The 55-and-older demographic is now responsible for 45% of personal spending in the United States, up from 29% before the turn of the century, according to Moody’s Analytics. And with retirement communities still a popular option for Americans later in life, it makes sense that the spending follows them there.
Plus, it’s a lot of money to spend. Americans over 55 hold around 70% of the country’s household wealth.
Heather Gillers of The Wall Street Journal wrote about how this demographic and its communities are driving some local economies. She joined Marketplace’s Kimberly Adams to talk about it. An edited transcript of their conversation is below.
Kimberly Adams: You start us off in a Sun City community in Texas. What are these, and what’s it like to live in one?
Heather Gillers: So these are planned communities. Sun City Texas has about 17,000 people. There are swimming pools, golf courses, pickleball courts, fitness centers. There’s a ballroom where events are held. There’s a Mardi Gras ball. It’s inside the city of Georgetown, Texas. But it really, in some ways, functions as a city where most people are retired and the median age is 73.
Adams: What do these kinds of communities, especially with an influx of older people, do for the local economy?
Gillers: For Georgetown, it’s been great. There, as you might imagine, are a lot of health care jobs. There are a lot of service jobs, you know, like when you’re retired, you can go out for breakfast and lunch. The mayor said to me, “It’s like having constituents who are in college, except for they have $3 million in the bank.”
Adams: So tell me more about the kinds of things people are spending on in these communities.
Gillers: Sure. They remodel their homes a fair amount. A local business that does flooring told me that they’re out in Sun City almost every day. They buy things at estate sales. They’re not, like, going out on yachts particularly. Like, it’s not extremely high-priced living or exorbitant spending. The guy who runs the local bar and restaurant in Sun City told me that he tries to keep his prices lower than Olive Garden and Chili’s. But it’s just sort of like a steady stream of spending by people who mostly are at the end of their working lives and want to enjoy themselves.
Adams: Not to be morbid, but the baby boomer population that is filling out a lot of these communities is getting up there in years. How long are people expecting this outsized impact on the economy to last?
Gillers: The youngest baby boomers are now turning 60. So they probably have a lot of years of living and spending. But you know, another interesting thing that we found in our reporting was that even as Sun City residents were getting older and aging out of a period of life where they might want to have, like, a single-family home that they have to be responsible for with a lawn and all that, developers are catering to that too. So there was a development within golf-cart driving distance that was more of an assisted-type living, and most of the people there were from Sun City. And they were sort of like visiting with their old neighbors and just kind of keeping it going.
Adams: I love that you said “in golf-cart driving distance.”
Gillers: Golf carts are a very popular mode of transportation in Sun City.
Adams: When states are trying to attract people, is there a sense it’s better for them economically to be focusing on supporting services and investments that encourage younger folks and people with families to come in? Or these older, wealthier retirees?
Gillers: Well, another really interesting thing about working on this story is that often you think about economic development as trying to attract young families or maybe remote workers. But what’s really helped Georgetown thrive is this huge cohort of boomers, because many of them bought their homes outright with cash — a far larger percentage than, you know, average for America. So they’re sort of mortgage rate agnostic, which makes them much more mobile, much more flexible, and for many different reasons — often less student loans, flush retirement portfolios or investment portfolios that built up over a 10-year bull market. They have this cash that makes them much less likely to be deterred by higher mortgage rates.
Adams: Talk about the reaction you’ve gotten to the story.
Gillers: It’s been really interesting. Everything from, like, “Those people are spending my inheritance,” to like, “You go, 80-year-old skydiving person!” Like, “Goals, you know? #Goals.”
