Courting retirees, it would seem, is more profitable than recruiting industrial jobs.
According to a retiree economic impact study from “Retirement Development: a How-to Guidebook,” the annual gross income in a county’s economy for a new industrial plant with 100 employees is $1.82 million, equivalent to the average annual income per 100 retiree households.
But leakages offset the average annual earnings of $18,200 in manufacturing by $1.27 million, by calculating 35 resident employees terminating their employment outside the county to work at the new plant ($637,000), 15 non-resident commuters obtaining employment at the new plant ($273,000) and federal and state taxes of 20%, or roughly $364,000, for plant employees, according to a December 2002 study.
Pension deductions at 7% for 100 plant employees negates $127,400, leaving a remainder of $418,600 direct economic impact per 100 industrial jobs versus $1.54 million per 100 retiree households. Bottom line: each relocated retiree household is the economic equivalent of 3.7 factory jobs.
“It was an excellent study by Mark Fagan,” said Diana O’Toole, TMP, program manager of Hometown Mississippi Retirement, the state’s official retiree attraction program. “Many of these statistics have been used to validate using retiree attraction as an economic development tool.”
O’Toole’s budget for the fiscal year ended June 30 was $120,350, with Certified Retirement Cities also having access to $75,000 for match grant applications. The program’s budget for the new fiscal year is still undetermined.
“I do know the Mississippi Development Authority’s (MDA’s) budget as a whole was cut, so I’m sure it will trickle down,” she said. “But I’m not sure exactly how we’ve been impacted yet. Every year, we do more with less.”
The state retirement program was initiated in 1994 to promote Mississippi as a retirement haven to pre-retirees and retirees throughout America, to assist communities in their marketing efforts to development hometowns with attractive retirement lifestyles, to assist in the development of retirement communities and life-care communities for economic development purposes and to encourage tourism to the mature market as a first step toward retiree recruitment.
To reach this coveted audience, MDA markets the Hometown Mississippi Retirement program primarily to retirees in the North Atlantic states and the Great Lakes region in Time Gold, AARP magazine and Where To Retire magazine, and participates in AARP’s national conference, trade shows and events such as the “LiveSouth Realty Show” in Illinois. Most certified retirement communities have their own well-rounded marketing programs, including accessible, interactive Web sites with links for additional information.
“In the back of our Mississippi Living Guide, there is a listing for each city in our program, and retirees call for personalized tours,” said O’Toole. “The number of inquiries is simply amazing. In the last 11 months, we’ve had 74,236 inquiries. Those folks are finding out the benefits of moving to Mississippi.”
Since the program was established, nearly 4,000 identified retiree households have located to Hometown Mississippi Retirement cities.
“I’m sure the retiree migration to Mississippi is much larger than we know,” said O’Toole. “We’re diligently working on a better way to identify relocated retiree households to our Certified Retirement Cities.”
Retirees are the fastest-growing and wealthiest economic market sector in the U.S., with 12,000 Baby Boomers turning 50 daily. More than 400,000 people, generally between the ages of 50 and 65, move annually to another state upon retirement. With a median annual income of $33,000, retirees bring an average of $320,000 in liquid assets, and spend approximately 85% of their income locally for goods and services. Their presence creates 1.5 jobs.
“In Mississippi, you can live it up instead of paying it out for day-to-day living expenses. You can take what you save on housing, utilities, healthcare and taxes, and spend it on recreation, travel or investments,” said O’Toole.
Mississippi now has 19 Certified Retirement Cities instead of 20, after Holly Springs withdrew from the program. On the waiting list: 22 cities.
“Moving those cities to the certified list is simply a matter of us opening up the certification again, because it takes money to promote these,” said O’Toole. “Due to budget constraints, we’re not certifying at this time. But I’ll share the certification list with anyone who contacts us, so they can get started.”
Each community must pass a three-month intensive screening process conducted by Hometown Mississippi Retirement, and is evaluated on criteria important to retirees: affordable cost of living, low taxes, low crime rate, quality medical care, recreation, educational and cultural opportunities and most importantly, a warm, welcoming community.
Because the cost of living is below the national average in most Certified Retirement Cities, Hometown Mississippi advertises the savings of relocating to those communities. For example, according to the ACCRA (American Chamber of Commerce Researchers Association) Cost of Living Index, Hattiesburg’s fourth quarter 2003 average cost of living was approximately 8% below the national average. The average rent for a 950-square-foot apartment was $628, and the average cost of a 2,400-square-foot home was $205,421. Principle and interest cost $922; total energy costs averaged $111.06; gasoline was $1.39 per gallon; and a private hospital room cost $493.50.
Mississippians benefit from the lowest per capita tax burden in the nation. Kiplinger’s Personal Finance magazine rates the state sixth in the nation and number one in the Sun Belt for least expensive tax states for retirees.
“Mississippi is tax-friendly when it comes to retirees,” said O’Toole. “In addition to low tax rates in general, retirees living in Mississippi don’t have to pay any state income tax on qualified retirement income.”
The state’s income tax rates are 3%, 4% and 5%. The first $5,000 of taxable income is taxed at 3%, the second $5,000 at 4%, and everything above $10,000 is taxed at 5%. A married couple filing a joint return, with joint or separate earned income, can separate their income, which would allow both individuals to take advantage of the lower rates. There is a standard deduction of $2,300 for single and $4,600 for married filing jointly and/or as head of household. The same itemized deductions for federal income tax apply with the exception of state income tax.
Single taxpayers may claim a $6,000 exemption, and married filing jointly may claim $12,000. Each additional exemption for dependents 65 and over is $1,500.
“Our retirees also gain an additional bonus exemption on property taxes upon reaching the age of 65,” said O’Toole.
For the new fiscal year, Hometown Retirement is collaborating with the Stennis Institute of Government at Mississippi State University on an economic impact study of retiree attractions.
“We’re really excited about that, because it will be the first time we’ll have some hard numbers,” said O’Toole.
MDA tourism director Craig Ray called O’Toole “the perfect person to head this valuable economic recruitment program.”
“I’m a lifelong Mississippian, and I love telling people what a wonderful place it is to live,” O’Toole said with a smile.
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.