Boomers or Bust in Florida and the Nation

AUTHORS: Drs. Lynne Holt, David Colburn, and Lynn Leverty

Introduction

For most of the past thirty years, Florida has been at the epicenter of demographic, social, and political change in the nation. Its transition from a regionally isolated and largely rural southern state in 1940 to a multi-racial and multi-ethnic urban state in 2012 has placed it at the forefront of national developments. These changes have transformed Florida and, by every measure, they will continue to do so for the foreseeable future. None of these trends portend greater consequence for the state than the baby boom generation. This essay focuses on that generation, born in 1946 through 1964 and estimated at 77 million strong, and the ways in which they will reshape Florida in their retirement years. Many of the oldest residents of this age cohort have already retired and have joined the 3.3 million retirees already resident in the state. The youngest of the baby boomers, now 48, are old enough to be planning their retirement. The sheer size of this generation gives them extraordinary potential to dominate public policy in Florida for the foreseeable future. Will they, in fact, do so? This is but one of many questions we seek to answer in this essay. We are equally interested in the financial and economic well-being of seniors, their health care needs, their relationship with younger residents, and their willingness to look beyond their own interests and address those of all residents, and the ability of the state and its institutions to respond to their needs.

Florida’s Senior Demographics

The Florida Legislature’s Office of Economic and Demographic Research forecasts that those over 60 will represent 55.2 percent of Florida’s population growth of 5.1 million between 2010 and 2030. Florida will thus continue to age faster than the rest of the nation and 24.1 percent of its population will be 65 and older in 2030.

The 2010 census underscored what we already know about Florida’s seniors, those over 65 years of age: they constitute the greatest number and percentage of residents in the nation. Florida has almost 3.3 million seniors and they are 17.3 percent of the population. Those Baby Boomers born in 1946 and 1947 have now reached 65 and have begun joining the ranks of other retirees in Florida. The Florida Legislature’s Office of Economic and Demographic Research forecasts that those over 60 will represent 55.2 percent of Florida’s population growth of 5.1 million between 2010 and 2030. Florida will thus continue to age faster than the rest of the nation and 24.1 percent of its population will be 65 and older in 2030.

Long-term workforce trends suggest that the pool of workers to retirees will decline in Florida from 3 to 1, to 2 to 1 in 2030. The nation by contrast has a ratio of 4 to 1 today. For Florida, this means that the pool of workers, especially among those who are highly educated and skilled, will shrink, and new retirees will not be replaced by younger workers. Of equal importance, the local and county government tax structures rely heavily on those in the workforce and the burden to deliver goods and services to meet the demands of an aging population will increase as the number of seniors increase. Studies also show that seniors spend less on goods and more on services than younger people, thus placing the state’s sales tax structure, which depends on the sale of goods, under great pressure. While today’s seniors have the lowest poverty rates of any group, an estimated one-third of boomers are projected to have more limited financial assets and private pensions when they retire.[1]

Perceptions of Financial Security

In recent years, the Bureau of Economic and Business Research at the University of Florida has conducted a bi-monthly survey of Floridians, age 18 and older, in an effort to assess their financial confidence, among other things. A snapshot of the baby boomer responses to BEBR’s April 2012 surveys revealed a great deal of uncertainty about their financial situation.  

Richard Johnson of the Urban Institute observed the following about baby boomers and the challenges they face in this economy: 

“We're very concerned about whether people really will end up working more when they're older. Can older workers find new jobs when they're laid off? What happens to people with disabilities who can't work until they qualify for Social Security retirement benefits? And how do employers feel? Lots of anecdotal evidence suggests that age discrimination is widespread, but attitudes could change as the workforce ages.”[2]

At the same time boomers struggle in a difficult post-recession economy, their children are graduating from college with a significant debt from college loans and frequently moving back home to search for jobs and to deal with their indebtedness. The parents of boomers are also often at a critical time in life and typically turn to their baby boom children for assistance with their health and welfare needs. The generational squeeze being felt by boomers is wrenching financially and emotionally.

Retirement Security

The current retirement generation receiving Medicare and social security held jobs that were generally more stable, more likely to offer health insurance coverage, and more likely to provide defined benefit plans. Not so for many boomers. In the aftermath of the Great Recession, they have had to revisit their expectations for retirement because the era of reliable employment, with guaranteed benefits, has become increasingly elusive.

 In 2008 and again in 2011, the MetLife Foundation surveyed Americans aged 44 to 70 about their average expected retirement age. Respondents in 2008 projected their retirement to begin at 63.7 years. In 2011, the response was two years longer at 65.8 years.[3] Similarly, a survey conducted in December 2010 by the Pew Research Center found that three-fifths of older boomers, aged 50-61, thought they would need to delay retirement.[4]

Baby boomer perceptions about the need to postpone retirement and their actual retirement age may not be the same. A survey by the Employee Benefit Research Institute (EBRI) of workers’ expected retirement age (25 and over) showed that there was a gap in 2012, with 8 percent of workers surveyed saying they expected to retire before age 60, but 40 percent claimed that they actually did so before age 60.[5] Because the EBRI survey included workers other than baby boomers, the gap between expected and actual retirement age may have been less pronounced if only baby boomers had been surveyed. However, the EBRI survey findings illustrate the need to take expected retirement age data with a grain of salt.  

If one assumes that retirees will need 75 percent of their pre-retirement income to maintain their standard of living, 39 percent of boomers born in 1946 through 1955 and 40 percent of boomers born in 1956 through 1965 will fail to do so.

Even if boomers perceive that they will need more money to retire, does the evidence support their concerns? If one assumes that retirees will need 75 percent of their pre-retirement income to maintain their standard of living, 39 percent of boomers born in 1946 through 1955 and 40 percent of boomers born in 1956 through 1965 will fail to do so.[6] A greater proportion of boomers will lack the means for maintaining their standard of living than was the case with the generation of Americans born in 1926 through 1935 during the Great Depression. Among boomers, those with less education, affluence, and labor experience, divorcees, and minorities fare much worse in shared lifetime earnings than those with more education, lengthier labor participation, spousal incomes, and those who are white.[7]

One indication that some older boomers are already facing a financial crisis can be found in the number of reverse mortgage applications by homeowners age 62 – 64 years old. MetLife Mature Market Institute reports that 21 percent of those applying for reverse mortgages were in this age group compared to only 6 percent for borrowers who were 62-64 years old in 1999.[8] Traditionally, reverse mortgages have been used to provide services in the last years of life, but these applicants need the cash now to pay bills, thus leaving them with less financial resources in their older years.

Among boomers, African-Americans and Hispanics may have a more difficult time funding their retirement. The Urban Institute reports that only two-fifth of African-American men and half of the Hispanic men age 62-64 participated in the labor force in 2011 compared to almost 57 percent of non-Hispanic white men. Part of this difference can be attributed to educational differences - only 18 percent of the African-American men and 15 percent of Hispanic men 50 and older have college degrees compared to 32 percent of non-Hispanic whites. Hispanic and Asian men born outside the United States (50 percent and 65 percent respectively of those 50 and older) are also more likely to continue working past age 60 than their native born counterparts.[9] Boomer women are expected to fare better on average than women from earlier generations, earning more during their working years and benefitting from more lucrative retirement accounts and pensions.[10] There are fewer differences in workforce participation among women of color, although, like their male counterparts, African-American women age 62-64 years old recorded the least level of participation in the workforce.

According to the AARP Policy Institute, in 2009, half of all older Americans, or 19 million, depended on Social Security for 50 percent or more of their family income, whereas 23 percent, or 9 million, relied on Social Security for 90 percent or more of their family income.

Reforms to Social Security are of particular concern to seniors because so many rely on it extensively for their retirement. According to the AARP Policy Institute, in 2009, half of all older Americans, or 19 million, depended on Social Security for 50 percent or more of their family income, whereas 23 percent, or 9 million, relied on Social Security for 90 percent or more of their family income. More than 1.5 million of Florida’s seniors depended on Social Security for more than half of their family income. Social Security is also a safety net for poverty prevention. Over one-third of all American seniors were able to live above the poverty threshold in 2009 due to Social Security benefits.[11]

Predicting the resources available to retired boomers is problematic at best. For example, to what extent will the bond and stock market boost or erode future investments? To what extent will federal policies affecting Social Security and health care costs impact future investments? How much replacement income will retirees actually need? Will the typically used benchmark of 75 percent be adequate or should a higher percentage be used?[12]

Finally, it may also be difficult to predict boomer behavior. More than half the adult retirees interviewed in the 2008 National Study of the Changing Workforce wanted to continue working after “retirement” for financial reasons but almost a third planned to do so because they thought they would be bored if they were not working. For those working in retirement who want to quit and find other jobs, the most important factor for seeking new jobs appears to be the ability of the job to mesh with their lifestyle, otherwise referred to as the “work-life fit.” Therefore, a strategy for improving the work-life fit and raising the prospects for retention may be to provide employees with more flexibility in their job design.[13]

Health Care and Home Care Needs

In addition to job and retirement security, boomers are particularly concerned about access to affordable health care. Florida’s profile for health insurance coverage in 2010 highlights why health coverage may be a pipe dream for at least some of the state’s baby boomers: nationally 65 percent of the population under 65 years old had private health insurance coverage in the U.S., but only 59 percent in Florida had such coverage. Moreover, one-fourth of Florida’s population under 65 years old lacked health insurance, compared to only 18 percent for the nation as a whole.[14]

The erosion of employer-based coverage has occurred alongside the absence of health insurance for many. Since the beginning of the Great Recession, the percentage of non-elderly workers with employer-based health insurance declined in the U.S., from 71.7 percent to 68.6 percent in 2010. At the same time, the percentage of uninsured increased. In Florida, the same trends are even more pronounced. What is unknown at this point is the extent to which employer-based insurance will rebound, if at all, once the economy improves. Also unknown are the implications of a potentially eroding employer-based coverage for access to care, particularly on the part of younger baby boomers, and the ultimate fate of the Affordable Care Act which could expand coverage to many uninsured Americans.

One thing we do know. If baby boomers or other adults under age 65 lose their jobs or change jobs without health insurance benefits, they will find it very difficult to access affordable health insurance on the private market. A study by the Commonwealth Fund found that nearly six in 10 who had employer-based insurance and then became uninsured were without coverage for one year or more.[15]

In general, Florida is not well positioned to meet the health care needs of boomers. A recent report ranked all the states on four dimensions of long-term care for seniors, the disabled, and caregivers: affordability and access; choice of setting and provider; quality of life and quality of care; and support for family caregivers. Twenty-five indicators were used to provide rankings within these four dimensions. Overall, Florida ranked 44th of the 50 states.

In general, Florida is not well positioned to meet the health care needs of boomers. A recent report ranked all the states on four dimensions of long-term care for seniors, the disabled, and caregivers: affordability and access; choice of setting and provider; quality of life and quality of care; and support for family caregivers. Twenty-five indicators were used to provide rankings within these four dimensions. Overall, Florida ranked 44^th of the 50 states. Two examples underscored the shortage of home health and personal care aides for retirees in Florida. According to the Scorecard, Florida ranked 49^th of 50 states in 2009 in the number of home health and personal care aides per 1,000 population of seniors aged 65 and older. The U.S. average was 40 per 1,000 and Florida averaged 14 per 1,000.[16]

Housing

Florida has become a haven of gated communities for seniors, and seniors have flocked to them with the largest being the Villages, near Ocala, with approximately 8,500 residents. While their parents have embraced these communities, it is unclear whether baby boomers will follow in their footsteps. One school of thought is that baby boomers will tend to age in their own homes and not move at all. There are indeed compelling reasons for this. The Great Recession and subsequent collapse in housing values reduced the worth of that equity. Many of those who wish to relocate or downsize are not be able currently to find a buyer for their home.

A major challenge for Florida in the aging market is providing suitable and affordable housing for its frailest seniors, and creating a social environment that enriches their lives. A recent survey by MetLife found Florida to be costlier than the national average for nursing home and assisted living facility rooms.

High foreclosure rates (one in 341 Florida homes in February 2012) also continue to complicate the housing market for boomers. Even if many boomers stay home, the boomer population is so large that there will still be many who choose Florida, as generations of seniors before them have. Economist David Denslow of the University of Florida contends that Florida will remain a haven for rich retirees. According to Denslow, few of these boomers were affected by the Great Recession, and they have the financial capacity to own two or three homes. Much like those who retired to Johns Island and Naples, Florida, Denslow predicts these boomers will maintain homes in at least two places, opting to winter in Florida.[17] A major challenge for Florida in the aging market is providing suitable and affordable housing for its frailest seniors, and creating a social environment that enriches their lives. A recent survey by MetLife found Florida to be costlier than the national average for nursing home and assisted living facility rooms. The costs for adult day care centers averaged $61 in Florida but there was considerable variability among low and high costs in the state’s major urban areas, with Miami having significantly lower costs than other regions of the state.[18]

Affordability is one dimension of the problem. Supply is another. As measured by the previously referenced Scorecard, Florida also lagged behind most states in the number of assisted living and residential care units in 2010 with 26 units per 1,000 population for seniors age 65 and older, compared to 31 units per 1,000 population for the U.S. Because Florida is such a large state, a more granular analysis would be needed to pinpoint regions in the state with the most serious shortcomings.  However, the Scorecard reveals Florida’s serious shortcomings for seniors and should serve as a wakeup call for further discussion and action.

Political Engagement

As baby boomers enter their retirement years, political leaders are watching closely to see the extent to which their voting patterns mirror those of seniors in previous decades. In 1998, according to Political Scientist Susan MacManus, seniors represented 18 percent of the state population but 24 percent of the voting age population and 27 percent of state registered voters. In 2010, that proportion was still roughly 18 percent of the state population and almost 27 percent of state registered voters. Seniors also accounted for 31 percent of all Floridians voting in the November 2010 election.[19] In some counties, such as Charlotte, Citrus, Highlands, Pasco, and Sarasota, seniors often accounted for over half the vote. These seniors also began electing their own to political office at the local and state levels to ensure that their concerns were fully addressed.

The senior vote takes on particular significance in Florida because it is overwhelmingly white. In the 2000 census, 83.2 percent of seniors were white, while only 9.9 were Hispanic and 6 percent African American. Those percentages adjusted slightly in 2010, with whites at 77.2 percent, Hispanics at 13.4 percent, and African Americans at 7. 98 percent, but seniors remained overwhelmingly white, especially when compared to the population as a whole, which was 57.9 percent white, 22.5 percent Hispanic, and 16 percent African American. With young families increasingly of color – Hispanic and Black – how will the politics of aging play out in the state? The concern among many is that white seniors will continue to exercise disproportionate influence at the polls and, consequently, in state politics, ensuring that their issues are addressed, while those of young families get ignored or postponed. If baby boomers follow the residential patterns of many of Florida’s seniors and elect to live in gated communities that are isolated from the rest of society, that concern is likely to persist. Only a strong economy can insure that the needs of both receive the attention of state leaders. And that has not been the case in Florida for the past five years.

Equally important is the fact that political interest among young people is low. The Harvard Institute of Politics recently released a survey of young adults aged 18-29 years old. According to the survey, less than half (49 percent) say they definitely plan to vote in 2012.[20] As the table below shows, however, only one-fifth of the total population aged 18-24 actually voted in 2010. If 2010 voting patterns are any predictor for the 2012 election, baby boomers will be less likely to vote than seniors but much more likely to vote than the youngest group of eligible voters.