My Generation August 2010 - Keep Me Current

6
By Melissa Wood
Big money, big impact
Boomer spending drives the economy of Maine
Maybe at one time you thought you could
hange the world, or at least wanted to try.
erhaps as an idealistic adolescent you thought
aybe you could do something to at least make
difference, politically, socially or otherwise.
But as a baby boomer, you already are changing
the world.
“Because they’re such a large part of the population
on a national level, they really drive a lot
of the national trends,” explained Amanda Rector,
an economist specializing in demographics
with the Maine State Planning Offi ce.
In other words, as members of this generation
go through the different stages of life, so goes the
nation.
“The baby boom population is so large that
as they enter different life stages the economy
changes to accommodate them,” according to a
population outlook for 2013 to 2028 published
by the Maine State Planning Offi ce.
Just how much power does that mean? “They
are such a large part of the population, if they
decide to retire in one fell swoop, some industries
would have to shut down for lack of workers,”
said Rector.
Thankfully that hasn’t happened, and whatever
they decide to do next, there’s no question
that currently boomers are at the height of their
earning and spending power, a fact with farreaching
effects on the rest of the economy.
“Certainly they have higher earnings than
other age cohorts and buy more things than
other age cohorts,” said Rector.
This holds true especially in Maine, where
boomers make up 30 percent of the population,
which means the state has the second highest
percentage of boomers in the nation after Vermont,
according to the State Planning Offi ce.
Why are there so many boomers in Maine?
Rector said the reasons vary, but include a number
of older boomers who came to Maine’s summer
camps or visited when they were younger
and are now retiring here. At the same time, as
the number of retirees is increasing, the number
A few of the high-end, “distinctive” properties listed for sale in Maine by Town & Shore Real Estate in Portland.
of younger people is decreasing because many
of them are leaving the state to go to college and
fi nd employment elsewhere.
As a broker specializing in high-end, “distinctive”
properties, Susan Lamb of Town & Shore
Real Estate in Portland has helped clients in their
50s and 60s fi nd that dream retirement home in
Maine. In the past couple years, however, she has
seen fewer people coming to Maine.
“I think, as far as spending goes, they’re probably
more conservative than they’ve been in the
past,” she said. “There are many more luxury
homes on the market that might have been purchased
if it were a different economy.”
When they are ready to buy, Lamb has found
low maintenance is a key selling point for baby
boomers.
“Most of them prefer to buy a home that does
not need work,” she said.
Glenna Irvine, a buyer broker with the Landry
Team at Benchmark Residential & Investment
Real Estate on Munjoy Hill in Portland, has seen
a buying trend of second home purchases both
by baby boomers from out of state and within
the state.
“From what we’re seeing, it’s not just people
from out of state, it’s also people who live in
Maine and want a second home closer to the
city,” she said.
Recent clients have included couples from
York and northern Maine, who kept their fi rst
homes but also bought places in downtown Portland.
She said Portland’s East End has proved especially
attractive to these second-home buyers,
who appreciate its mix of homes and old neighborhood
feeling while still being in the city.
“It has a real down-to-earth feel,” said Irvine.
“They want to be in the city, but they also want
to have that closeness of a neighborhood.”
Irvine says many baby boomers – including
fi ve of her clients in the last three months – are
buying condos in the city to be closer to their
adult children. All of the fi ve are from Maine
and tend to use the city as a hub where the
whole family can gather.
“It’s very, very common,” said Irvine. “I think
we tend to have a little bit more of a connection
to our kids.”
Having those kids out of the house has also
changed some of the boomers’ spending habits
when it comes to their vehicles, too.
Clyde Bartlett of Yankee Luxury Auto said
baby boomers, who make up about 50 percent
of his customer base, are mostly buying smaller
SUVs and convertibles for driving around in
the summer.
“They’re graduating from their family vehicle,”
said Bartlett. “Most of their kids have
grown up and gone and now they’re able to buy
that car they’ve wanted all their lives. They’re
fi nally able to get that luxury they’ve been waiting
for.”
More than anything else, however, health
care spending is expected to grow as boomers
reach their retirement years.
“Anecdotally, it’s safe to say that older people
spend more money on health care and so that
is one reason why health care spending is expected
to grow strongly as the baby boomer
generation ages and requires more,” said economist
Joel Johnson, also with the Maine State
Planning Offi ce.
Other consequences include a change in revenue
in both income and sales taxes.
“Right now, baby boomers are in their peak
earning years and at the top of pay ranges,”
said Rector.
This means that the state receives higher
payroll and income taxes from boomers and
will lose that revenue once they retire.
“The other side of that is they’re at their peak
earning years and they’re also buying more
stuff, so the state gets more sales tax revenue,”
said Rector.
And boomers may not retire for a while.
Many may choose to wait until they’re 75 instead
of 65. It’s hard to tell because boomers
don’t follow trends, they create them. And so,
for example, once they do retire, they may decide
to spend their retirement years working for
a nonprofi t as a volunteer or starting up new
businesses – instead of playing golf for the next
20 years.
“The baby boomers have never really done
anything conventionally,” said Rector. “Baby
boomers tend not to follow the same pattern
of behavior as previous generations in terms of
working and thinking about retirement.”