Retired people are on the move. They’re going to resorts, towns and cities where their children and grandchildren live, or simply to locations with a lower cost of living. And they’re not just visiting – they’re staying.
This relocation is in sharp contrast to generations ago, when it was common for a person to be born, live and die all in the same community. This was the case for both of my parents and my wife’s parents.
But times have changed. Improved standards of living, better health and the increased mobility of their children have caused many households to reconsider where they live when they retire. The trend started in the 1980s and 1990s, took a break during the recent recession, but now has reappeared.
North Carolina has been on the receiving end of many of these “on the move” retirees. There are several reasons for this. We’re a state with a warmer and milder climate than many others – especially compared to states in the North and Midwest. Older households seem to tolerate heat better than cold; I know that has been the case for me. Plus, severely cold winters with heavy snow and ice can be especially dangerous for elderly persons who have experienced deterioration in their walking and balance.
North Carolina also has a lower cost-of-living – about 5 percent lower than the national average and even more compared to some of the big states of the Northeast. So retired households will find their dollar stretches farther in our state, especially for housing.
Then there’s the fact North Carolina has been one of the fastest growing states during the last three decades. Even in the recent four years as the economy has recovered from the Great Recession, payroll jobs have increased faster in North Carolina than in the nation. So for those retired households who are moving to states where their children work, there are more of those potential connections in our state today than in the past.
While the migration of retired households can be interesting as a social and demographic phenomenon, there also can be important economic implications. Attracting retired households can be a form of economic development. Broadly speaking, economic development occurs when “outside” money is brought in to the local area. Usually this is done by the local area making something – a product or a service – and selling it to an “outside” buyer. Thus, economic development occurs when the local farmer raises corn and sells it to a processor several counties or states away. But economic development also happens when tourists from other counties, states or countries visit – and spend money – at the local attractions.
When retirees move to a local area, they bring with them their savings, pension, Social Security and eligibility for the federal Medicare program. All these funds generate new spending and new jobs. Indeed, a study looking at the migration of elderly households to Southeastern states, including North Carolina, found a uniformly positive association between them and job growth, particularly for non-metropolitan or rural counties that had been struggling economically.
Another study examined what features of a local area were most attractive to retired households. Warm weather and amenities like golf courses, marinas and hiking trails led the list. Interestingly, areas with large commercial amusement attractions were not preferred by in-migrating retirees, and, overall, retirees preferred locations offering summer activities over winter activities.
There has, however, been one major concern expressed about efforts to bring retirees to a locality. Some call it the “gray peril.” The issue is whether retirees, who in a large majority of cases do not have school-age children, would support local public education funding. Without school-age children of their own, retirees may not see the need to support local taxes to pay for new or improved school buildings, teacher pay supplements and other educational programs. And, if local education is not supported, many worry about the consequences for economic improvement.
The current research suggests the “gray peril” does not occur. Careful studies show that elderly households – especially in rural areas – are just as likely to support educational funding as non-elderly households. Perhaps this is because they perceive their quality of life to be tied to the success of local education. Or maybe it’s because elderly households are looking out for the educational opportunities for grandchildren who might be living in the area.
In today’s challenging economy, localities are looking for ways to boost their jobs and economic opportunities. This is even truer in rural regions, which have typically lagged metro areas in economic growth. You decide if there’s both green and gold in trying to bring those with gray hair into your community!
Dr. Mike Walden is a William Neal Reynolds Distinguished Professor and N.C. Cooperative Extension economist in the Department of Agricultural and Resource Economics of N.C. State University’s College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy.