Retirement Living News

July 2006

HEADLINES  (Click on headline to read story)

• Future Retirement Communities May Have a Retail Center
• Survey Finds Most Baby Boomers Eager to Relive College Days
• Many Households "At Risk" of Falling Short in Retirement
• AARP Survey Finds Few and Small Inheritances Are Bust for Most Boomers Expecting Help in Retirement
• Valuation Report Finds Housing Overvalued in 
  Many Markets -- and Getting Worse

Archive of Past Issues                          New Retirement Communities

NEWS STORIES

Future Retirement Communities May Have a Retail Center 

The traditional clubhouse is on its way out as a marketing strategy for selling active adult housing, and a "casual, cozy and convenient" retail district providing products and services targeted to the aging baby boomer is on its way in, according to Rick Abelson of William Hezmalhalch Architects based in Santa Ana, Calif. He told the National Association of Home Builders "Building for Boomers and Beyond" housing symposium held in April in Phoenix that bringing the retail and residential worlds together in a way that supports "how active adults live in their daily lives just feels right." 

His company has created a brand -- Active Adult Retail® -- as a prototype for what will grab buyers in age-targeted, age-restricted or aging-in-place communities, and the clubhouse as it is used today is not on the agenda. 

"With its unprogramed activity rooms, token retail, high operating costs and nonexistent revenue," Abelson said, today's clubhouse "no longer leverages new home marketing strategies. The upgraded version offers more amenities, requires more staff, generates insignificant revenue and takes up to 14 years to show a return." 

The property owner needs to understand what active adults are seeking, Abelson said. Of the many things that buyers are looking for in adult communities, retail and restaurants on-site or nearby are the hardest to find. He said the retail area should also provide a place for hanging out and socializing. 

Abelson recommended making service deliveries from the front and not the back of stores. "Shopping now is very disconnected," he said. "Each shop only has one thing you need and there is a lot of wasted time." The challenge for the developer is to "cherry pick the services and products that active adults need and position it for the community." 

While the clubhouse can be transformed to serve this purpose, Abelson has his sights on a retail village set on 11-19 acres, about the size of a conventional strip center. Depending upon what else is already in the existing neighborhood, a good mix might be 40% retail, 30% food and entertainment and 30% health, finance and education, he said. 

Possibilities for the retail center include: 

• A department or general store, about one-third the size of a typical grocery store that focuses on the needs of older adults. 
• An active adult pharmacy with a self-check diagnostic room and services that will help seniors develop a closer relationship with their pharmacy.
• Three small bank branches.  
• Ground-level special retail that might include a cooking and kitchen store, a pet store, a bookstore, and a store with assistive equipment, such as hearing aids. 
•  A bed and breakfast is also an option, providing a place where friends visiting from out of town can stay, says Abelson. 
• A dinner and movie club can provide an alternative to the standard Cineplex. Two or three restaurants and a coffee shop can round out the mix.
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Survey Finds Most Baby Boomers Eager to Relive College Days

Last June we did a story in our newsletter about retiring to a college-linked retirement community and urged our readers to participate in a survey sponsored by Campus Continuum of Newton, Mass. The results are in. 

A total of 233 respondents age 55 -75 say they like the idea of living on a college campus in their retirement years. Fifty-eight percent said they'd like to live on or near a small college town campus while 62 percent said they would be "very interested" in taking courses together with traditional college students. Forty-six percent said they'd prefer to own their residence in a college-affiliated community.

The survey was designed to gauge the level of interest in the concept of living in "a community of active life-long learners affiliated with an academic institution," according to Campus Continuum Managing Director Gerard Badler. He said the survey results will help the firm determine sites for campus communities which it will build and operate. 

"In 20 years, there will be 70 million people over age 65 in the U.S. and retirement lifestyles will be radically different from today," says Badler, who has spent the past few years crisscrossing the country meeting with college administrators and boards. He reports that the idea is gaining popularity. 

Among other survey highlights from respondents were the following: 

• While 58 percent said they'd prefer a small college town, 37 percent prefer a suburban area; 28 percent prefer a city. (Note: Respondents were allowed to choose more than one location preference). 
• Responders are willing to move further distances from their current location than is typically reported in other retirement relocation surveys. 46 percent are willing to move more than 100 miles to their preferred college destination; 27 percent would move more than 500 miles. 
• More than one-third expressed interest in retiring to a university with which they had no prior affiliation (as an alum, faculty member, donor, etc.). 
• 45 percent say the maximum desirable distance of the community from the main campus is 2 miles; 25 percent indicate 2-5 miles; 22 percent indicate 5-10 miles is okay. Only 2 percent insist that the project be located directly on campus. 
• 64 percent are very interested in volunteering on campus (tutoring, mentoring, part-time lecturing, museum guide). 
• 52 percent are very interested in volunteering off campus (elementary schools, libraries, hospitals). 
• Asked, "At what age would you seriously consider moving into a college retirement community" the most frequent responses were: 61-65 (32 percent), 66-70 (23 percent), and 56-60 (16 percent). 
• 58 percent of respondents have a Masters degree or higher level of education. 

Badler says the concept is a win-win-win: There are numerous advantages for people 55+ who choose to live on or near campuses, for the colleges, and for the surrounding communities at large. 

The survey is ongoing. If you would like to participate, go to http://www.campuscontinuum.com/survey.asp.
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Many Households "At Risk" of Falling Short in Retirement

A new measurement of Americans' finances shows that almost 46 percent of working-age households - given the current savings ranges and changes in pensions and social Security - are at risk of being unable to maintain their standard of living in retirement. 

According to a study by the Center for Retirement Research at Boston College released last month, the evidence now supports what economists have been warning for years: that many Americans are doing far too little to prepare financially for retirement and are unaware of how their lives might change as a result. 

Alicia H. Munnell, the center's director and one of the authors of the study, says that retirement is going to get tougher for people over time, and they don't know it. Americans weaned on post-war affluence have come to expect an extended period of leisure at the end of their work life. And, indeed, the majority of today's retirees are able to afford a decent retirement. However, this group is living in a "golden age" that will fade as Baby Boomers and Generation Xers reach traditional retirement ages in the coming decades. This gloomy prediction reflects the trend towards longer retirements and likely declines in retirement incomes relative to pre-retirement earnings - known as replacement rates. 

Because many Americans appear unaware of these disquieting trends, the center has developed the National Retirement Risk Index. The Index measures the share of working-age households who are at risk of being unable to maintain their pre-retirement standard of living in retirement. 

The findings may understate the size of the problem. Dr. Munnell said. That is because the research makes several conservative assumptions. It assumes people will retire at age 65, when in fact many Americans retire earlier. It also assumes that families will annuitize their wealth and take out a reverse mortgage on their home for additional financial support. 

But the situation is not hopeless. If people choose to work longer -- even just two years -- and save 3 percent more, they can substantially improve the outlook for their retirement security. The center plans to update the index every six months. The research was funded by Nationwide Mutual Insurance Company in Columbus, Ohio. To view a copy of the nine-page report, go to: http://www.bc.edu/centers/crr/issues/ib_48.pdf
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AARP Survey Finds Few and Small Inheritances Are Bust for Most Boomers Expecting Help in Retirement

Despite forecasts of inheritance windfalls for Boomers, a new AARP study shows that, as of 2004, an overwhelming majority (80.8 percent) of those born between 1946 and 1964 had yet to receive an inheritance. The study also found that only a small percentage of Boomers - 14.9 percent - said they expected to receive an inheritance in the future, suggesting that for most, inheritances will not represent a boon for their retirement security. Furthermore, for the fortunate Boomers who had received inheritances by 2004, the median amount received was only $49,000 (adjusted to 2005 dollars). 

"Many of us dream of an inheritance in the same way we think about winning the lottery," said John Gist, Associate Director of AARP's Public Policy Institute. "The harsh reality is that for all but the lucky few, an inheritance is a pipedream. "This sobering report makes it clear that in the absence of such a windfall, Boomers need to look toward Social Security -- combined with savings and, in some cases, pensions - as the true keystones for peace of mind in their retirement years," Gist added. 

AARP's study - titled "In Their Dreams: What Will Boomers Inherit" - is a follow-up to an earlier study, and is based on an examination of the Federal Reserve's 2004 Survey of Consumer Finances. The Federal Reserve information derives primarily from interviews with more than 4,500 families that are conducted every three years. AARP has broken down the findings under three groupings: Boomers, pre-Boomers (born before 1946) and post-Boomers (born after 1964). 

The latest AARP research findings come amidst continuing projections by some of huge dollar transfers through inheritances to Boomers and the other cohorts. Some estimates have been as high as $41 trillion. A projection of $7 trillion for Boomers alone has not been uncommon. 

However, AARP has found that the value of inheritances held by Boomers thus far has totaled only $2.l trillion in 2005 dollars. 

Some of the other highlights of the report include: 

• In contrast with the median inheritance of $49,000 for Boomers, pre-Boomers had median inheritances of $70,000 and post-Boomers, $24,000. 
• Boomer families in the bottom 40 percent of net worth will inherit just under 20 percent of inheritance dollars, while Boomer families in the top 40 percent will receive over 60 percent of all inheritance dollars. 
• For those nearing retirement, a large inheritance might play a role in the timing of their retirement, but only the most affluent are likely to receive such inheritances. The study concluded: "In general, inheritances are not likely to rescue most Boomers if they have failed to prepare for retirement on their own." 

To read the survey results, go to: http://www.aarp.org/research/reference/boomers/dd139_inherit.html
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Valuation Report Finds Housing Overvalued in 
Many Markets -- and Getting Worse

The first quarter report from Global Insight/National City Housing Valuation Analysis shows 39 percent of all single family housing valuation in America is extremely overvalued and at risk for a price correction. The number of markets deemed "extremely overvalued" increased by 11 percent to 71 metro areas in the first quarter of 2006, up from 64 metro areas in the fourth quarter of 2005. The most overvalued markets continued to show the strongest price appreciation, while the most undervalued continued to experience the weakest price appreciation. 

Of the 50 most overvalued markets in the first quarter of 2006, the average pace of price appreciation was 10.1 percent. Conversely, in the 50 most undervalued markets, price appreciation was just 2.7 percent. California and Florida continue to have the highest concentration of overvalued markets, accounting for 17 of the top 20 most overvalued metro areas. The present 39 percent of overvalued markets is dramatically higher than it was as recently as the first quarter of 2004, when only 1 percent of the housing market was considered overvalued. 

Jeannine Cataldi, senior economist at Global Insight, stated, "Although quarter-to-quarter price appreciation is slowing in most markets, a large imbalance remains. As appreciation rates slow, along with a reduced demand for housing in most areas, it is expected that this imbalance will gradually shrink."

The Global Insight/National City Housing Valuation Analysis examines the top 317 U.S. real estate markets, or 84 percent of the housing market, to determine what home prices should be, controlling for differences in population density, relative income levels, interest rates, and historically observed market premiums or discounts. Markets with valuation premiums above 34 percent were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 66 known local market price declines observed since 1985. 

The top 10 most overvalued markets in the first quarter of 2006 for single family homes are (percent over-valuation in parentheses): Naples, Fla. (102.6%); Salinas, Calif. (79.1%); Port St. Lucie - Fort Pierce, Fla. (77.4%); Merced, Calif. (77.0%); Bend, Ore. (76.4%); Stockton, Calif. (74.9%); Punta Gorda, Fla. (73.4%); Santa Barbara, Calif. (73.0%); Madera, Calif. (72.5%); and Riverside - Bernadino, Calif. (68.7%). 

To view the complete list, go to: http://www.globalinsight.com/gcpath/1Q2006report.pdf. Here you will find two tables. One with cities ranked alphabetically and the other by their valuation ranking. Some of the cities you will recognize as popular retirement destinations.

The study was prepared by Global Insight (Waltham, Mass.) and National City (Cleveland, Ohio) - under a joint venture arrangement that combines a statistical model originally developed at National City Corporation with data largely developed at Global Insight.
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