Retiring Boomers are going rural (but not too rural)

There is a lot of buzz amongst urbanists and demographers about millennials’ preference for urban areas.  We’ve found evidence to support this narrative in some areas of Virginia, including indications that they may be staying even after having kids.

But there’s also a lot of talk about baby boomers retiring and moving into cities.  Maybe this is happening in other parts of the U.S., but it’s certainly not the case in Virginia.  On the contrary, they appear to be heading for the hills.  In fact, despite Forbes Magazine naming Virginia its 5th best state to retire in, Virginia does not appear to attract many retirees in general.

Virginia is aging quickly, as can be seen on the map below.  From 2000 to 2010, the median age in the Commonwealth rose from 35.7 to 37.5.  In some localities, it rose by as many as 5 or 6 years in just that 10-year period.  But most of that is due to a gradual decline in birthrates, not older people moving in.  From 2000 to 2010, migration accounted for only a slight (1-2%) increase in the population of age groups around retirement age, and that increase was smaller than the state’s overall growth rate.

Median Age Change

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How to Succeed Financially: The American Template

In the U.S., the traditional narrative of how to succeed financially in has been to do the following:

  1. Go to college and earn a degree
  2. Use that degree to get a good job (with health insurance) that pays enough money to cover your basic needs and allows you to build some savings.
  3. With your savings, a mortgage loan, and maybe a little help from your parents, buy a home (presuming it makes sense vs. renting). This will save money on rent and home equity will be a major portion of your nest egg.
  4. Take advantage of institutionalized savings mechanisms (401K or other pension plans) to start saving for retirement to supplement Social Security. With diminishing payouts and concerns about the future solvency of Social Security, supplemental savings are increasingly important.
  5. After many years of work, retire and live comfortably off of your savings and Social Security.

While the notion of a strict linear model of the life course is increasingly outdated, there are also questions about the veracity of its basic assumptions–is a college degree worth the price tag? Is homeownership really a good investment? Yet, in the absence of clear alternatives, this remains the dominant life course narrative. Taking advantage of the online analysis tools at the University of California, Berkeley’s Survey Documentation and Analysis (SDA) program, I used the triennial Survey of Consumer Finance (SCF) and annual Current Population Survey (CPS) data to examine trends in work, benefits, and wealth among young working-age adults, those aged 25 to 44, over the past twenty years, with an eye to examining each step in this traditional narrative.

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Are Baby Boomers financially ready for retirement?

In her post “How old is old? Is 80 the new 65?”, Susan discussed how increases in longevity have dramatically increased the typical years lived post-retirement.  The average 65-year-old retiree is now expected to survive until age 84.  These changes mean that retirees need increasing amounts of money to afford a comfortable retirement and provide a cushion for emergencies over such a long period without employment.

How much do retirees need? Being able to retire at 65 is expensive even under the most conservative of estimates.  Using the CNN Money retirement calculator, a 64-year-old earning $50,000 a year needs nearly $450,000 in savings to supplement Social Security and pay for their current standard of living for 19 years.  While these needs may go down if they receive an employer pension, the costs will skyrocket if they face a medical crisis, require long-term care, or live longer than expected.  In fact, some report that 65-year-old retirees need a minimum nest egg of more than $1 million.

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How old is old? Is 80 the new 65?

Most of us have heard talk about the Baby Boomers and how they will impact the U.S. population in the next few decades.  The Boomers are the large group of people (76 million) who were born in the U.S. between 1946 and 1964.   The oldest members of the cohort have just started turning 65 in the past year, and they are starting to become eligible for many benefits that are provided to the “elderly.”  But more and more, it feels strange to categorize these individuals as “elderly.”  The words elderly and senior conjure up the notion of someone far more frail and feeble than the many vibrant, active people age 65 and older with whom a lot of us interact on a daily basis.  According to the American Community Survey, 1 in 4 Americans age 65 to 74 are still in the labor force, and many of the others are retirees who still actively volunteer or provide care for grandchildren or even their own parents.  These are folks who run in marathons and go back to school.  So why are we calling them elderly?

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