Illustration by David Vogin
Mike and Mary Potter dreamed of the day they could retire and move north to a little cottage in the woods. They had their eyes on the Eagle River area, where they had long vacationed on one of the longest stretches of interconnected freshwater lakes in the world. There, they’d putter around in their boat, entertain friends they’d made in the area and live the simple life. One of those friends tipped them off about a wooded two-acre lot on a small lake before it even came on the market. But could they afford it?
“The only way was if we both quit smoking and used the money we saved to make payments,” Mary recalls. And that’s just what the Potters did five years ago. “We bit the bullet and paid $55,000 for the land; today it’s worth $200,000.”
Still smoke-free and with their Sussex home paid off, the Potters began construction in June of a year-round, two-bedroom, two-bath cottage with an all-season porch and a canning kitchen. Mary reassured the couple’s two married daughters that they’d be only four hours away and the grandkids could vacation at “Camp Potter.”
Like a lot of baby boomers, the Potters are planning ahead. Mike Potter, 50, a Waukesha County sheriff’s deputy and Mary, 58, a Quad/Graphics purchasing agent, won’t retire until 2012 when Mike becomes eligible for a government pension. Then, Mary says, they’ll sell their home here and move north, where she’ll tend bar part-time and Mike will “bag groceries if he has to,” in order to live their dream.
At age 62, the oldest baby boomers will be eligible for Social Security this year. With nearly 80 million waiting in the wings, where they choose to retire will have a huge impact on the country. Cities, counties and whole states could be transformed, depending on whether they lose or attract this population. “The phrase ‘demography is destiny’ was never more appropriate than when used to characterize the impending age-wave tsunami,” writes demographer William H. Frey of the Brookings Institution.
Some boomer retirees will still chose Florida, as did their parents, but the big surprise is how many will choose places like northern Wisconsin and Michigan. Out of the nation’s 3,142 counties, 277 rural ones are already attracting so many new retirees that a U.S. Department of Agriculture study has dubbed them “retirement destination counties.” Fourteen are located in Wisconsin.
Some of these retirees will be Wisconsinites, like the Potters, who are choosing to relocate to the place where they’ve regularly vacationed. But the two biggest sources of relocating retirees will be Chicago and the Twin Cities, says Dan Veroff, director of the UW-Madison Applied Population Laboratory. Without them, he says, Wisconsin’s population would actually be declining.
Instead, Wisconsin was one of only two states in the upper Midwest and central U.S. to have a net in-migration of residents ages 60-plus between 2000 and 2005. (The other was Kentucky.)
For decades, you could pick up retirement guidebooks and never find a mention of Wisconsin. Now the state is hot: The main lure is the northern lakes. But there are also small Wisconsin towns on the urban fringe attracting “retirees with the most educated tastes and interests,” as demographer Charles Longino of Wake Forest University puts it, referring to boomers who want a small-town ambience within a couple hours of metro amenities like museums, theaters, restaurants and an international airport.
Milwaukee, of course, has all that, and last fall, AARPThe Magazinepicked it as one of five cities that are “great urban retirement destinations.” Calling Milwaukee the best example of why the Midwest is attracting 15,000 more retirees per year than it is losing, it pointed to this city’s RiverWalk, rich ethnic diversity, many festivals and “affordable waterfront condos with views of the Milwaukee River and Lake Michigan.” Boston, Atlanta, Portland, Ore. and Chandler, Ariz., completed AARP’s list.
In the 1980s, states competed to lure businesses. Now, the fight is over affluent retirees, ages 50 to 75. Healthier, wealthier, better educated and more active than their parents at the same age, the boomers will have more money to spend and more retirement years to enjoy. The average American who reaches age 65 today can expect to live 19 more years. One in three will reach their 90s. AARP reports 79 percent say they will work beyond age 65 and 20 percent plan to start a business. Where they choose to live will have wide-ranging effects.
“Nothing will have a bigger impact over the latter half of the decade on the state of Wisconsin,” James H. Miller, president of the Wisconsin Policy Research Institute, noted last year.
Even if you’re not one of the boomers, you will feel the repercussions.
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Debbie and Larry Winkelmanretired to North Carolina after careers with the U.S. government. They were back in Debbie’s hometown of Tomahawk, Wis., visiting family when her husband Larry looked at the snowy, pine-studded hills and said, “You know; this is really God’s country,” recalls Debbie. After learning The Cheese Shoppe was for sale, she adds, “it all came together.” The retired couple, still both in their 50s, bought the shop and decided to relocate to Tomahawk.
“We’ve never run a business or worked so hard in our lives, but we’re loving it!” Debbie exclaims.
Tomahawk, a 3,770-person Lincoln County town bypassed by U.S. Highway 51 several years ago and left to shrivel, is beginning a comeback thanks to retiring boomers like the Winkelmans. “This Christmas season was unbelievable,” Debbie says, “with businesses coming in and ordering cheese baskets for all their employees.”
Between 2000 and 2003, Wisconsin’s 14 top rural retiree counties saw their age 60-plus populations grow 15 percent or more due to in-migration. The counties make up three distinct clusters: In the northwest, the Twin Cities fuel migration to Polk, Burnett and Washburn counties. A second cluster – seven counties along the Wisconsin-Michigan border – attracts retirees from Chicago, Milwaukee and parts of Wisconsin. And the third retirement cluster, in the center of the state, includes Adams, Marquette, Waushara and Waupaca Counties, and also draws from Chicago and Milwaukee, along with Stevens Point and the Fox River Valley.
When Art Lersch began warning residents about this coming wave, he was literally a voice in the wilderness. Now, the Lincoln County UW-Extension community resource development agent is in demand for advice. “For years, we had a very pronounced brain drain here,” Lersch notes. “Now, we have a brain train of young retirees who want to come back to where they spent summer vacations, and they want to make some positive things happen … we’re attracting a new labor pool. This affects just about every aspect of life in a community.”
The newly arrived boomers are “very well educated, have a high level of disposable income and are very much part of the creative class,” says Oneida County Extension agent Dan Kuzlik. They are settling along a line from Rhinelander through Woodruff, Arbor Vitae, Minocqua and Eagle River, he notes.
With their own wells and septic systems, and even hauling their own garbage to the local dump, these empty nesters don’t require a lot of government services, but add a lot of taxable property. In northwestern Wisconsin’s Washburn County, despite recent passage of a large school spending referendum, property tax bills have barely budged, notes Washburn Extension agent Beverly Stencel. Hers edged up just 0.5 percent this year.
The building boom on the county’s lakes has led to new minimums for both lot width (150 feet) and setback (100 feet), requirements stricter than DNR regulations. The county wants to make sure the retirees don’t spoil the beauty that drew them here, says Stencel.
In most of the north, observers say, there hasn’t been much tension between older residents and newcomers. The reason: So many newcomers are like the Potters, who’ve been visiting the area for generations. Some lifelong residents have complained about rising lakefront prices, and a few have sold waterfront homes and moved into town where prices are less, says Stencel. “But they might have done that anyway, because they were getting older.”
The newcomers are embracing the area’s year-round charms. “The boomers are not as negative on winter as their parents, and they know they’re not stuck here. They can fly out for a month or two,” explains Oneida’s Kuzlik. Because the winter population is up, there are now more miles of groomed trails, a new adult pond-hockey competition and other amenities.
In downtown Spooner – population 2,700, in Washburn County – what was a ghost town in winter has come alive. “Now, shops stay open year-round and we have amenities we could never sustain before, like a local bookstore,” Stencel says.
Like the Winkelmans, Pat and Bill Haskin became second-career Tomahawk business owners. Retiring from jobs in Wausau, they turned their cabin into a year-round home and bought the local monument company. Now, Pat is a force behind the Downtown Business Council’s effort to win a state Main Street designation to revitalize downtown. Retiring boomers, she says, give the city not just entrepreneurs, but enthusiastic volunteers.
“Our baby boomers want to get involved,” she says. “And they really rallybehind things.” Eight-two percent of residents voted in favor of the Business Improvement District to fund the Main Street project.
Oneida and Vilas Counties are the hottest of the state’s hot rural retirement destinations, thanks to more than 2,500 lakes, the densest concentration of freshwater lakes in the world. But that doesn’t mean the newcomers have all gone fishing. Many are still holding down high-level jobs, says Kuzlik. His seatmate on a recent flight back to Rhinelander was a woman who works for California-based software company Oracle but lives on a lake near Woodruff. She does much of her work via a high-speed Internet connection, flying to meet with clients when needed.
“There are so many semiretired migrants from the Chicago area who maintain their business from here via the Internet that the region’s spotty broadband access is a real problem,” says Vilas County Extension agent Kelly Haverkampf.
“Broadband access will be like being on the railroad line in the 19th century. It will determine which communities thrive and which ones die,” says David Pearce Snyder, a futurist who’s worked as an advisor to one of the nation’s leading real estate development trade groups. Five northern Wisconsin counties have risen to the challenge, forming an organization called Grow North to upgrade the region’s technological infrastructure.
Central Wisconsin’s retiree cluster, thanks to its proximity to the Camp Douglas military facility, has Internet service “as good as any in New York City,” says Terry Whipple, executive director of the Juneau County Economic Development Corp. “We’re ahead of the rest of the state on that.”
That’s helped fuel an explosion of second homes along the Wisconsin River where it separates Juneau and Adams County. The area boasts the state’s third-largest lake, 23,040-acre Lake Petenwell, and the sixth-largest, 13,995-acre Castle Rock Lake. Both were largely undeveloped until 2000, when the local power company began selling off pristine frontage.
“We were sort of an undiscovered treasure,” says Waupaca Chamber of Commerce President Terri Schulz. While the city of Waupaca itself counts just 5,600 residents, she notes, there are 22 interconnected spring-fed lakes nearby with another 12,000 residents, making Waupaca a sort of “micropolitan” hub.
It was in central Wisconsin that the economic power of the retiree brain train first became apparent. In 2000, the region lost two big employers, Best Power and Rayovac, and their combined 1,150 jobs. “We had 14 percent unemployment,” recalls Whipple, a former corporate turnaround expert who helped launch the state’s first Inventors and Entrepreneurs Club.
Whipple’s group was formed to help change Wisconsin’s risk-averse culture. “In California, if someone with a startup is struggling, they yell for help and people rally to their aid.” In Wisconsin, Whipple adds, they suffer quietly.
Today, the Inventors and Entrepreneurs Club boasts 750 members, including Chicago retirees who’ve moved to the area just to be part of it, says Whipple. “These people are just not 100 percent ready to retire, and they have the time, money, education, experience and contacts we need – and they can do it all from a nice wooded lake lot.” The club has played a role in developing nine new alternative fuel businesses, two bio resin firms and a company that supports the aerospace industry, not to mention an unlikely operation that sells cinnamon-scented pinecones that glow in bright colors when tossed into a fire – with sales of $1.5 million a year, he says. Today, the area’s unemployment rate is just 4.5 percent.
The Juneau County club has helped spawn 49 others around the state, including the Oneida County Inventors and
Entrepreneurs Club. Formed last year, it already has 140 members, including a man with a patent for a folding pontoon boat, another member producing double-jointed wrenches and a third with an international patent for recycling glass to absorb oil, says Kuzlik.
Beyond boosting entrepreneurial efforts, boomer retirees are providing talented workers in areas that can’t always find recruits. At Church Mutual Insurance Company, headquartered in Merrill, executives are creating flexible part-time jobs to tap into that talent, says Lersch.
One of the country’s 277 fastest growing rural retirement destinations is in Upper Michigan’s Copper Country. Just south is another: Wisconsin’s Marinette County, where Crivitz bills itself as the “Gateway to the North,” acknowledging the convoy of migrants heading to the upper peninsula. “There’s no need to keep driving, you can find all the great things about the north woods right here, less than three hours from Milwaukee,” says Marinette Extension agent Paul Putnam.
“We don’t have a Starbucks and a Home Depot every five miles,” he says, “but when you walk into the local hardware store, they greet you by name, and that’s what people want today, a sense of community.”
That’s a big part of the attraction for boomers, as is the low cost of living. Around Eagle River, the Potters will find prices 15 percent below the national average; in Marinette County, it’s lower still.
“What you can buy here for $250,000 compared to the Milwaukee area is just amazing,” says Putnam, offering the example of a three-bedroom all-season home with its own private waterfall for $179,900. The county claims the title of Waterfall Capital of Wisconsin, he notes.
Marinette County’s 55-plus population has jumped by 44 percent since 2000, spurring new mom-and-pop shops, a sporting goods outfitter, a new business park and interior design shops. Many newcomers are former Milwaukeeans who’ve had ties to the Crivitz area for decades, Putnam says.
The quality of health care in Wisconsin may also draw retirees. A 2007 study by The Commonwealth Fund ranked both Minnesota and Wisconsin in the top quartile of states for health care quality. The snowbirds’ traditional retreats – Florida, Arizona, Georgia, Texas and Nevada – all ranked in the bottom quartile.
Across northern Wisconsin, both the availability and quality of care have grown over the past decade. In 2006, Marinette’s Bay Area Medical Center won a Distinguished Hospital Award for Clinical Excellence from HealthGrades, an independent rating service – placing the hospital in the top 5 percent nationally for both mortality and complication rates.
Marshfield Clinic now has 41 clinics across the north with enhanced oncology and heart care. It recently doubled the size of its Minocqua clinic, built new buildings in Eagle River and Mercer, and expanded its Rhinelander facility. Next up: more orthopedic surgeons and rheumatologists to serve the active boomers the region is attracting, says Dr. Laura Nelson, medical director for Marshfield’s northern division. “We’re seeing a lot more people stay year-round becausethey have good medical care,” she says.
With good health care, a low cost of living, countless lakes, and so many state and federal forests, the north woods have become Wisconsin’s trump card in the competition to attract retirees.
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Grafton, Wis., just a half-hour north of Milwaukee, didn’t set out to become a retirement mecca. “It just happened,” says Village Administrator Darrell Hofland. Boomer retirees just started showing up at open houses.
Driving into town from the east on state Highway 60, you can see the attraction: handsome new row-house condos rising along the Milwaukee River, a modern day Currier & Ives scene with the
village skating rink nearby and a new coffee shop, sporting goods store and other retail outlets.
Recognizing Grafton’s potential, village President Jim Brunnquell set out to make the village a “community of choice” for boomers in Ozaukee County, says Hofland. Officials added public trails and increased recreational programming aimed at active baby boomers, including walking programs and “cooking healthy” classes.
“Typically, aging boomers have high disposable income, and that’s good for Grafton’s economy,” says Hofland, pointing to the results: a newly opened Milwaukee Ale House, a proposal for a local Water Street Brewery and another restaurateur eyeing the old Grafton Hotel. Not to mention a new hospital that Aurora Health Care plans to build in the area.
“Hospitals are followers, not leaders. They follow an older affluent population,” says Terry Ludeman, retired state of Wisconsin chief labor economist.
In Waukesha County’s Oconomowoc, two hospitals will compete to provide services even though the city’s population was only 12,382 back in 2000. Largely because of an influx of boomers, the Oconomowoc area’s population hit 79,328 in 2006.
“We’ve always looked at Oconomowoc as a fast-growth area,” says Ludeman, pointing to a heavy influx of DINKS (dual-income, no-kids households) from western Milwaukee County. The Oconomowoc area has a wealth of lakes, and the city has an attractive downtown with walking trails and city parks on Fowler Lake.
In Washington County, West Bend has become another exurban retirement mecca. City officials say boomers who grew up in the area and Milwaukeeans nearing retirement are attracted by the small-town ambience and the area’s five lakes.
Since 2001, downtown West Bend has added nearly as many condos as Downtown Milwaukee, with another 500 in the works. The city offers a paved river walk and the Eisenbahn Trail, used for walking, running, biking and rollerblading. It also has downtown specialty stores and an active nightlife.
In nearby Hartford, the population is up more than a third since 2000. “We’ve taken the one body of water we have, Mill Pond, on the mighty – or not so mighty – Rubicon River, and we’ve made it a focal point,” says Mayor Scott Henke. Three developments aimed at retiring boomers enjoy scenic views, and the city’s new library will be built there as well. Add a quaint downtown and nearby Pike Lake, a draw for retirees, and Hartford has become a retirement destination.
In western Racine County, on Fox Lake, Waterford has become the fastest-growing community in the five-county metro area. Its population rose from 2,300 in 1997 to 4,700 today, according to UW’S Applied Population Lab. Many are boomers who now commute to jobs in Milwaukee or Waukesha.
Last summer, a village survey found that 52 percent of Waterford’s population is age 55 or older and 65 percent of local households have incomes in excess of $50,000 a year. Just 15 percent of current residents grew up there. When asked to name the most important reasons they live there, 66 percent named Waterford’s “small-community atmosphere,” 41 percent named “safety-low crime” and 29 percent praised the village’s “short commute.”
These small towns are what demographers call “high-amenity” locations offering scenic beauty, recreational opportunities and a community feel. “In both the snow and sunbelt, it’s small towns on the urban fringe” that are growing fastest, writes Brookings Institute demographer Frey.
In his 2004 bestseller, Boomtown USA, author Jack Schultz coined the term “agurbs” to refer to fast-growing rural towns in scenic recreation areas. “They are now, and will continue to be, for Baby Boomers, and a growing number of Gen X-ers, the hot spots to live in,” writes Schultz.
Schultz’s list of 397 American boom towns includes 16 in Wisconsin: Arbor Vitae, Baraboo, Beaver Dam, Clintonville, Dodgeville, Fond du Lac, Grantsburg, Hayward, Menomonie, Rhinelander, Shell Lake, St. Croix Falls, Stevens Point, Sturgeon Bay, Waterloo and Whitewater.
Reinforcing Schultz’s projections, the Wisconsin Department of Administration forecasts that between 2000 and 2025, while the city of Milwaukee grows 4.3 percent, Wisconsin communities with 5,000 to 9,999 residents will grow 36 percent, followed by a 31 percent increase in the 2,500 to 4,999 group. The Research Institute for Housing America predicts “only 2 percent of suburban empty nesters can be expected to move to an urban area.”
Yet the urban ideal of walkable downtowns has become all the rage in the small towns that attract boomers. “The concept is so strong,” Snyder says, “they seem to succeed anywhere you put them, even in the middle of a farm field like the town of Celebration in the film Truman.”
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For Jeff and Mary Turner,it’s all about the kids. The Oak Creek residents plan to retire in town because their five kids and (soon-to-be) six grandkids live in the area.
The 53-year-old Aurora pharmacist and his 46-year-old wife have been “socking away money” in their retirement accounts since they were in their 20s, says Mary, an electrical engineer with HGA Architects and Engineers. But neither will retire until age 67, when they’re eligible for full Social Security benefits. After that, they’ll work part-time. “We want to have the financial security without causing a financial burden to our kids,” she says.
It’s not scenic beauty or low taxes, but kids that are the ultimate boomer magnet. An estimated 85 percent of the cohort born between 1946 and 1964 are expected to “age in place” when they retire. The boomers don’t face the infamous “generation gap” that distanced them from their parents, so many will want to remain near their children.
With their new 2,000-square-foot, three-bedroom, three-bath Oak Creek ranch home, the Turners didn’t downsize because they want to have enough room for overnight visits from the grandkids and for the family get-togethers they love.
A lot of the Turners’ friends are doing the same thing – remodeling their existing homes. “There will be as much money spent on housing additions and improvements in the next 10 years as on all new construction,” predicts Snyder.
On the northwest side of Milwaukee, Diane and Rick Romboy, both 60, moved into a two-bedroom condo three years ago. Diane is retired from Miller Brewing and Rick is a semiretired carpenter. They have lifelong ties to the north woods, where they own a parcel near Crivitz and hope to build a seasonal cabin one day. But long-term, Diane says she’s thrilled to live five minutes from her daughter, Jen, and close to Rick’s three sons and the couple’s 10 grandkids.
When boomer retirees do move, it may be because their children have moved. A 2005 survey by Del Webb, one of the country’s largest builders of 55-year-old-plus active adult communities, found half of all boomers who intend to move want to stay within a three-hour drive of family.
Consider Ken and Cheryle Frasheski. Ken, 62, worked for Milwaukee’s Falk Corp. for 41 years and spent 28 years in the military and reserves, which qualified him for a second pension. Cheryl, 58, worked for Kohl’s for 20 years. The couple had a condo in Germantown and would have stayed there – if their only child hadn’t moved to Michigan.
The Frasheskis followed their daughter, Kathy Fox, to Brighton, Mich., where she’d landed a job with a law school and where her husband secured one with the Detroit Tigers’ front office. Now, the retirees live in a four-bedroom, 2,200-square-foot home with a fenced yard and 110 feet of sandy frontage on a little no-wake lake. Granddaughter Lauren, 18 months, is a regular visitor.
“The lakes west of Milwaukee were just too expensive,” says Ken, “But here in Livingston County, we had our choice of 50 lakefront homes under $300,000 and the taxes are half what we paid in Wisconsin.” Livingston County has one of the highest median household incomes in the country, $67,400, and it has led the state of Michigan in growth since 2000 with an 18 percent population increase.
Though he’s been a Michigan resident for only two years, Ken has already become the historian for the local American Legion post and is about to become its first vice commander. “The people are warm and friendly,” he says. “Our quality of life has really improved, and they even give you a 10 percent senior discount on all your utility bills here,” muses Ken. “It’s a lot cheaper than in Wisconsin.”
Now, he says, friends he left back in Wisconsin are thinking of joining him in Michigan. “I hate to say it,” he says, “but I’ve become a salesman for the place.”
In Wisconsin’s Walworth and Kenosha counties just north of Chicago, and Burnett, Barron and Douglas counties east of Minnesota’s Twin Cities, a similar phenomenon is occurring. It’s not just the influx of commuters to jobs in those cities driving growth. It’s also baby boomer retirees, including many of the parents of college grads the state exported during the 1990s brain drain, says longtime Wisconsin labor economist Ludeman. Many of the state’s lost grads went to jobs in the Twin Cities and Chicago.
“People move toward their kids, and that’s where their kids are working,” explains Ludeman, who chose to retire to a 150-year-old Rock River cottage in Jefferson. Yes, it’s colder than Florida, but the cost of living is reasonable and Ludeman’s three daughters and his grandkids are all within a two-and-a-half-hour drive.
Florida’s Sunset?
Along the dusty roads of southern Texas,not far from Brownsville and the Mexican border, there’s a small hamlet filled with Wisconsin transplants. So many, in fact, that the community is known as “Green Bay South.”
Fredonia, Wis., residents Terry and Brian Zellmer were visiting friends there last winter when one of the development’s homes came on the market. They snapped it up. At age 53 and 46, respectively, Terry, an executive assistant at ADM Cocoa in Milwaukee, and Brian, a manufacturing engineer for DOWCO Inc. in Manitowoc, don’t meet the active 55-plus community’s age restrictions yet, but they are planning ahead. Besides, Green Bay South’s homes rarely come on the market, and “when they do, they sell in a day, usually by word of mouth,” says Terry.
The Zellmers were smitten by the well-kept little community, which is close to golf courses and populated by people who share their background and values. The low cost of living was a big plus – with manufactured homes on a quarter-acre of land selling for $60,000 to $90,000. “We didn’t set out with taxes in mind,” says Terry, “but the tax breaks there are incredible.”
Texas and Nevada have become popular retiree destinations because they offer a warm climate, low cost of living and no state income taxes. These same traits once made Florida the nation’s fastest-growing retirement destination, but migration there peaked in 1980. By 2000, it was the destination for 19 percent of the country’s migrating retirees, down from 26 percent.
Florida’s home prices are now some of the nation’s highest. Hurricanes have raised home insurance rates sky-high and property taxes are substantial. “What’s interesting now is how many people are no longer interested in declaring Florida their domicile because what you save on income tax will go to property tax there,” says Joe Schlidt, senior vice president and southeastern Wisconsin regional manager for M&I Wealth Management.
His clients, who have a half-million dollars and more in investable assets, are “really scrutinizing whether it makes sense to relocate anymore,” he says. “The boomers are much more active and interested in staying connected with their network of people here.”
The Tax Foundation ranked Wisconsin 13th in total federal, state and local tax burden in 2007. That was actually better than Florida, which came in 12th.
“We’re seeing a boomerang bounce of the boomer’s parents,” says David Pearce Snyder, a consultant to one of the top national associations of real estate developers. “They’re coming home because they can’t afford to live in Florida anymore, their spouse has died or their health is failing.” Another group, dubbed “half-backs,” have left Florida and moved part-way back, settling in the Carolinas, Georgia and Tennessee.
Battling for Boomers
Active, well-off retirees ages 50 to 74have become the spoils in a battle between states.
Retiree migration expert Charles F. Longino estimates that the out-migration of age 60-plus residents cost the state of Wisconsin $260 million between 1995 and 2000. Meanwhile, Florida reaped $1.42 billion in net annual economic benefit from residents 50 or older, according to a 2002 state study there. But the state is beginning to lose its appeal for retirees.
Nationally, economists predict 400,000 boomers a year – with an average of $320,000 to spend on a new home – will leave their states to find greener pastures. With $2.3 trillion in annual spending at stake, states are scrambling to lure the boomers.
A study by the Wisconsin Policy Research Institute last year warned that tax policy is not a cost-effective way to do this, because most of the tax breaks go to retirees who would have stayed in the state anyway. But scores of states are trying that technique.
On top of the nine states that have no income tax, three don’t tax any pension income. Seven more exempt all federal, state and local pensions. Illinois eliminated state taxes on all retirement income, while Michigan excludes $81,840 a year in private retirement income per couple from its income tax.
All but 13 states have stopped taxing Social Security payments. Wisconsin joined the crowd this year and also ended its estate tax.
Many states are also aggressively marketing to boomers. Launching its campaign, Maine’s governor described retiree recruitment as “green development,” citing studies showing one retiree household creates the economic impact of 3.7 manufacturing jobs without the environmental toll.
Among Wisconsinites ages 60 and older who move to other states, the most popular destinations are Florida (23 percent) and Arizona (14 percent), with Illinois, Minnesota and Texas next, but well behind. The top states sending retirees to Wisconsin include: Illinois (30 percent) and Minnesota (14 percent), followed by Florida, Michigan, Arizona and California.
What will give a city an edge in the battle for retirees? A location with nearby water or mountains, quality health care, and an affordable housing mix of relatively new and 100-year-old residences, says a Wharton Business School study. Income tax rates matter less than sales taxes, the study found.
“A high sales tax scares people and businesses away,” says futurist David Pearce Snyder. That gives Milwaukee an edge. It has a 5.6 percent sales tax compared to Chicago’s 9.25 percent and Minneapolis’ 7.15 percent.
But for all the talk about taxes, the lower cost of living in favored Wisconsin counties could be far more important, says retired state of Wisconsin chief labor economist Terry Ludemann: “If I can buy a home for $250,000 half an hour from Minneapolis-St. Paul, or an equal one for $400,000 in St. Paul, I can pay a lot of taxes before I’m behind, and you see a lot of people doing exactly that.”
Milwaukee can compete successfully against Chicago with its lower cost of living and easier, faster access to arts, sporting venues and other amenities. “I can afford to live in Downtown Milwaukee, keep the car and commute to Chicago for less than it would cost to live in Chicago without a car,” says Snyder.
As for the northern climate, its impact may be exaggerated. Some movement to warm states may have actually been people moving near a child or friends. “It is difficult to argue that cold winters are the only trigger for out-migration” Longino says, when three of the country’s top five states for attracting retirees – Florida, Texas and California – are also among the top five losing them.
Room with a View
In a lot of ways, Ralinda Howard typifiesthe values of boomer retirees, even though she’s a single woman. She wants to be near family, have a low cost of living, enjoy an active lifestyle, and, she adds, “I’ve absolutely got to have vistas.”
Vistas. Map the country’s fastest-growing retirement areas, and you’ll find they’re all located around natural amenities – lakes, rivers, mountains and woods. “The attractiveness of scenic landscapes increases sharply among older migrants,” notes USDA Economic Research Service analyst John Cromartie.
When researchers from Texas A&M University asked residents of four Texas and Arkansas retirement communities to rank the things that attracted them there in 1996, nothing topped scenic beauty.
Howard, who lives in a Mukwonago home overlooking the Kettle Moraine, works as an interior “plantscaper” for businesses and an outside perennial gardener for a stable of clients. She bills herself as “The Plant Lady,” a job she will take with her when she moves. That will be seven years from now, when she’s 59 and her current home is paid off, she says. Then, she’ll head south to the hilly terrain of western Tennessee or the Carolinas, where she’ll have scenic views and excellent topography for hiking, biking, motorcycling and kayaking.
Property taxes will also be one-fifth of what they are here, she adds, and heating and cooling costs will be lower. With energy costs expected to double in five years, and again in the following five, many boomers have a similar concern.
Howard will also be following family. Her father worked at Pabst’s Milwaukee plant until it closed, then moved to the Carolinas for a job. Ralinda’s younger siblings reached adulthood and settled there, too.
Mary Van de Kamp Nohl is a senior editor at Milwaukee Magazine. Reach her at mary.nohl@milwaukeemagazine.com.
