Baby Boomers Boosting Resort And College Town Real Estate Markets

While the housing crisis continues to pound many regions in the United States, a small subset of college and resort town communities have continued to grow, largely because of their popularity among retiring and second home-owning baby boomers looking to spend more time in their favorite vacation destinations. Many of these towns, such as Flagstaff, Arizona, have seen growth rates double and triple that of the average rural small town, according to NPR. The demand for housing in small scenic towns- such as beach resorts, western ski towns and New England villages will only continue to grow as more baby boomers retire, creating the “demographic perfect storm” for growth in these areas, demographer Kenneth Johnson said.

Reactions have been mixed in regard to the increasing popularity of these picturesque destinations. Proponents argue that newcomers bring jobs and wealth, shielding these rural communities from economic downturn. Critics contend that the influx of wealthy baby boomers raises housing prices through gentrification and generates a surge in the overall cost of living for all residents of these small communities. The median house price in Flagstaff, for instance, has more than doubled in the past eight years. Rising house prices have forced many middle-income families to reconsider living in Flagstaff, resulting in backlash that has been paraphrased in a bumper sticker slogan popular in the region: “Don’t Phoenix Flagstaff.”

As increasing numbers of baby boomers approach retirement, it will be important for these small towns to consider plans to keep growth at a comfortable yet steady clip. While continued growth and strong real estate markets can be extremely beneficial for these communities, unfettered growth can have disastrous consequences, potentially destroying the small town charm that made them unique and desirable in the first place.

Retired Baby Boomers Becoming Part Time Entrepreneurs

Many older baby boomers have been choosing an earlier retirement as a means to pursue hobbies and other interests as part-time small businesses. Carl Boast, for example, a former neuroscientist in the pharmaceutical industry, quit his job at age 55 to pursue his interest in nature photography, according to the New York Times. That interest eventually morphed into a small business; he began to market his photographs at craft shows sponsored by Wyeth, his former employer. While Boast’s nature photography business has not been particularly profitable, as with most other baby boomers taking part in this growing trend, profit tends not to be the primary motivation.

“Carl Boast, owner of Peaceable Kingdom Photos in Moneta, Va., was making a hefty salary in New Jersey as a neuroscientist in the pharmaceutical industry when he decided he ‘wasn’t a fan of working for a living’ and began plotting his departure,” according to the New York Times. And this doesn’t appear to be just an isolated trend. “Ty Freyvogel, a small-business consultant and investor in Pittsburgh, predicts that the ranks of early retirement dabblers will swell as they discover they have too much time and not quite enough money. ‘If they do the proper research and can get started without putting a significant amount of capital behind them initially, these types of small start-ups can get going with little risk,’ he said.”

These baby boomer micro-businesses are particularly interesting as profitability tends not to be the top priority for most participants, allowing people to be more creative in pursuing personal hobbies and quirky business ideas. As an increasing number of baby boomers begin to take on these types of low risk endeavors, this growing pool of entrepreneurial partial retirees may provide unforeseen opportunities to investors.

Economic Slowdown Delaying Retirement

When most people think of their retirement years, they picture themselves traveling, relaxing and enjoying hobbies they had less time for when they worked--or even finding some new hobbies.

But, with the U.S. economy floundering as it is, many people are putting such plans on hold.

"As the economy slows and prices rise, most middle-aged and older respondents report that they are having difficulty paying for food, gas, utilities, and medicine, and are responding to the situation by cutting luxuries and postponing major purchases and travel," according to a recent study by the AARP.

Some people are even postponing retirement itself. 27 percent of American workers aged 45 or older have postponed their plans to retire in response to the economy, according to the study.

Even more troubling is that one in four have trouble paying their mortgage and rent, and that one in three have stopped putting any money into their retirement accounts. And nearly one in four--23 percent--have prematurely withdrawn funds from their 401(k) or IRA.

But, with costs rising as they are, many people simply have fewer dollars to save. Making ends meet is tough for many, with the costs for necessities rising as they are. "Majorities are having trouble paying for essential items such as food, gas and medicine or utilities such as heating, cooling and phone service," according to the study.

Baby Boomers: Invest In Yourself

I recently read an article MSN titled “Internships for Boomers” and it hit home. I’ll turn 53 next month and I’m an intern at NuWire Investor, getting my feet wet in the world of online publications. I want to confirm what I read in that article with my personal story so others will know that big boomer changes are happening all over the country. I guess the first thing I would like to declare is that retirement is an anachronism for many people 50 and older. I don’t ever want to stop being involved, plugged in or a contributing member of society--I just want to have fun doing it. I think it’s a national tragedy that so many retirees take their experience (and money) out of societal circulation. OK, so much for the rant.

After 18 years in the ceramic tile industry I (and my knees) decided that it was time for a change. I taught myself how to type and use a computer. During the course of a year, my wife and I downsized into a small condo located between the local community college and the University of Washington. We did this anticipating we would be paying huge college tuitions with only her income. As it turned out, we didn’t need to.

At the community college, I wrote for the school paper. The job paid $750 per quarter and tuition was around $800 per quarter. Even though I had never had a job writing before, I quickly adapted. I even had an advice column called “Ask the Old Guy.” After my first year, and because of my high GPA (I wasn’t messing around) and my involvement with the paper, I was nominated by the school for a national two-year college award. That award resulted in a $750 scholarship and eventually a $400 partial quarterly tuition waiver at the UW. Meanwhile I applied for and was awarded an honors scholarship from a private foundation for community college transfer students. Between the two awards, I actually ended up netting about $200 per quarter to attend the University of Washington for two years. I graduated in 2007 cum laude, Phi Beta Kappa, with a liberal arts degree. The challenge that I had put off all of my life had become a reality. None of it would have happened without the decision to “pull the trigger” and do it.

The point that I would like to make is that starting a new endeavor at 50ish is completely possible--as far as getting a college degree anyway. I was astonished how many scholarships are available for “non-traditional” students, making financing a non-issue if you go through the rigors of their application process. I would suggest doing some research on the available scholarships in your area prior to enrolling. There are scholarships out there that will take you through all four years if you ask. The thing to note is that you have to commit to doing it. Even once you’re in school, the opportunities are available.

I don’t know where this internship will lead. I don’t know if it will lead to a job in this field, or a new set of questions. What I do know is that whether you leave a job because you have to or because you want to, there are many, many opportunities for older Americans to stay sharp, and stay involved.

Guest post by James Krieger, an intern at NuWire

Estimated Productivity Losses Caregiving Causes U.S. Businesses

The baby boomers comprise a large and aging population. As baby boomers and their parents age, more and more people are requiring caregiving in varying levels of intensity. In fact, more than 44 million Americans provide some sort of care for a family member or friend 18 years or older. The National Alliance for Caregiving and AARP conducted the study, called Caregiving in the United States, to find the costs to employers of caregiving employees.

"This study estimates the productivity losses to U.S. business of employees who must make workplace accommodations as a result of caregiving responsibilities. These include costs associated with replacing employees, absenteeism, crisis in care, workday interruptions, supervisory time, unpaid leave, and reducing hours from full-time to part time," according to the study.

Some of the key findings of the study are listed below:

The total estimated cost to employers for full-time employees with intense caregiving responsibilities is $17.1 billion.

The average cost per employee for those with intense caregiving responsibilities is $2,441.

The total estimated cost to employers for all full-time, employed caregivers is $33.6 billion.

The average cost per employee for all full-time, employed caregivers is $2,110.

The majority of family caregivers (79%) are providing care to someone over the age of 50.

Nearly 60% of those caring for an adult over the age of 50 are working; the majority of those work full-time.

Nearly 40% of caregivers are men.

The average age of the caregiver for a person over the age of 50 is 47.

Most caregivers provide unpaid care to a parent or grandparent.

Approximately 15% of the caregivers were providing care to someone who lived at a distance of more than an hour away.

At least 6 out of 10 employed caregivers reported that they had made some work-related adjustments as a result of their caregiving responsibilities.

10% of the employed caregivers reduced their hours from full-time to part-time.

Study Documents Baby Boomers' Plans For Working In Retirement

By dint of their sheer number alone, baby boomers are an influential group. So when a group of about 78 million people decides to blaze a new trail, the rest of us have no choice but to follow their lead.

In this case, the baby boomers have begun to reshape the American workforce.

"A succession of surveys over the past decade makes plain the plans of a new generation of older Americans to keep working. Most of this research reveals that four of five boomers are expecting to continue working at the point when earlier generations moved to the sidelines," according to the MetLife Foundation/Civic Ventures New Face of Work Survey. "Indeed, there is already evidence of shifting labor patterns on the part of the pre-boomers, as early retirement levels off and millions of older workers remain in the workforce. These polls also find that most people who keep working want more than an endless incarnation of midlife work. Instead, they are keen on renegotiating their relationship to work, looking for more flexibility and liberation from the long hours characterizing midlife labor in America today."

53 percent of adults aged 50 to 70 expect to work even into their retirement, according to the survey.

The survey focused on what baby boomers want to accomplish through their work once they have passed the traditional retirement age, and whether those desires meshed with what America will need to have people doing. Thankfully, rather than finding a huge disconnect between what baby boomers will want to be accomplishing and what will need to be accomplished, the survey found "heartening indications of what might well be a win-win opportunity of staggering proportions."

According to the survey, 50 percent of Americans aged 50 to 70 are interested in working--now or in the future--in positions that would help improve the quality of life in their communities. More specifically, of leading edge baby boomers, 58 percent are interested in such positions.

"There is overwhelming interest in finding specific types of work in retirement that would
serve the community and people in need," according to the survey. Of baby boomers who plan to work during retirement, 78 percent are interested in working to help the poor, the elderly
and others in need. 56 percent are interested in working with health issues, such as in a hospital or for an organization working to fight a particular disease. And 55 percent are interested in teaching or other educational positions.

Those surveyed gave a variety of reasons for why they will want to continue working past the traditional retirement age. The most common reasons included staying connected with other people; receiving a sense of purpose from working; earning additional income; and the ability to help improve the quality of life in their community.

America's Senior Citizens Wealthier Than Previous Generations Of Seniors

In my earlier post, I wrote about the phenomenon of middle-aged adults moving home with their parents, most of whom are at or near retirement age. While this is not a practical solution for all families, in many cases, it's doable. Perhaps playing role is that U.S. government researchers released a report yesterday which found that, "older Americans have more money and are expected to live far longer than prior generations," according to Reuters.

Data from 15 federal agencies on population trends, economics and health issues were combined to create a report called Older Americans 2008.

"The average net worth of older Americans—those 65 or older—has increased almost 80 percent over the past 20 years," according to Reuters. "And those who reach the age of 65 are now expected to live an average of 19 more years, or seven years longer than people who had reached age 65 in the year 1900."

Medical advances are largely to thank for this increase in life expectancy. And the increasing wealth of senior citizens makes quality health care more accessible to them.

One final finding of the report? "Older adults in the United States are far better educated than prior generations. In 2007, 76 percent of those over 65 had high school diplomas, and at least 19 percent had a bachelor’s degree, up from 24 percent with high school diplomas in 1965 and just 5 percent with bachelor’s degrees."

Adults Moving Back Home With Their Parents

In what has become a fairly common practice, many college graduates move back in with their parents temporarily after graduation. I did this (thanks, Mom and Dad!); so did most of my friends. Living at home for a time generally allows new college grads to find a job and save up some money before heading out to live on their own.

"But now the slumping economy and the credit crunch are forcing some children to do so later in life—even in middle age," according to a recent Associated Press article.

The slumping economy, dwindling jobs and rising costs for housing, food, gas and medical care are all combining to make it harder for many people to make ends meet. So even some adults are moving back home with their parents to decrease the strain on their finances.

"Kim Foss Erickson, a financial planner in Roseville, Calif., north of Sacramento, said she has never seen older children, even those in their 50s, depending so much on their parents as in the last six months," according to the AP.

Parents, still being parents, are used to taking care of their children. "Parents feel guilty if they don’t offer help, but [Erickson] warns them to be careful with their savings," according to the AP. "Some of Erickson’s clients are giving as much as $50,000 at a time to their kids, many of whom have overextended themselves with big houses or lavish lifestyles," according to the AP.

But the parents of middle-aged adults are typically retired, semi-retired or nearing retirement and have to think about major expenses such as extensive medical care.

"Plenty of well-meaning parents must delay retirement or scale back their dreams because they have to help their children," Karen Maloney Stifler, a financial planner in Hudson, Ohio, said, according to the AP.

Adults who are considering moving back home with their parents for financial reasons should make sure that such a move makes sense for their parents, too.

Industries Friendly To Workers Over 40

"With the baby-boomer generation approaching retirement, resulting in a shortage of approximately 10 million employees over the next decade, candidates with relevant work experience are becoming more in demand," according to ClassesUSA, an online higher education portal.

Many workers of a certain age fear being forced out of their jobs and forced into retirement so that their company can then hire younger replacements. Younger workers are cheaper, in theory, than their older counterparts. They generally cannot command wages as high as those with more experience and education than they have themselves.

Companies can also save by employing younger workers because they will have to shell out fewer dollars for health care, because younger workers are often healthier. Assuming a company participates in a matching program for retirement plans, they will also save money on that front, because the rate of young workers participating in retirement plans is smaller than the rate of older workers doing so.

"With the baby-boomer generation approaching retirement, resulting in a shortage of approximately 10 million employees over the next decade, candidates with relevant work experience are becoming more in demand. That gives older employees more leverage to request bigger paychecks and to change jobs later in life," according to ClassesUSA. "Fields such as health care, business-to-business services, education and services for the elderly are practically custom made for the older worker considering a job change."

The health care industry is ideal because many of the required academic programs can be completed in two years or less, and many health care jobs offer flexible schedules; consulting is a common opportunity in business-to-business settings, and consulting clearly favors those with experience in an industry; education is facing shortages and high turnover across the board and would benefit from older workers, who often bring a sense of loyalty to their workplace; and finally, older workers are especially cut out for the industry of services for the elderly because they are the ones most likely to understand what that population wants and needs.

For more details on why each of these industries are particularly well suited to workers 40 years old and older, see the entire article here.

Did the Housing Boom Cause a Baby Boom?

The nation's recent housing bubble--which is now collapsing as a recession looms--may have had consequences beyond strictly financial ones. The 4,265,996 babies born in 2006--the most babies born in a year since 1961--may have been part of a baby boom brought on by the housing boom, according to an article in the New York Times.

"Social scientists have long traced a connection between housing and fertility," according to the New York Times, and some of these social scientists are theorizing that the housing bubble led to a mini baby boom.

"For the first time in 35 years, America’s total fertility rate—the estimated number of children a woman will have in her lifetime—reached 2.1, the theoretical level required to maintain the country’s population, according to recent data from the National Center for Health Statistics," the article said.

"In the wide-open mortgage climate early this decade, creative loan products allowed more people than ever to buy homes, often a precursor to having children," the article said. Once they owned homes, then, many probably felt they were stable and responsible financially. Owning a home also probably gave a lot of people the feeling that they had enough space to raise kids. And in 2006, the housing boom baby boom was born.

This mini baby boom could mean a lot of things. For one, the class of college students starting in the fall of 2024 is sure to be quite competitive.

In addition, this mini baby boom could be a boon to the original baby boomers who, in addition to having more grandchildren to spoil, now have a lot more people who could help pay for their retirement.

While the oldest of the original baby boomers can now collect Social Security and retire, the youngest baby boomers still have 21 years until they hit age 65--the traditional retirement age--and many people plan to work past age 65 in order to be able to sock away enough money to retire comfortably. Thus, these housing boom baby boomers will be in the work force early enough to contribute to Social Security in time for the original baby boomers to benefit.

More Employers Now Seeking Older Workers

Many job seekers over a certain age feel discouraged by the fact that some employers may consider them old. In fact, statistics do show that there is some ageism in play in the hiring process; in 2004, job seekers 55 years old and older took 25.8 weeks to find jobs, while the job search lasted only 18.9 weeks for younger workers, according to the AARP.

Sometimes older workers are discriminated against because they are stereotyped as being unwilling or unable to adapt and to use technology and also because they command higher pay than workers straight out of school. There are also a lot of companies unwilling to invest time and training in employees who they think are just going to retire in a few years anyway.

There are definite and obvious benefits to hiring older employees, though. Older workers bring to the table years of experience and tend to stick with jobs longer than their younger counterparts.

To combat ageism in the hiring process, the AARP created the AARP National Employment Team three years ago; the group is comprised of a list of employers, in both the public and private sectors, looking to hire workers 50 years old and older for full-time, part-time and seasonal jobs. The Associated Press reported about two weeks ago that three federal government agencies and six private companies had been added to the list, bringing the total number of employers to 38.

The job opportunities are available for free on the AARP's website.

Deborah Russell, the AARP's director of workforce issues, said 69 percent of baby boomers intend to work past age 65--the traditional retirement age--and that most plan to do so to shore up their savings to cover the high costs of medical care.

Age and Decision Making Ability

There may be a reason why so many victims of scams seem to be older adults: Researchers have found that decision making ability decreases with age, according to the New York Times. The study, led by Natalie L. Denburg of the University of Iowa, appeared in the Annals of the New York Academy of Sciences.

Test subjects were divided into two groups, one of 26- to 55-year-olds and one of 56- to 85-year-olds. "The goal was to see how well the older volunteers used the skills often demanded of them when making decisions in real life about activities like investments, insurance and estate planning," according to the New York Times.

The study "used a gambling-style test in which people draw from four different decks of cards. Two decks, not to mince words, are for suckers," according to the New York Times. "They give short-term rewards but long-term losses. The other two decks do the opposite. Most people draw a lot from the bad decks first and switch. In the study, many of the older participants stuck with the bad decks."

The study attributed the decreased ability aging adults have to make good decisions to changes in the prefrontal part of the brain that influences behavior.

Those who are approaching retirement or are already retired are perhaps the investors who need to be making the best investment decisions simply because they have less time to recover from mistakes. And, just like the older adults in the study, perhaps older investors would be content to stick with the short-term rewards.

Investors of all ages who seek out immediate and/or large returns are susceptible to falling victim to scams. But older adults, making less sound decisions than in their youth, may be especially likely to become victims of scams. There are plenty of stories of older adults who put all of their money into one investment only to lose it all. Older investors, and investors of all ages, should remember to not put all their eggs in one basket, just in case one of their investments falls through.

Young Investors are Alternative Investors

Millionaires from Generation X, aged 28 to 42, allocate 23 percent of their portfolios "to alternative asset classes, such as hedge funds, private equity, investment real estate and commodities," according to a Northern Trust survey published Jan. 25.

Gen X millionaires are "proving to be more sophisticated in their investment style than older millionaire generations" because of their interest in alternative investments and new investment products, such as exchange-traded funds (ETFs) and structured notes, according to Northern Trust.

This is something that holds true among my circle of friends, many of whom are making their first forays into investing. They talk about their real estate deals, the small businesses they start and their Kiva loans, not the stocks they buy.

The thing that stuck out the most to me about this survey is that 41 percent of the Gen X millionaires who are aware of socially responsible investments have some money in them, according to Northern Trust; in contrast, only 18 percent of baby boomer millionaires who are aware of socially responsible investments have actually made any.

The younger generations have more time to spend on this planet. Maybe that's why they are more willing than older generations to invest their money to try to save it.