Insights for Attracting Baby Boomer Retirees
Think of a stream flowing through a large meadow. Unimpeded, the flow of the stream will remain fairly constant year to year. However, should beavers decide to dam the stream creating a pool of water behind the dam, it will temporarily reduce the flow of the stream. Eventually, enough water will build up behind the dam to cause it to rupture allowing the pent up water to rush downstream. This is analogous to what has been happening with retirees over the past 9 years.
Communities and housing developments attempting to attract retirees have generally focused on the number of people retiring each year, the flow of the stream, and especially the number who may relocate. However, as we come out of the current economic recession a more relevant statistic is the number of retirement age adults (age 55+) who have postponed retirement over the past nine years.
These people are analogous to the increasing water level behind the beaver dam. Sooner or later the desire to retire is going to outweigh whatever reasons have kept them from it and we are going to be faced with a flood of new retirees many of whom will want to relocate.
One problem, however, is counting the number of retirees age 55 and better. Because there is no well accepted definition of what it means to be retired, when talking about the number of retirees most people, including the U.S. Census, use a specific age, often 65. Using an arbitrary, specific, age to define retirement can misrepresent what is happening in the active adult market. A better solution would be to let people self-declare their retirement status. Fortunately, the U.S. Census provides a surrogate; it tracks labor force participation, which can be used as an estimate of the number of retirees.
Each of the most recent decennial Censuses (1990 and 2000) and every American Community Survey published during the past 7 years (2001-2007), have published statistics on the number of men and women in specific age cohorts who describe themselves as being in the labor force. Those in the labor force are classified as being employed or unemployed, thus those not in the labor force are presumably not working and not looking for work (as opposed to being unemployed). While not every mature adult who is not in the labor force is retired, it is undoubtedly a good indication of their retirement status.
Using this definition of “retired”, Table 1 (below) shows the population age 55+ as well as the number of retirees in the years 2000 to 2007 and the number not retired. Note that the population age 55+ grew by more than 11.4 million people (19.3%). On the other hand, the number of retirees grew by only a little more than 3.9 million people (9.7%) during these eight years while the number of people age 55+ waiting to retire grew by almost 7.5 million (40.1%).
The period between 2000 and 2008 was a time when the War Babies (those born between 1942 and 1945) and the Baby Boomers (those born between 1946 and 1964) were beginning to dominate the 55-64 age cohort, the age cohort during which their parents retired. With the exception of the latter part of 2001 and most of 2002, it was a period of great growth in the economy and personal wealth. Thus, the data suggests the delay in the age at which they retire, is more a reflection of the desire of the War Babies and Baby Boomers to continue their careers, not a financial necessity.
Although there is no statistical evidence yet to support it, it seems to be common knowledge that for the past year and a half (since the start of 2008) many people who had in the past delayed their retirement for non-financial reasons are now postponing retirement for financial reasons. As with the stream, for a while the dam will increase the size of the pool of water, but when the pool becomes large enough, it will overwhelm the dam and flood downstream areas.
It appears that this is the case with the active adult housing market. A relatively sizable number of people age 55+ have, for the past nine and a half years (since 2000), placed their retirement plans on hold. Now they are only waiting for some confidence that the economy is on its way to recovery before undertaking their retirement plans. People in this age cohort are still the wealthiest segment of society and thus are still able to afford their retirement dreams. When their confidence returns they will be the first to take advantage of the relatively affordable housing market and lead the way out of the housing slump. Thus turning an active adult housing bust into a boom.
– Gene Warren
| Year | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 |
| Population age 55+ | 59,150,202 | 58,292,787 | 59,943,880 | 61,501,745 | 63,542,924 | 64,882,334 | 68,809,233 | 70,569,665 |
| Population Retired | 40,509,287 | 39,255,377 | 39,607,016 | 39,941,988 | 40,922,113 | 41,189,516 | 43,780,707 | 44,450,610 |
| Population Not Retired | 18,640,915 | 19,037,410 | 20,336,864 | 21,559,757 | 22,620,811 | 23,692,818 | 25,028,526 | 26,119,055 |
| Percent Retired | 68.5% | 67.3% | 66.1% | 64.9% | 64.4% | 63.5% | 63.6% | 63.0% |
| Percent Not Retired | 31.5% | 32.7% | 33.9% | 35.1% | 35.6% | 36.5% | 36.4% | 37.0% |