Retirees Boosting States’ Rural Economies

By: - March 4, 2006 12:00 am

As members of the baby boom generation start searching for the perfect place to spend their golden years, states-especially ones not typically considered havens for senior citizens-are touting their quiet communities and unblemished surroundings in hopes of grabbing a share of the biggest retirement bonanza in world history.

Some 77 million strong, boomers-born between 1946 and 1964-have been trendsetters throughout their lives, and their retirement choices are expected to be no different. Instead of beating paths to Florida and Arizona, aging boomers already are opting for unconventional, far-flung U.S. locations, primarily in the South and West.

State and local governments-vying for their share of the great boomer migration-are developing innovative ways to attract and keep this healthy, wealthy and relatively young new breed of retirees. Their hope is that boomers-with their enormous wealth and diverse talents-will breathe new life into rural communities, many of which are slowly declining as younger workers move to metropolitan areas.

Small towns-as opposed to big retirement enclaves-are a good fit for the new retirees, sociologists say, because they’ve shown a preference for staying active, living in mixed-age communities and escaping the hubbub of urban and suburban life.

Seizing this emerging economic opportunity makes sense, but some worry that states-too eager for young retirees’ cash-won’t be prepared to provide the medical and social services their new senior citizens will need as they grow older. Still, economists say most boomers have savings stashed for their old age, and demographers point out that, in the past, many senior citizens moved closer to family when they became too frail to enjoy the surroundings they chose for early retirement.

This year is the beginning of an 18-year demographic bulge in which about 4 million people-20 percent more than in previous years-will leave their full-time jobs each year and either stay put or purchase a retirement home somewhere else. Economists predict that at least 400,000 boomers a year-with an average of $320,000 to spend on a new home-will choose greener pastures beyond their state borders.

At stake is $2.3 trillion in annual spending power-more than half of total U.S. consumption-held by a diverse crowd of highly educated retirees who are more likely than their parents to relocate later in life.

Better than new businesses

For rural states and small towns near major metropolitan areas, attracting retirees is a much better choice than attracting businesses, says economist and consultant Gene Warren. Retirees spur economic development through the mailbox, because their income arrives in the form of Social Security, pension and other savings checks, and they require very little in return.

On average, retirees-especially those with the wherewithal to relocate-are wealthier and pay more taxes than younger people, require fewer social services, create jobs in medical and other service industries, and often volunteer in the community or start small businesses.

That’s why small Southern towns such as Gadsden, Ala., Warm Springs, Ark., and Oxford, Miss., want to make sure their communities show up on retirees’ potential destination lists.

In the West, scenic towns are increasingly drawing active boomers, many of whom are retiring early and want to work part-time. As a result, small communities in Colorado, Idaho, Washington, Wyoming and other Western states are working with telecommunications providers-using cutting-edge wireless technologies-to deliver Internet services throughout the wide open spaces so retirees won’t be deterred from taking up permanent residence there.

Wyoming Gov. Dave Freudenthal (D) has taken an active role in ensuring that the state’s remote towns are prepared for an influx of boomer retirees, as well as local boomers who intend to stay. Wyoming, where about half the population already is more than 50 years old, is projected to become the third oldest state in the country by 2020.

Launching the Wyoming Boomers and Business Initiative right after he took office in 2002, Freudenthal has held workshops around the state to find out what is attracting boomers to Wyoming’s small towns and what the state needs to do to meet their future needs.

Southern strategies

Among Southern states, Mississippi has been a leader in initiatives designed to attract retirees, establishing a project in 1998– Hometown Mississippi Retirement -that supports small towns’ efforts to prepare for re-locating seniors by giving towns a state seal of approval if they meet certain criteria, such as adequate health care facilities, recreational and cultural opportunities and low crime rates.

The Magnolia State also helps local officials market their communities and keep retirees happy once they relocate.

The program-which costs the state $200,000 per year-has netted nearly 7,500 additional retirees, some $194 million per year in additional tax revenue and 2,320 jobs per year, according to a 2005 study by Mississippi State University. The program offers up 22 certified communities throughout the state for retirees interested in Southern charm and small-town living, and program manager Diana O’Toole said she doesn’t expect recent hurricanes to slow the flow of retirees.

Louisiana has a similar retirement promotion program, and Texas passed a law last year committing to a statewide marketing effort to attract boomers to its small towns.

Alabama-a largely rural state with a small coastline-has gone even further. Realizing the state would have to make an extraordinary effort to get on the tourism and retirement charts, a state investment group started pumping millions into golf courses and resort hotels in the late 1980s to attract tourists who they hoped would consider a permanent move to the state after retirement.

“If you’ve never vacationed in rural Alabama, you’re not likely to want to retire there,” says Mark Fagan, a sociologist at Jacksonville State University in Alabama. “Alabama had an image problem,” he said. “People were driving straight through the state on their way to New Orleans or Florida and never stopping.”

To get people to stop, the state pension fund launched a mammoth development project– the Robert Trent Jones Golf Trail -which included 18 public courses and numerous hotels. The recently completed project has returned healthy dividends for the state’s employees and teachers and boosted tourism from $2.5 billion in 1990 to more than $7 billion last year.

The fund- Retirement Systems of Alabama -also invested $4 billion in broadcast stations and newspapers, receiving $50 million a year in free retirement and tourism advertising as part of the deal. “That’s more than any state spends on retirement and tourism promotion,” Fagan said.

It is well known that people tend to retire to the places where they vacation, says William H. Frey, a demographer with the Brookings Institution. “Retirement is like permanent tourism,” he says.

Taking a cue from Alabama, Tennessee is developing a series of public golf courses using state park land and funds, Louisiana is building a network called the Audubon Golf Trail , and Arkansas is promoting its existing golf courses and retirement communities.

States could do more

Despite these ambitious projects, Warren says states aren’t doing enough. Instead of leaving retirement promotion to developers and local authorities, Warren encourages states to jump on the boomer retirement bandwagon as quickly as possible, before communities in other states become established and talked about. “It’s like (the) developing countries: If they don’t start early, they’ll be playing catch up,” he says.


Most state development officials concentrate on wooing businesses. But Warren says rural and exurban communities seeking growth and job creation would do better to attract retirees first and businesses later.

Because young workers tend to leave small towns to find work in metropolitan areas, rural communities often lack the workers needed for new businesses. When seniors move in, they create one job for every 1.8 retirees, gradually luring young workers back and ultimately making the communities more attractive to businesses, he explains.

Although the majority of states offer some tax breaks for seniors, the reductions don’t make a dent in the overall tax revenues contributed by retirees, he says. But to attract businesses, states almost always end up offering huge tax abatements, which hurt local economies in the long run, Warren says.

Georgia, North Carolina and South Carolina, with their long coastlines and major tourist attractions, already have sizeable shares of the retirement market. Even so, officials in those states are considering state-backed efforts to help small inland communities attract a share of the retirement boom.

Likewise, in Arizona-where most retirees live in huge developments surrounding Phoenix-state officials are helping remote communities attract retirees who are fed up with rising housing prices in the state’s metropolitan areas.

Worries over wooing elders

Still, some state and local politicians are reluctant to promote their towns as retirement havens because of long-held beliefs that seniors are a drain on resources. It is commonly held, for example, that seniors are less affluent than younger residents, require more medical and social services, and tend to vote against public school improvements and other issues affecting younger generations.   Nothing could be further from the truth, Warren maintains.

Mature Floridians brought more revenue to the state in the year 2000 than they cost in services, and their per-capita income was 25 percent higher than citizens ages 18 to 49, according to a report from the Florida Department of Elder Affairs. In the same year, Floridians ages 50 and older spent $135 billion-almost $12.5 billion more than younger adults.

A similar economic study in Arizona showed equally positive benefits.

As for generational conflicts, Susan MacManus, a political scientist with the University of South Florida, says that boomers are retiring earlier and often have kids who are either in college or have young families.

Known as the sandwich generation, many boomers approach retirement while still caring for their parents and kids. They care about children and education and the elderly, she said, and typically vote for the greater good of the community.

More than enough boomers

About five years ago, both Florida and Arizona began to fret as they watched their retirement market shares slip. They commissioned studies and considered state promotional campaigns. But because retirement housing is a big business, state officials abandoned the politically controversial projects because of concerns that spending public funds to promote retirement would be perceived as helping land developers.

In spite of shrinkage in their market shares, the top three retirement destinations-Florida, Arizona and California-have nothing to worry about, says Peter A. Morrison, a demographer with the Rand Corp. The absolute number of retirees migrating to those states continues to go up, he points out, noting that the sheer volume of boomer retirees will create enough demand to sustain the traditional retirement states and boost rural economies at the same time.

As the boomer retirement floodgates open, “what has seemed like a trickle of retirees to out-of-the-way towns and communities will suddenly become meaningful,” Morrison says.

States that experience sharp spikes in migrant retirees and boomers aging in place won’t necessarily gray faster than other states. Retirement migration often goes hand-in-hand with overall population growth, Frey says. Qualities that attract retirees often attract younger people as well. Nevada is a prime example.

With its vibrant economy and relatively low cost of living, Nevada is attracting older people who are cashing out of their homes in high-priced California cities and moving across the border where they can live like kings for much less money. In many cases, their children follow once they learn about job opportunities in the state. In reverse, young people move to the state seeking jobs and later ask their retirement-aged parents to join them.

Staying close to family and other trends

As a recent survey by the Pew Research Center indicates, family members-as much as ever-tend to live close to one another. Despite common claims that America has become a more mobile society, the Center found that roughly the same percentage of families live close to one another now as in the late 1980s when Gallup conducted a similar survey.

( is a project of the Center, a nonpartisan “fact tank” that provides information on issues, attitudes and trends shaping America and the world.)

Another hallmark of the new retirement wave is that boomers are working longer, which has resulted in a significant migration of older urban professionals to nearby small towns, allowing them to stay close to business contacts and adult children while establishing a new life in quieter surroundings.

This phenomenon explains an exodus of Boston area residents to small towns in New Hampshire and a steady flow of boomers to small towns that have cropped up around Atlanta.

Another migration of city-weary and equity-rich boomers is occurring between the Los Angeles area and communities surrounding Las Vegas and Reno, Nev.

Several other boomer retirement trends have emerged: More retired women are relocating on their own, and blacks in the Northeast are retiring to Southern states, often returning to childhood hometowns. Some early boomer retirees are settling in college towns such as State College, Pa., and Boulder, Colo.

Even small trends such as these will become significant over the next two decades as hordes of boomers choose retirement destinations and grow older, says Charles Longino, a demographer with Wake Forest University in North Carolina.

The percentage of people who move to another state upon retirement has remained consistently low-under 5 percent-over the last 50 years.

While some experts think more boomers will relocate than those in previous generations, even if the percentage of people who move across state lines remains the same, the absolute numbers will be enormous, he says.

Shifts in retirement destinations

In the 1960s, Florida was already the No. 1 retirement destination, and New York, New Jersey, Illinois, Pennsylvania, Ohio and Michigan were in the top 10.

Retirement to the Sunbelt would come later.

Longino explains that the major limiting factor for mass retirement migrations was, and still is, housing. That’s why the large industrialized states with growing populations and plenty of homes were also the major retirement destinations. People vacationed close to where they lived and tended to return to those places upon retirement, he said.

For example, New York, Pennsylvania and New Jersey residents retired to the Jersey Shore, Long Island or the Poconos, and workers in Michigan and Illinois resettled in resorts along the Great Lakes and the woods of Michigan’s Upper Peninsula.

Over the four decades since the 1960s, Florida and California remained No. 1 and No. 2, with Arizona moving up to third place in the 1970s and overtaking California in 2000. It wasn’t until the 1980s that Southern states ranked in the top 10, as North Carolina and later Georgia became popular retirement destinations. The Southern states now have a firm foothold in the retirement market, Longino said, particularly with boomers choosing a broader range of retirement spots.

Longino, a Southerner himself, said “the South was not a very hospitable location for Northerners when I was a child, and Northerners thought all white Southerners were rednecks,” offering a possible explanation for why the Sunbelt migration did not occur until recently.

It’s important to watch where the boomers are choosing to retire and how they behave after retirement, Longino said. “We’re going to need to know when to build retirement communities and when to build nursing homes,” he said.

Contact Christine Vestal at [email protected]

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