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Attracting wealthy retirees becomes an economic development strategy
By Holly Fisher
Supplements Editor
“Affluent retirees welcome!” That could be the unofficial state motto as South Carolina realizes retiring is big business.
In the coming years, 76 million baby boomers will retire. About 20%—or 15 million—of them are expected to retire to other states. Many will have healthy financial portfolios, meaning states and local businesses can cash in on the economic benefits of retirees.
Those 15 million retiring—and relocating—baby boomers are “worth fighting for. It is worth attracting those people,” said Gene Warren, president of Thomas, Warren + Associates, a Phoenix-based consulting firm that helps cities attract retirees.
Warren is promoting the retirement community as an incredibly profitable economic benefit—an even greater benefit than attracting a new manufacturing plant or other large business.
An influx of retirees—particularly affluent ones—generates added property taxes, sales tax and consumer spending. More jobs are created and added services and amenities develop, Warren noted. At the same time, retirees don’t have children in the school systems. They also don’t compete for jobs, yet they demand goods and services.
South Carolina is working to attract the affluent retiree, and it seems to be working. Patrick Mason is co-founder of the Center For Carolina Living, which promotes the Carolinas as a place to “live, grow, do business and retire.” The center produces CarolinaLiving.com, an online guide to relocation and retirement in the Carolinas.
Mason said, based on surveys of tourists, about 150,000 people will move to South Carolina this year—and about 43% of them are over the age of 50.
Once people hit age 50, they start thinking about where they will be in 10 years, Mason said. They may still be working, but in their mind, they are thinking about what to do in 10 years. That’s when the second-home phenomenon begins. Normally, it’s the more affluent that can afford the second home or timeshare on the coast.
“That’s the group we’re chasing,” Mason said. “That’s the group we want. That’s the BMW-driving people who can afford the Kiawah home or the $500,000 home in Mount Pleasant.”
Florida has long been the place for retirees from the North and Midwest to spend their golden years. But, Mason pointed out, Florida has adopted a “no state taxes, ya’ll come” attitude that has resulted in some problems.
“It’s easy for a fireman from Long Island to live on a golf course in Jacksonville,” Mason said. “We have not taken that track. You get more here, but you pay more.”
One of the issues facing Florida, Mason noted, is the overwhelmed Medicaid system. So much of its older population qualifies for Medicaid, leaving Florida residents to pay for 43% of those people’s medical costs.
Yet the federal government pays for all Medicare costs for senior citizens, Mason said, so it makes sense to attract a more affluent group of retirees who won’t drain the state’s Medicaid system.
That’s not to say less affluent and middle class retirees won’t decide to retire in South Carolina. The best tactic, Warren advised, is for cities to attract the affluent retirees who will offset some of the added costs of the less affluent newcomers.
“It’s a business positioning strategy,” Mason said. “Let’s aim for the Kiawah types, knowing we will get some Summerville types, and all of them will be happy.”
The numbers make sense, so the next issue is how best to draw the wealthy retirees to the Lowcountry. People retire to areas for different reasons and based on their individual preferences and tastes, Warren said.
First, determine a city’s strengths and weaknesses and what draws people to that community, Warren said. Then do some targeted advertising to reach those people most likely to be drawn to a place like South Carolina.
“We’re finding the baby boomer is not necessarily retiring to places their parents did but instead what fits their interests,” Warren said. “Traditional golf and shuffleboard is not the norm anymore; they are much more active.”
Holly Fisher is the supplements editor for the Business Journal. E-mail her at hfisher@charlestonbusiness.com.
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