EconSouth (Third Quarter 2004)
Paradise Found (or Lost)?
The tide of older Americans moving into the Sunshine State is rising. While the newcomers bring affluence, policymakers are confronting the issues caused by their rapidly swelling ranks.
Located off Interstate 75 near Ocala, the Villages of
Florida is an archetype for one of the hottest trends in
retirement: the active adult community. Some 45,000 people
call the Villages home, but only people 55 and older can
live there. They are lured by the sales pitch of a hometown
lifestyle in the sun that involves driving golf carts to
various leisure activities, including golf, tennis, and
In many ways, the booming Villages community—whose growth belies its humble origins in 1983 as a small mobile home park—parallels Floridas swift transformation in recent decades from a land of orange groves and sleepy towns into an economic powerhouse in the sand. As the states population swells, Florida has enjoyed rapid growth and an influx of wealth as it grapples with the problems that accompany such changes: overcrowding in some areas, compromised environmental quality, and rising health care costs.
Floridas fast growth
Floridas population increased by more than 3 million during the 1990s to nearly 16 million, an increase of 23.5 percent, according to 2000 U.S. Census data analyzed by the Federal Reserve Bank of Atlanta. During the same period, the U.S. population grew by 13.2 percent.
Moreover, because of Floridas famously agreeable climate, the character of growth in the state has been unlike growth anywhere else in the nation. The state has a moderate rate of natural population growth by birth, and the percentage of residents who were born there is low: 32.74 percent, a statistic that contrasts sharply with the 60 percent of the national population who reside in the states in which they were born. Floridas population growth is notable for its massive rate of in-migration and the relatively high average age of this population. In 2000, more than 22 percent of Floridas population was 60 or older, compared with 16.3 percent for the United States as a whole. This figure has held steady in Florida, where 23.6 percent of residents were 60 or older in the 1990 Census. Moreover, the state is becoming grayer as people live longer: Floridas population over age 80 increased from almost 4 percent in 1990 to more than 4.6 percent in 2000, whereas 2.8 percent of Americans are over 80.
Migration into Florida is expected to gain momentum as the baby boomer generation, born between 1946 and 1964, moves into the active adult demographic range. By 2015, 77 million Americans will be 50-69 years old, and about 45 million of this group are likely to relocate, according to Del Webb, a division of Pulte Homes that specializes in developing active adult communities.
Because the peak of the baby boomers just turned
50, youre going to have another 10 or 15 years with huge
numbers of young elderly moving into Florida, said
Stanley K. Smith, director of the Bureau of Economic and
Business Research at the University of Florida in Gainesville.
Because jobs have been available in Florida at a time of weak employment in many other parts of the country, the state has also become a destination for young families, many of whom end up providing services to retirees in one way or another. (This influx is apparent in the Florida population in the 30Ð49 age range, a group that increased by nearly 30 percent from 1990 to 2000.) As a result, in many parts of Florida, residents barely noticed the 2001 recession because of strong demand for services, especially in health care, education, and tourism.
Catering to the boomers
There is a strong business case to build communities for the glut of aging Americans who consider themselves young at heart. Fresh from their peak income years, many are financially secure. They rarely have children who are still in school, and they require fewer health care services than people over 70.
But too often developers overlook the harsh reality that baby boomers wont be active forever. As baby boomers age, the fun-loving communities now under construction may have to accommodate both nursing care and fitness centers.
Thirty years down the road, peoples retirement needs will change, said Andrew Kochera, a senior policy adviser for the American Association of Retired Persons Public Policy Institute. My question is, will the communities be able to change in terms of what theyre offering?
Perhaps no other state has an economy that depends on retiree influx as much as Florida. A vast service-based economy has developed to support these affluent new residents who demand housing, retail, recreation amenities, health care, roads, and other government services. Retiree migration is a growth industry, and its an impetus to other types of growth, Smith said.
William G. Smith, president and chief executive of Capital City Bank Group in Tallahassee and a member of the board of directors of the Atlanta Fed, described the influx of deep-pocketed residents as an amazing phenomenon that provides for a lot of stability.
|As they age, Floridians will increasingly strain federal Medicare programs for the elderly, and more and more people may draw from the largely state-funded Medicaid programs.|
In 2000, direct spending by Floridians who were 50 and older, along with the value of their federal health benefits, was estimated at $150 billion, according to the Destination Florida Commission, which was created by Florida Gov. Jeb Bush to explore Floridas future as a retirement destination. Because retirees dont typically use schools and they pay a large sales tax (Florida has no income tax), they represent a net benefit to the state of $2.8 billion in taxes. A healthy retirement industry is critical for the overall current and future prosperity and well being of the state of Florida, the commissions 2002 report states.
Shadows in the sunshine?
But money is not enough to offset a growing perception that growth has diminished the appeal of Florida as a retiree destination, a concern that prompted Gov. Bush to form the commission to study the issue. Some 59,000 mature residents left Florida in 2000, according to the report.
Apart from challenging lifestyle questions, difficult issues of dependency confront Florida policymakers. As they age, Floridians will increasingly strain federal Medicare programs for the elderly, and more and more people may draw from the largely state-funded Medicaid programs for low-income households.
Given these pros and cons, more longtime Floridians are ambivalent about the retiree influx and the economic growth that comes with it. For example, while they enjoy more options for shopping, they cope with worsening traffic.
Growth along central Floridas Interstate 4 corridor and elsewhere has sparked increasingly testy debates about growth.
A vocal antigrowth movement is winning adherents with an agenda to slow the pace of in-migration, ease the paving of rural land, and preserve as much of Floridas natural environment as possible.
States compete for retirees
As Florida grapples with sprawl and other social issues, neighboring states are boosting their efforts to gain a larger share of retirees. In part because of the migration of older Americans, the Southeast grew faster than the rest of the country. Between 1990 and 2000, population for the six Southeastern states increased 18.5 percent to nearly 42 million, or 15 percent of the country. By contrast, the United States as a whole, with a population of 281 million, grew approximately 13 percent during the same period. The states with the highest rate of out-migration included New York, Illinois, California, New Jersey, Michigan, Ohio, Pennsylvania, Massachusetts, and Connecticut.
Migration shifts are evident at Houston Springs, a new community now under
construction in Perry, Ga. About 150 miles north of the Florida line off I-75,
Houston Springs targets the same active adult demographic segment that many
Florida developments do. Developers plan to build 2,000 units (for 4,000 people)
on 494 acres with homes costing $100,000$400,000, prices that are lower than
those of comparable communities in Florida, especially along the oceanfront.
Middle Georgia is usually not viewed as a retirement destination,
said Jeff Moredock, managing director of Houston Springs. But the reality
is that many retirement destinations are saturated as well as expensive. When
you look at the folks who are moving, not all are terribly wealthy. A large
segment is middle income. Theyre not in a position to buy a beachfront
condo in Florida, so theres an opportunity for us here.
Officials in nearly every Southeastern state set goals and budget money to attract retirees, either through national advertising campaigns or through programs such as Mississippis Certified Retirement Cities. In that program, the state offers tax breaks and other incentives for residents over 65 who live in qualified communities.
Mississippi officials justify the tax breaks on the grounds that each retirement household brings to the state disposable income equal to 3.7 factory jobs. Each relocated retiree household brings an average of $320,000 in assets and has median annual income of about $33,000. Moreover, that money tends to stay close to home since some 90 percent of retiree income is spent locally for goods and services.
We are not about age restriction here, said Diana OToole, program manager for the Mississippi Development Authority. We are looking for people who want to be assimilated into our communities.
Retirement patterns change
Despite the backlash against growth and the increasing competition from other states, Florida remains a top destination for retirees. But, added Susan MacManus, professor of political science at the University of South Florida in Tampa, Were going to see a completely different pattern of retirement.
Having pretty well saturated the southeast coastal region of Florida between Miami and Palm Beach, more retirees are moving out of that part of the state than are moving into it.
But Florida is a big state; its diverse geography still offers plenty of open spaces that are attractive to older people. For example, the St. Joe Co. owns 825,000 largely uninhabited acres primarily in northwest Florida, including miles of oceanfront. The companys Web site said this land is planned for development that will eventually become as unique, special and evocative as Nantucket, Napa Valley or Santa Fe.
In the few years since the 2000 Census, the University of Floridas Smith said the states population growth actually gained momentum, and he projects this decades growth rate will surpass that seen during the 1990s. According to Smith, Floridas population is expected to increase by 3.4 million between 2000 and 2010, with an estimated 89 percent of that growth coming from in-migrants.
Homebuilder Del Webb ranked Florida as the top state baby boomers are most likely to consider moving to. And three Florida destinations made the list of the Retirement Living Information Centers Top 10 hot counties for active adult homebuyers.
The top destination in the United States is Floridas Sumter County, home to part of the Villages. The booming community, which sprawls across three counties and encompasses 25,000 acres, sees about 300 homes on average built each month. The Villages is about halfway to its capacity of 100,000 people, and in light of the projected growth in Florida, the developers have good reason to believe they will reach their final goal.
Said Professor Smith, I keep waiting for growth to slow down, and it hasnt happened yet.