21 January 2010

Boomers see retirement later, less likely

Wed, Jan 20 2010
By Helen Chernikoff

LAS VEGAS (Reuters) - People just starting to consider retirement are less optimistic about their ability to stop working than older people, but many still want to move when they reach traditional retirement age, according to a survey commissioned by homebuilder Pulte Homes Inc.

Of those who turn 50 this year, 41 percent say they will never be financially capable of retiring and 23 percent have not even started to save, Pulte revealed at the International Builders' Show, homebuilding's annual industry event, held here this week.
The study compared attitudes toward retirement by older and younger baby boomers, the massive age cohort born between 1946 and 1964 whose sheer size makes it a prize demographic across industries.

Pulte's Del Webb subsidiary, which builds amenity-heavy communities featuring golf courses and swimming pools for the market aged 55 or older, is homebuilding's biggest "active adult" business with operations in 21 states.

Along with luxury homebuilder Toll Brothers Inc, Del Webb is one of only two nationally known homebuilding brands, Pulte Chief Executive Richard Dugas has said.

Del Webb was about half of Pulte's business until it acquired rival Centex Corp in 2009. Now the combined company's business is about a third Del Webb, a third first-time home buyer and a third first-time move-up buyer, said spokeswoman Caryn Klebba.

Pulte's own decision to diversify away from Del Webb by buying Centex demonstrates the active adult category is a tough business, said UBS analyst David Goldberg.

But the company, the largest homebuilder in the United States since the Centex acquisition, has confidence in Del Webb's future, despite the relative pessimism expressed in its survey by younger boomers, said spokeswoman Caryn Klebba.

There are 78 million baby boomers, more than enough to give Del Webb long-term viability, she said. Del Webb, which opened its doors in 1960, has sold 170,000 homes in its 50 years of operation.

Also, between 30 percent and 40 percent of younger boomers still plan to move when they retire, despite financial worries, according to the survey.

Of those planning to move, about 50 percent plan to move to a different state and about 25 percent plan to move to a different city.

"There's no doubt there's a very large percentage of the population that's aging that would like the lifestyle choices that Del Webb offers. It is a good business over the long term from a demand perspective," Goldberg said.

Still, the study reveals deep financial concerns on the part of potential Del Webb buyers who are turning 50 in 2010. Even those who do plan to retire say they will do so later, at a median age of 67 compared with 63 for the older survey respondents.
The older group surveyed is more optimistic about its retirement prospects, however. Only 15 percent say they will never be able to retire. Also, about a third of the older baby boomers say they will be financially prepared for retirement, while only 16 percent of the younger group say they feel that way.

Del Webb can adapt its product to changes in the active adult market's financial profile, Klebba said.

The company has made its homes smaller to enhance their affordability, for example. It has modified Del Webb floor plans to accommodate the more widespread desire for home offices among older buyers who are still working. And it is building more in North and South Carolina, which cost less than the traditional warm-weather retirement destinations, Klebba said.

HarrisInteractive conducted the online survey, consisting of a representative sample of 504 people turning 50 and 510 turning 64 with a sampling error of plus or minus 4.4 percentage points, in late 2009.

© Thomson Reuters 2009

1 comment:

Jeff Green said...

A third first-time home buyer and a third first-time move-up buyer? That's interesting.