Retirement Living News

February 2006

HEADLINES  (Click on headline to read story)

* New Research Discloses Boomers' Views on Retirement Lifestyle
* NAHB Announces Awards for Best Senior Housing
* More Retirees Are Reentering the Workforce
* Increasing Number of States Seeking to Attract Retirees
* New Retirement Communities Will Offer More Amenities

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NEWS STORIES

New Research Discloses Boomers' Views on Retirement Lifestyle 

Baby boomers have always had a major influence on the real estate industry. They have set new records for home ownership, equity wealth and mortgage debt. Now they are about to redefine retirement living as the first wave of them turned 60 years old last month. New research presented at the annual meeting of the National Association of Home Builders in Orlando last month provided some interesting answers on how boomers plan to live in retirement. For starters, a stunning 52 percent of all boomers aged 45 to 54 years of age expect to purchase some form of retirement, investment or second home property within the next 60 months. Fifty-seven percent of homeowners aged 55 to 64 say the same. So it's fair to say that the 76 million boomers will play a key role in residential real estate sales, home building and new community development for years to come. 

The study was conducted by ProMatura LLC, an Oxford, Mississippi-based research firm, and covered a national sample of 2,309 boomer homeowners who use the Internet. In answering the question about location few indicated that they were interested in property on or near a golf course. Just 1.7 percent of the boomers surveyed said "yes" to buying in golf course developments, and only 5.1 percent said they even want a view of a golf course. Contrast that with 12 percent who said they expected to move back into the city or have a view of a city. 

Other questions about location showed that over 25 percent of those who said they were likely to move, reported they were interested in "fresh water" and "green space." They either want to buy real estate directly on, or with a view of, fresh water such as a lake, river or pond. Nearly 12 percent want to buy real estate surrounded by "green space" -- parklands, fields or trees -- and 27.1 percent want to see green space out their windows. 

Salt water-oriented locations get much lower marks. Perhaps worried about potential hurricane damage, just 8.5 percent want to be either located on, or have a view of, the ocean, a bay or other bodies of salt water. 

Boomers are much more open than their parents to the idea of planned "active adult" real estate developments, according to study author Margaret Wylde, president of ProMatura. A surprising 49 percent of all boomer homeowners consider themselves likely or highly likely to move to an active adult community after selling the family home. 

Boomers reported that a key factor in their decision about where to move will be the presence of high-amenity facilities for physical activity, workouts, sports and fitness. One out of every four boomers 45 years and older want to be able to walk -- not drive -- to a fitness center. Twenty-seven percent want to be able to walk to either bicycling or hiking areas.
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NAHB Announces Awards for Best Senior Housing

The very best in the 50+ housing industry were honored by the National Association of Home Builders (NAHB) during the 2006 Best of Seniors Housing Awards ceremony held January 11, in conjunction with the International Builders' Show in Orlando. 

The NAHB 50+ Housing Council, which has promoted excellence in the seniors housing industry for the past 14 years, presented 132 gold and silver awards in 58 categories to current and on-the-boards projects from across the United States and as far away as Japan. Design categories covered a range of product types such as active adult, aging in place, assisted living, continuing care retirement community, for-sale condominiums, rental apartments and renovated seniors housing. Awards were also given for senior housing marketing strategies. 

This year, as in the past, active adult community design reflected a greater sensitivity to working with the natural environment while creating a resort-like community. Floor plans in both villas and apartments continue to be open and flexible, reflecting current lifestyle preferences. Universal design is also becoming standard in the planning and detailing of active adult residences. 

Some of the top award winners are highlighted below. 

Active Adult Community of the Year 
Gold Awards 
* Small (up to 200 homes): Red Mill Village, Norton, Mass. http://www.thorndikedevelopment.com/redmill/ 
* Midsize (201 to 750 homes): Central Parke at Victoria Falls, Laurel, Md. http://www.centralparke.com/vf/ 
* Large (more than 750 homes): Province, Maricopa, AZ. (480) 214-0628 

Silver Awards 
* Small (up to 200 homes): Benson Woods Community, Middlebury, CT http://www.bensonwoods.com/ 
* Small (up to 200 homes): Shepard's Cove, Kittery, ME (207) 439-1911 
* Midsize (201 to 750 homes): Symphony Village at Centreville, Centreville, MD http://www.symphonyvillage.com/introset.html 
* Large (more than 750 homes): Colonial Heritage, Williamsburg, VA http://www.colonialheritageva.com/ 
* Large (more than 750 homes): Victoria Gardens, Deland, FL (386) 785-2700 
* Large (more than 750 homes): K. Hovanian's Four Seasons at Beaumont, Beaumont, CA http://www.khov.com/Home/CA/770/_Properties_Auth.htm?FlashVer=7

For a complete list of the Best of Seniors Housing Awards winners, please visit http://www.nahb.org/fileUpload_details.aspx?contentID=48591
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More Retirees Are Reentering the Workforce

While many retirees are still focused on leisure activities in retirement, a growing number are returning to the workforce. A key reason is the need for income. Alicia H. Munnell, a Boston College economist, says recent economic research generally indicates that about half of the baby boomers are not saving enough to maintain their current standard of living and will likely have to take a job to supplement their income. Americans are living longer, but every extra year of life, as well as every medical advance, comes at a cost. 

A recent study sponsored by Putnam Investments found that about seven million previously retired Americans have returned to work for pay after an average sabbatical of 18 months. Most are in a job requiring at least the same skill and experience levels as their prior position. 

The study, titled "The Working Retired," is the largest, most comprehensive report of Americans who retired and returned to work. It was based on a national survey of 1,726 retirees who are working, and whose average age was 61. The working retired represent 10 percent of the U.S. workforce age 40 or over. Of the respondents to the survey, 54 percent work part-time, 36 percent work full-time, and the remaining 10 percent are looking for work. Two-thirds said they planned to work following their first retirement. 

In aggregate, the working retired are an educated and high-income group. The average household income of survey respondents, $87,000, is 60 percent higher than that of traditional non-working retirees, and the working retired are about twice as likely to have a college degree. 

Many retirees and those planning to retire are facing uncertainty over the future of Social Security benefits. According to government estimates the Social Security trust fund faces a shortfall of about $4 trillion in today's dollars. Even worse is the shortfall associated with Medicare over the same period -- estimated at around $30 trillion. 

There is great uncertainty surrounding financial resources for retirement. Investment losses and cuts in pension benefits have hurt retirees in the past and are likely to do so in the future. Many Fortune 500 companies have frozen pension plans for employees, saying they cannot afford them. When this happens, employees stop accruing further benefits and many are left to shoulder the additional burden themselves. 

If a shortage of younger workers emerges, as many demographers expect, the job market may readily absorb more older people. But for now, finding a full-time job later in life can be difficult. Those who have not saved enough for retirement need to make sure they will have marketable skills.
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Increasing Number of States Seeking to Attract Retirees

Marketing programs by states trying to recruit retirees by promising an affordable paradise within their borders are on the increase. States such as Alabama, Florida, Louisiana, Mississippi, West Virginia and Wyoming have taken note of the impending retirement of the post-World War II population bulge and are ready with Web sites, guidebooks and tax breaks to try to lure well-off retirees to relocate. Texas will begin a program in the spring of 2006. 

While retired people tend to pay less in income taxes and demand more taxpayer-supported services such as health care after they retire, those with the wherewithal to relocate are a different breed and can be an economic boon for states, researchers say. More than half of migrating retirees in 2004 reported incomes over $60,000, and 25 percent had incomes over $100,000, according to U.S. Census data. For the first time the oldest of the baby boomer generation can make penalty-free withdrawals from retirement savings accounts. 

"Migrating retirees pay more in taxes than they will cost in services. That's the main reason states are interested. They can increase the tax base without increasing the tax rates," said Mark Fagan, a professor at Jacksonville State University in Alabama and an expert in retiree recruitment. 

A higher percentage of baby boomers are planning to relocate than did previous generations, Fagan said. Affluent seniors are like permanent tourists in their new states, enriching communities and bringing up the standard of health care and services, Fagan said. Overall, baby boomers will wield $2 trillion in buying power by 2007, according to AARP. 

Louisiana's retirement recruitment Web site, "Retire Louisiana," boasts a list of Top Ten reasons for retiring there, with No. 1 being the cost of living. The state has a 4 percent sales tax and a personal income-tax rate that ranges from 2 percent to 6 percent. West Virginia pitches its proximity to retirees' home states so friends and family can visit. The state's site, "Retire West Virginia," features a map showing that the state is within a day's drive for 60 percent of the nation's population. 

People who will volunteer, start a second career, or work part-time are the target of Alabama's retiree recruitment effort. A public-private partnership, the Alabama Advantage Program, produces 30,000 copies of a magazine promoting places to live and provides an online "tool box" allowing comparisons of cities' cost-of-living and crime rates. In Mississippi the state retiree attraction program centers on 21 "certified communities" for retirement and is the focal point of their site. http://www.visitmississippi.org/retire/ 

The economic impact of retirees is so great that Florida Gov. Jeb Bush created a task force two years ago to try to regain the ground it has lost to other states in terms of retiree relocation. You can read its final report here.  Wyoming Gov. Dave Freudenthal (D) has held a series of economic planning sessions preparing for 2020, when the state is predicted to lead the nation in percentage of residents age 65 and over. Freudenthal calls retirees an untapped natural resource. 

Texas has passed legislation that creates a certified retirement community program to be administered by the Texas Department of Agriculture. The program is actually a marketing plan for rural communities in Texas to attract retirees and boost local economies.  

Many states advertise financial benefits to relocating. More than half the states with a broad-based income tax give exemptions to seniors. The largest breaks for seniors are, in order, Michigan, Kentucky, Georgia, South Carolina, Hawaii, Indiana, Idaho, Oregon Wisconsin, Connecticut and Illinois, according to a study by the Center on Budget and Policy Priorities. 

But income tax may not be the only consideration. Taken together with sales, gas, car and real-estate taxes, plus vehicle licensing and registration fees, the best states for retirees' pocketbooks are Hawaii, Wyoming, Delaware, Alabama and Louisiana, according to Bloomberg Wealth Manager's June 2005 ranking of wealth-friendly states. 

Bloomberg compared tax bills facing retirees with identical tax profiles and found the least tax-friendly retirement state was Texas, followed by Missouri, Minnesota, Illinois and Maine. 

But some believe attracting more retirees through tax breaks has downsides. Peter Francese, founder of American Demographics magazine and director of demographic forecasts for the New England Economic Partnership, said that New Hampshire's property-tax breaks have made it virtually free for seniors to live there, but that the influx of older people is only slightly offsetting younger people who are leaving. "The long-term economic consequences are serious. Property taxes will go through the roof to help pay for Medicaid and other expenses of having an aged population, and the economy will suffer when businesses start leaving," Francese said.
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New Retirement Communities Will Offer More Amenities

Many developers of active adult communities have already geared up for the first wave of baby boomers heading for retirement. They are designing communities with lots of the amenities that surveys have shown boomers are looking for and that will influence them in settling into a new community. Here are the top 10 according to the National Association of Home Builders. 

1. Walking and jogging trails are the most desirable amenity, with roughly half of active adults and older seniors (52 percent) saying the presence of trails would influence the home-buying decision. This number increases substantially for those with annual incomes greater than $75,000 (65 percent). 

2. Outdoor spaces, especially park areas, could influence the buying decision of about half of the active adult and older senior households (51 percent). A park area makes an even bigger difference with households planning to relocate to a suburban area (up to 55 percent) than for those who prefer a rural area (44 percent). 

3. Public transportation is a highly attractive amenity. Overall, 46 percent of all 55+ buyers would be influenced to move to a community based on the availability of public transportation. This number rises to 61 percent for those ages 75 and older. In addition, 52 percent of buyers with incomes of less than $15,000 noted that public transportation could be a factor in their decision. 

4. Open spaces are important to all seniors, more so than for other age groups. Around 46 percent would be influenced to move to a community by the presence of nearby open spaces such as park and recreation areas, playgrounds, land set aside by the builder or developer, and natural undeveloped land. 

5. Lakes are appealing to active adults, especially younger ones. In all, 44 percent mentioned lakes as key factors. That number dipped to 37 percent for ages 65 to 74 and 25 percent for 75 and older. 

6. Outdoor swimming pools also are important, but their appeal decreases with the age of residents. Around 30 percent of survey respondents preferred an outdoor swimming pool, but this number drops to around 25 percent for older seniors. 

7. Security guards at the gate were mentioned by 26 percent of respondents. However, only 16 percent considered a card-operated gate as a key factor. 

8. Clubhouses were mentioned by 24 percent of respondents. That number rises dramatically for 55+ buyers with incomes greater than $150,000. 

9. An exercise room was a factor for 21 percent of respondents, illustrating the importance of health and fitness among 55+ buyers. 10. Business centers are desired by 19 percent of survey respondents.
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