The common definition for “Baby Boomers” is the generation formed by children born between 1946 and 1964—a population of about 78 million Americans with births peaking in 1960 and then tapering off into the declining birthrates of the “X” Generation commonly defined as the fifteen years following 1964. This numeric definition does not include both legal and illegal migrants who have expanded these numbers by approximately one million per year (the accuracy by age group difficult to determine because of inaccurate records on illegal migrants).
A recent news article claimed that “10,000 baby boomers turn 65 every day and will continue to do so through 2030”, thereby continuing to feed retirement housing demand throughout the next fifteen years. This statistic appears to rely upon the average high birthrate throughout the 1946-64 time period (11.8 million per year average, minus younger death rates), whereas the annual birthrate actually increased every year through 1960, after which it began to decline. There also is a current trend toward extending work years beyond the historic age of 65 in order to keep up with the falling spending power of the dollar. In sum, the number of aging baby boomers increases every year through 2025 after which it begins to decline at a modest rate through 2030.
The important issue for residential real estate developers planning long-term developments, of course, is not the historic age threshold of 65, but the financial capability of these aging Americans moving into their lower income years, coupled with the long-term value of the American dollar. There seems little question that the baby boomers, swelled by migrants and longer life spans bolstered by improved health care, will generate increasing numbers of households requiring accommodation through 2025, and continuing on a marginally lower growth level through 2030. The more difficult forecast is affordability in terms of their level of household wealth and the proportion of that wealth that they can allocate to housing and long term care.
The recent trend in household wealth is expanding the top earners and the lowest earners, coupled with declining middle class wealth. Only a small proportion of these aging Americans can consider things like using life insurance for retirement and a new retirement home. However, this small proportion of retiree prospects has been fueling increasing demand for targeted retirement housing over the past few years. It seems reasonable to assume that this relatively small proportion will continue to increase in number through 2025 and beyond, providing increasing sustainable demand for both new and resale retiree housing.
David F. Parker