities are enriched Attraction Policies for Rural Development .
by the investment, knowledge and connec- U .S . Department of Agriculture Economic
tions that retirees bring to the community . Research Service . Agriculture Information
Bulletin No . 741: 5 .
Sources and further reading Serow, William J . 2003 . “Economic conse-
Cahill, Kevin E., Michael D. Giandria, and quences of retiree concentrations: A review
Joseph F. Quinn. April 2008. “Self-em- of North American studies.” The Geron-
ployment transitions among older workers tologist . Vol . 43: 897-903 .
with career jobs .” Boston College Depart-
ment of Economics working paper: http:// Wyoming AARP and Gov. Dave Freudenthal.
fmwww.bc.edu/EC-P/WP684.pdf 2005 . http://wyoming .gov/governor/poli-
Campbell, Charles A . 2005 . “The impacts Standard2005_000 .PDF
of the hometown community retirement
program in Mississippi .” Mississippi State
Universit, John C . Stennis Institute of
Chesnutt, J . Thomas, V . Wilson Lee, and
Mark Fagan . June 1993 . Attracting the
Migratory Retiree . Alabama Cooperative
Extension Service Issue Brief CRD-56 .
Applied Research in Economic Development, vol. 5, issue 3, December 2008 53
Erik R. Pages is President of EntreWorks
Consulting, an E.D. consulting firm based
in Arlington, VA . He previously served as
Policy Director for the National Commission
on Entrepreneurship (NCOE) . Dr . Pages
has also held senior positions at the U .S .
Department of Commerce's Economic
Development Administration (EDA), where
he helped lead efforts to assist communities
affected by military base closings and defense
plant shutdowns . He received his Ph .D . from
• 703 237 2506
• epages@entreworks .net
54 Applied Research in Economic Development, vol. 5, issue 3, December 2008