States Mine for Gray Gold
At the state level, economic development is usually associated with business recruitment. But some states are hoping to boost their bottom lines by luring senior citizens with tax cuts and other incentives.
Hoping to maintain Florida's lead in the gray gold rush, Gov. Jeb Bush (R) recently formed a commission to study how to lure more well-off retirees to his state.
The commission, called Destination Florida , was formed amid Florida's growing realization that the retirement business is big business, but that the state's hold on the industry is slipping.
"The economic impact of this group is clearly significant," said Pamella Dana, director of the governor's Office of Tourism, Trade and Economic Development . "We know that there are other states, other countries, that are vying for retirement communities, because they understand their economic impact."
Dana's concern stems from the fact that over the past two decades Florida has seen a smaller percentage of retiring seniors choose its sandy white beaches and palm trees over the attractions of other states, and even other countries, as these locales have become more aggressive in courting the senior set.
As a result, Florida's older population grew by only 19 percent in the 1990's, less than third of the rate it grew during the 1960's and 1970's.
One change many states have made to attract retirees is to give tax breaks to seniors. Thirty-four of the forty-one states with a broad-based income tax now have special exemptions for seniors, according to the National Conference of State Legislatures .
"There was a kind of a competition through the 1990's to reduce taxes on retirement income and social security benefits," said Ron Snell, director of economic and fiscal division for NCSL.
Also, many states, especially the Southern and Southwestern states, now actively market themselves to seniors. They have created Web sites, sent out postcards to older state university graduates and purchased ads in senior-oriented publications.
The stakes are huge.
In 2000, Florida reaped a $1.42 billion net economic benefit from its "mature" residents (age 50 and older), according to a study commissioned by the governor's office.
On a per person basis in 2000, mature residents had nearly twice the income, spent almost twice as much, paid much more in sales and use taxes, and imposed slightly lower medical costs on state government than did Floridians under age 50, according to the report.
"There seems to be a myth out there that retirees are a lower-income group," explained Gene Warren, author of Florida's report and president of Thomas, Warren and Associates , an economic consulting group in Phoenix, Arizona. "If you look at it on a per-capita basis as opposed to a per-household basis, the retirees have greater income in [Florida]."
In recent years, one of the more active states in attracting retirees has been Louisiana, which formed an office in 2000 dedicated to further developing the state's retirement industry.
"Our goal is two-fold: first to retain our own retirees, second to attract pre-retired and retiring individuals," said Rochelle Michaud Dugas, executive director of the Louisiana Retirement Development Commission.
"All the attributes are here. We just haven't packaged and marketed ourselves to retirees," she said.
Dugas lists outdoor recreation, fine cuisine, decent cost of living, great music, and a favorable tax code, as among the state's stronger selling points for seniors.
The state's retirement Web site, www.retirelouisiana.org , was launched December 2001 and includes the Top Ten reasons to retire in Louisiana, links to housing in the state, and testimonials from recent retirees.
"This is a very new program in state government," said Dugas. "Retiree-based economic development is new all around."
Despite the newness of the idea, Dugas thinks most states would be well served economically by making themselves more attractive to seniors.
"With the baby boomers coming of age and with that segment of the population being the largest, I think smart states are positioning themselves for them," she said.