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Retirement Communities & Senior Housing |
Retirement Living News July 2005 HEADLINES
(Click
on headline to read story) Archive
of Past Issues
New Retirement Communities Aging in America Poses Challenge for States State leaders are becoming increasingly concerned about the impending impact of America's aging population, but they're only slowly taking steps to meet the challenges that will arise when baby boomers start reaching retirement age in 2011. The impact is already apparent in Florida, West Virginia, Pennsylvania, North Dakota and Iowa -- states with the highest percentage of people over 65. But it will soon become more widespread. By 2030, nearly one American in five will be 65 or older. Fewer than one in eight are elderly now. An aging population will bring workforce shortages, new pressure on the nation's already shaky health care system and declining state revenues. These and other looming policy challenges are getting some notice at a series of state conferences being held in advance of a White House Conference on Aging scheduled for December, but so far there's little concrete action. "Very few states have done the kind of planning that would even let them become aware of what the needs are. I don't think there's any state that has implemented a comprehensive action plan. States, even more than the federal government, are faced with a lot of challenges in the immediate future, and they tend to focus on those," said John Rother, AARP's director of legislation and public policy. Income tax revenues are expected to decrease because seniors' incomes usually are lower. Sales tax revenue will decline because older people buy fewer taxable goods. As the percentage of older people increases, tax breaks enjoyed by the elderly in most states (such as Massachusetts' $500 property tax break for people 70 and older who earn less than $13,000 a year if single and $15,000 if married) will also take a bite out of tax revenues. Most affected will be states with the largest tax breaks for older people -- 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. The most obvious impact will come in state-provided health care. Health care costs of older people are significantly higher than for younger people. According to the Centers for Disease Control and Prevention, one of every three U.S. citizens aged 65 years and older falls each year. Older people are more likely to suffer depression. They are the largest consumers of high-cost prescription drugs as an age group. And a staggering 20 percent of newly diagnosed HIV cases occur in Americans over 50. Because many older people won't be able to drive, their health needs also translate into transportation planning challenges. Those who do drive pose another policy problem as they increase in years -- motor vehicle-related fatalities are higher among adults 75 years and older, compared with adults between 65 and 74 years of age, the CDC said. The aging of America will transform the economy. Already there is a shortage of workers to care for the elderly. Pension funds will be stressed with more payouts to retirees. Aging will also take its toll on state workforces where nearly 44 percent of employees are age 45 and older, according the National Governors Association. Some state leaders, such as Virginia Gov. Mark Warner (D), expect people to change their concept of retirement and find a part-time place in the workforce. States have only taken baby steps to prepare for such challenges. Nearly half the states have established
Aging and Disability Resource Centers so elderly residents can learn
about ways state government can help them. The National Association of
State Units on Aging -- http://www.nasua.org/,
a nonprofit association representing aging agencies, is urging the
federal government to fund the creation of even more of these centers. Advertisement What are the challenges of independent living? It doesn't always involve a crisis. It can be the result of the natural aging process. Over the years, a person's visual and other physical capabilities begin to change. Loneliness can also take its toll. While the vast majority of people over 65 are independent and living safely in their homes, the number of those needing assistance with routine personal tasks is rising as people live longer. If someone you care about is facing challenges living at home, take Interim HealthCare's free Independent Living Assessment at http://www.homestyleservices.com/go.asp?id=H4G6A
The 50-plus housing market is transforming the way builders design and develop active adult homes. Builders and architects say demand is growing for smaller communities with interesting streetscapes and high-end homes designed for individual lifestyles. When the first active adult communities were launched in the 1960s, many were large in size, located in traditional Sun Belt states and shared similar community format, design and amenities. However, builders recognize that today's buyers are open to change, demand a variety of choices and are more likely to consider a community close to home. These are some of the trends that emerged from the Building for Boomers & Beyond: Seniors Housing Symposium 2005 presented by the National Association of Home Builder's Seniors Housing Council at their recent meeting in Chantilly, Va. "For many buyers, the established concept of the active adult community conjures up images of boring, cookie-cutter neighborhoods with no opportunities for owners to express themselves, said Bill Feinberg of Feinberg & Associates a Voorhees, N.J.-based architect and designer. "Builders understand that the active adult industry is rapidly changing. A single formula will no longer meet the needs of mature consumers. Feinberg added that main street communities, exclusive enclaves and age-targeted villages within master-planned communities are gaining popularity. In terms of design, these youthful, individualistic buyers want diversity in street patterns and streetscapes, embrace natural features such as wetlands and open space, and favor smaller, more flexible communities. They may also not need a large community clubhouse, preferring more informal spaces that offer different experiences and a range of social and physical activities. While most active adult communities have traditionally been built in suburban locations, urban buyers command a greater share of the market, especially for condominiums, town homes and multifamily apartments. Many buyers are empty nesters who expect a high level of service, spend more on upgrades and are less likely to consider moving to an age-qualified community. "Boomers are buying
lifestyle," said Chuck Covell, president of Greenbelt, Md.-based
Bozzuto Homes. They crave a sense of lifestyle when buying a new home.
He noted that boomers will continue to work in some capacity, with
many
trading their primary careers for a part-time job that is more like a
hobby. Covel said builders must include high tech offices and media
centers in active adult homes to appeal to these buyers who see
themselves working well past the traditional retirement age. He added
that they also want first floor living space, including a luxurious
master suite and bath, and a high-end kitchen. Louisiana Seeks to Attract Retirees Louisiana has launched an aggressive marketing campaign to interest retirees in moving to the state. The state sees them as a low-cost source of economic development since they bring large disposable incomes and make few demands on community resources. Lt. Gov. Mitch Landrieu added that retirees also improve a community's quality of life. The plan is to market Louisiana as a preferred choice for retirement in an effort to retain the retirees it has and attract new ones thereby improving the economic climate statewide. The Louisiana Retirement Development Commission has set up a Web site - http://www.retirelouisiana.org/ -- which allows consumers to search for communities and developments by region and amenities, such as golf, waterfront living, medical care, etc. The site also lists 10 reasons to retire in the state: cost of living, climate, lifelong learning, friendliness, outdoors, international influences, cultural, healthcare, food and shopping. The commission has designated parts of
the state as "Livable Louisiana Retirement Ready
Communities." These premier locations include traditional
neighborhoods and communities such as villages, towns, and cities, as
well as parishes and regions. It also has age-qualified and
age-targeted lifestyle developments that are based on an assessment of
senior-related services, businesses, and amenities. Retired Boomers May Continue to Work It is becoming clear that more Americans reaching their 60s and 70s are going to want to work, at least part-time. Researchers are finding that far from wearing people down, work can actually help keep them mentally and physically fit. Many highly educated and well-paid workers -- lawyers, physicians, architects -- already work to advanced ages because their skills are valued. Boomers, with more education than any generation in history, are likely to follow that pattern. And today's rapid obsolescence of knowledge can actually play to older workers' advantage: It used to be considered wasteful to train people near retirement. But if training has to be refreshed every year, then companies might as well retrain old employees as well as young ones. Another important factor is that high-level work is getting easier for the old. Thanks to medical advances, people are staying healthy, enabling them to work longer than before. Fewer jobs require physically demanding tasks such as heavy lifting. And technology -- from memory-enhancing drugs to Internet search engines that serve as auxiliary memories -- will help senior workers compensate for the effects of aging. "Assuming that the improved health trends continue, boomers should be able to work productively into their late 70s" if they choose to, says Elizabeth Zelinski, dean of the Leonard Davis School of Gerontology at the University of Southern California. To keep older workers in the workforce the government and businesses must discard the outdated rules, practices, and prejudices that prematurely retire people who would prefer to keep working. In many corporations, there's an unspoken assumption that older workers are much less capable than their younger counterparts. So in addition to ensuring that older workers get their fair share of training, CEOs may also need to directly confront unintended age discrimination. Society will also have to grapple with the tricky question of how to change the Social Security system to suit an aging but healthier population. A balanced approach might be to increase the Social Security retirement age at a more rapid clip while beefing up the Social Security disability program -- which now covers 8 million disabled workers and dependents. This optimistic vision of aging in
America stands in sharp contrast to the conventional wisdom, which
looks ahead with dread to the 60th birthday parties of the first
boomers in 2006. Pessimistic pundits expect that boomers will retire
in droves soon after hitting 60, as their predecessors did, while
those who do keep working will dial back to less challenging and less
productive jobs. "This explosion in the number of elderly
Americans will place an unprecedented economic burden on working-age
adults," say investment banker Peter G. Peterson in his book, Running
on Empty. Estates Taxes on the Minds of Many State Legislatures Estate taxes are alive and well, and where you live and die now can make a big difference in your tax bill. If you were to die this year, you would have to pass on more than $1.5 million to nonspousal heirs to trigger the federal estate tax. Transfers to spouses are not taxed. In the years 2006 through 2008, the exemption is $2 million. By 2009, the amount you can shelter from the Internal Revenue Service is $3.5 million. The federal estate tax disappears completely in 2010 only to begin again in 2011 at $1 million. The Bush administration wants to eliminate the tax permanently while others want to set the exemption higher, perhaps at $3.5 million. The federal tax legislation passed in 2001 included a phaseout of the federal estate tax, culminating in 2010. On a much faster track, the legislation repeals over four years - 2002 through 2005 - the federal estate tax credit to which state estate taxes are tied. In most states, estate and inheritance taxes are designed in such a way that states face either a full or partial loss of estate tax revenues as this credit is phased out. The states now have a dilemma: stay tied to the federal system and watch their estate tax revenues fall to zero, or start collecting their own estate tax dollars - and risk having wealthy retirees flee to tax-friendly states. A number of states have already taken action to avert this loss by "decoupling." Decoupling means protecting the relevant parts of their tax code from the changes in the federal tax code, in most cases by remaining linked to federal law as it existed prior to the change. People who live in decoupled states may be facing a higher estate tax bill, or taxes on smaller estates, than people in states that remain tied to the federal system, such as Florida, Nevada and Alabama. * Eighteen states and the District of Columbia have retained their estate taxes after the federal changes. Of these, 16 states - Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Ohio, Oregon, Rhode Island, Vermont, Virginia, and Wisconsin - and the District of Columbia decoupled from the federal changes. Two states - Nebraska and Washington - retained their tax by enacting similar but separate estate taxes. * Of these, 13 states acted to decouple from the federal changes. Illinois, Maine, Maryland, Massachusetts, New Jersey, Rhode Island, and Vermont enacted legislation linking their estate taxes to the federal estate tax as in effect before the 2001 tax bill. Minnesota, which passes a tax conformity package each year, explicitly elected not to change its estate tax to conform to the federal changes. North Carolina elected to decouple at least through 2005 but effective July 1, 2005, it plans to recouple. Wisconsin has decoupled through 2007. Nebraska decoupled by creating a separate state estate tax on estates that exceed $1 million based on the federal law before the 2001 changes. In 2005, Washington enacted a separate tax with a somewhat different rate structure that applies to estates that exceed $2 million after the state's original decoupling was nullified in court. Connecticut decoupled in June 2005 and will tax estates valued at $2 million or more, beginning at about 5 percent and topping out at 16 percent. * In addition, five states and the District of Columbia will remain decoupled unless they take legislative action. In five states -- Kansas, New York, Ohio, Oregon, and Virginia -- estate tax laws are written in such a way that the state will not conform to the federal changes unless it takes legislative action. Most states can decouple through
actions by the legislature. In a few states, there are additional
barriers to decoupling. For example, in California decoupling would
require a vote of the people, and in three states -- Alabama, Florida,
and Nevada -- constitutional provisions restricting the amount of
estate tax levied would likely need to be altered. For more
information on the debate over estate taxes, visit: http://www.responsiblewealth.org/
and http://www.atr.org/ |
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