A new study shows the cascading effect of taxes on the retirement population. The state of Wisconsin lost $4.7 billion in household net worth between 1995 and 2000, although gaining 4,400 households during the period. The study was completed by the Wisconsin Taxpayers Alliance (WTA).
Todd Berry, WTA president, explained for Gazette Extra that tax structure is important for Wisconsin and other states to consider as they lose highly paid, or well educated residents to other states, such as Florida. Fewer residents, generating less tax revenue, may lead to fewer bank deposits and less investment capital. This situation may translate to less support for local charities.
Berry continued, in the Gazette Extra, noting that if good workers move to other states with better tax structures, companies in Wisconsin may have to strive to find qualified workers and grow. Also companies may sell fewer goods and services as fewer wealthy people and families live in the state. Berry said that nine other states receiving Wisconsinites possess income and property taxes 25 to 73 percent lower than Wisconsin.
Realizing this is more important than ever as the first baby boomers, born between 1946 and 1964, are turning 60 this year. In fact, according to USA Today, once they quit working, 20 percent of some 79 million baby boomers are expected to move to a new state. This is double the previous level, according to Gene Warren, president of a consulting firm that assists communities in attracting retirees.
ABC News reports that most baby boomers expect to retire around the age of 63 and 66 percent of the survey participants intend to work for pay after retiring. Staying busy is the reason for 43 percent, while 27 percent will work to ensure their livelihood. Another 19 percent will work to afford “extras.” The survey was completed by the Associated Press.
“It’s the new economic development. This freight train is just a few steps from our doorstep now. The oldest boomers (next week) will be turning 60. That’s the tip of the iceberg. As more and more boomers get into their 60s, the market will just be exploding,” said Dan Owens, a consultant who works with cities to attract baby boomers and retirees.
Baby boomer’s large disposable incomes have been made possible by home equities that have increased with ballooning property values, fat 401k funds, and inheritances. Gene Warren told USA Today that millions of retirees will have “huge discretionary incomes.” Warren continues, “All the Medicare benefits is money coming into the community from the outside. So is Social Security. So are all the pension plans. It’s like manna from heaven.”
Florida, in particular southwest Florida, is expected to be a mecca for retirees who promise to be healthier and more active than other retiree waves in the past, according to USA Today. Competition from other retiree centers is not expected to stunt the development of the area, even with rising taxes and congestion.
Some baby boomer trends are presenting themselves already, according to the News-Press. Out of preference or necessity, baby boomers will likely opt for working retirements, instead of complete retirements, as the limits of their health insurance plans and pensions may push many retirees into the work force.
This population may also facilitate a burden on health care services, even if they are healthier than their parents, according to the News-Press. There may also be issues with affordable housing and recreation areas as well. Community planners and private developers will surely be challenged to meet these issues head-on.