Attracting Retirees is Efficient Economic Development
Because economic growth increases the level of economic well being in a local economy, almost every community devotes financial resources to economic development. Traditionally, community economic development has focused on attracting new businesses. Their operation generates new jobs and additional spending in the local economy. Further, the spending by the new business and its employees generates additional local spending and new jobs by those companies providing them with goods and services. This spending and job creation in turn induces additional spending and more jobs. The decreasing cycle of secondary spending and job creation is known as the multiplier effect. It is the key to the benefits of economic development.
While the multiplier effects from new businesses are well known in economic development circles, what has largely gone unrecognized is that attracting retirees to a community also has a multiplier effect. Furthermore, the spending of migrating retirees provides a larger multiplier effect than does business attraction. The Kansas City Federal Reserve Bank has estimated that the total impact on a local economy of a migrating retiree household is equivalent to 3.7 new industrial jobs.
The comparative benefits to a community from attracting retirees are greater than those of attracting a new business for a couple of reasons. First, retirees generally have higher incomes than do blue collar workers, so they have higher levels of spending thus inducing more total spending and job creation. Because of their higher incomes, retirees also generate more local sales tax revenues. Not only does migrating retirees’ spending, amplified by the multiplier effect, generate new jobs and additional sales tax revenues, it will induce new amenities (e.g., medical facilities, shopping opportunities) in the community. Granted, a few of the new amenities may be specific to the age of the retiree, but, because retiree spending patterns are not dissimilar from those of younger residents, retirees will attract amenities relevant to all residents of the community.
In order to attract a new business to locate in a community, it is usually necessary to provide it with significant tax inducements. But, because one of the few tax inducements a community can offer a business are reductions in its property taxes, the additional property taxes created by a new business may be minimal. Furthermore, once the incentives used to induce a new business into a community lapse, it may again relocate to another community offering incentives. On the other hand, retirees only rarely, if ever, require or even expect inducements to relocate. Also, once migrating retirees have chosen to move to a new community, they usually reside there for the rest of their lives.
Unlike current residents, retirees moving into a community need a place to live. When they buy a new home in the community, which an estimated 75% of them do, they increase the property tax base. The benefits of a migrating retiree compared to someone moving into a community to take a newly created job also favors the retiree. Retirees typically purchase a new home with a value greater than the community average, thereby paying more property tax than a new worker. Finally, migrating retirees rarely bring school age children with them, so their property taxes provide what amounts to a subsidy to the local school system.
Attracting retirees is a particularly appropriate type of economic development strategy for rural communities. Because many of the younger residents of rural communities often leave to find jobs in metropolitan areas, most rural communities do not have a workforce with enough training to fill the jobs in the businesses that are the targets of traditional economic development. On the other hand, the strategy of attracting retirees has two major advantages in rural areas. First, the amenities retirees attract will provide jobs to entice new workers into the community and may persuade the younger residents not to seek jobs elsewhere thereby expanding the skill set of the community’s workforce. Secondly, many highly skilled retirees may want to work part-time. Including such individuals in the workforce increases the skill set of a rural community’s workforce. This ratcheting up of a rural community’s workforce will eventually allow it to develop the workforce necessary to induce other types of economic development.
Economic development activities provide benefits whether they are focused on attracting businesses or retirees. However, in times when local resources that can be devoted to economic development activities are scarce, it is more efficient to focus on those activities which provide the largest return. From a community’s perspective, the return on dollars invested in attracting retirees is larger than those invested in attracting businesses. Thus, attracting retirees is a more effective type of economic development than attracting businesses, especially in rural communities.
-Gene Warren
Age Restricted Communities are for Boomers' Parents
Ageism is dead! As proclaimed by the Baby Boomer generation. Boomers believe they are now in the prime of their lives and do not intend age to slow them down. Accordingly do not automatically expect Boomers to buy new houses in communities that have been labeled with age qualification, or age restrictions.
Age restricted communities are simply housing developments that restrict property ownership to those of a qualified age. The original retiree enclave was the brain child of Ben Schleifer. Schleifer founded a 320 acre all inclusive housing development known as Youngtown, Arizona in 1954. On January 2nd, 1960 age restricted communities were popularized by Del Webb with the grand opening of its Sun City development northwest of downtown Phoenix. Sun City offered retirees a place to be ‘active adults’ (golf, community centers, planned events, etc) without the inconvenience of having children around. It has been an unmatched success. The Sun City communities and Del Webb single handedly altered what retirees, and the public at large, thought retirement should be about.
Since the founding of Youngtown over 50 years ago two generations have gone by and perceptions of what retirement should be like have changed. As Baby Boomers approach retirement age they have voiced their opinion loud and clear, “We do not want to retire like our parents did.” In response to that declaration an increasing number of home builders are changing their product offerings to better fit the new wave of retirees. Some developments are in urban settings, others are specific to certain amenities, and even others are mixing age groups together in multigenerational communities.
The latest multigenerational master-planned communities not only offer diverse residence options, but also shared community amenities. Furthermore the minimum age for ownership qualification is dropping too, once it was 55+ and now it is 50+. There are a few theories about why the change has come about. One, as stated above, is that Baby Boomers do not want to live their retired life as their parents have. Secondly, young families are drawn to the amenities that are in the community. With the recent advents in technology and flexible work schedules becoming the norm, younger generations have more free time to use those amenities. The truth is likely somewhere in between. Examples of communities for the new retirees are:
- Vistancia (Shea Homes) – located northwest of Sun City. It features separate housing, but shared amenities with a build out of approximately 15,000 units. Age is restricted to 50+.
- Anthem (Pulte) – located about 30 miles north of Phoenix. It offers a family atmosphere with multiple lifestyle arrangements (entry level, country club, luxury). No age restrictions.
- Fireside (Pulte) – located 25 miles north of Phoenix. It offers different housing arrangements (low maintenance, multi-unit, traditional family homes) with shared amenities and no age restrictions.
In 1998 Schleifer’s vision of how retirement should be was vanquished when Youngtown repealed its age restriction and became a community for all ages. In the coming years the per capita demand for age restricted housing is going to recede. However, because the boomer segment will realize four times the number of relocating retirees than the previous generation there will be a greater total demand for age restricted housing. The overall demand for multigenerational and alternative housing developments will be greater than that for age restricted communities. Once again it appears that Del Webb may be reengineering how we think retirement should be, and home builders of all sizes should consider multigenerational developments as a key to their success.