The youngest cohort of the Baby Boomers (the generation born from 1946 to 1964) are set to reach 50 this year with the oldest turning 68. Australia’s largest and wealthiest generation is now entering retirement or seriously planning for it.
With 8% of Australians aged 75 or older living in retirement villages and having grown from a low base in the 1990s, and amidst a rapidly ageing population, the retirement village sector is experiencing significant growth. Australia’s most comprehensive census of retirement village residents, the bi-annual McCrindle Baynes Village Census 2013, profiled over 5,200 retirement village residents nationally, identifying the key characteristics and decision drivers that motivate 20,000 Australians to make the village move each year.
The Baby Boomers: Redefining retirement
Over the last decade, there has been a significant rise in the wealth and expectations of residents entering retirement villages and the Baby Boomers will lift this to a whole new level. Younger Boomers (aged 55-64) are Australia’s wealthiest age group with an average household net worth (all assets) of $1.1 million, which is 50% larger than the average Australian net worth. The older Boomers (aged 65-68) are a close second with a $1 million net worth, 37% above the average household.
Social researcher Mark McCrindle comments on this emerging cohort of wealthy retirees:
“The average new retiree has a household net worth exceeding $1 million for the first time in our history. These Baby Boomers are redefining the retirement lifestyle, travelling more, spending more, and moving into retirement living in a manner never before seen. In fact many are not downsizing their homes and spending as they move into retirement but actually upsizing it. And the youngest Boomers, who are now turning 50 will redefine this further with a retirement household net worth expected to exceed $1.5 million on average.”
We are now seeing this wealthy generation of retirees enter retirement villages. When the 5,220 village residents surveyed in the McCrindle Baynes Village Census 2013 were asked about their individual net worth, 7% indicated that the value of all their assets – excluding the value of their village home and subtracting the total of their debts – came to a value of over $1 million. Nationally, this equates to 12,390 millionaire retirement village residents!
5 Retirement Village Myths Busted
Myth 1: Retirement is beginning earlier and lifestyle options are attracting younger retirees into retirement villages.
Reality: The census found that residents living in retirement villages are on average older than a decade ago, with 95% aged 65+. While legislation specifies you must be 55 or older to join a village, today the average age of entry is 76. Over half (54%) of village entrants over the past two years were aged 75 or older and 1 in 3 (32%) aged 80 or above.
Myth 2: The village catchment is limited to a 10 km radius.
Reality: 44% of residents moved more than 20km from the family home, including 31% that moved more than 50km.
Myth 3: Prospective residents are focused on lifestyle villages.
Reality: 7 out of the top 10 reasons for choosing the village accommodation option were physical health related.
Myth 4: Buying into a village is financially a costly exercise
Reality: Overall, most residents felt financially secure to meet both their current and future financial needs. Furthermore, a majority felt that their decision to move into a village had been a good financial decision (90%).
Myth 5: Selling the family home and moving into a retirement village negatively impacts on social connections and happiness.
Reality: More than half (54%) indicated that they were still involved with the outside social clubs they were part of prior to their move and whilst for half (46%) their social life stayed the same, for 45% it had improved to some extent. Village residents had positive experiences with village living, with half (50%) stating that their overall life satisfaction and happiness had improved since moving in.
Downageing retirees: Living longer, active later, enjoying life
While village residents are older chronologically, they are younger from a longevity perspective than a generation ago. The recently released ABS Measure of Australia’s Progress indicates that in the last 40 years, life expectancy has increased by 10 years.
The 76 year old of today has the same life expectancy and to some extent, vigour, as the 66 year old a generation ago, explaining the significant delay in age of residents first entering retirement village living.
Social demographer Mark McCrindle summarises the situation, “Today’s village residents are downagers – a generation that are younger than their years would suggest. They’re living longer, active later, using technology more and even working later in life than previous generations of retirees. More than 1 in 7 of the retirement village age group are still in paid employment and based on these trends we will see increasing numbers of retirement village residents who are not in fact retired!”
For further information, interviews, or images, please contact the McCrindle Research office at 02 8824 3422 or [email protected]. For comment contact Mark McCrindle at 04 11 5000 90 or Christopher Baynes from Villages.com.au at 0416 281 899.
About this Study: The McCrindle Baynes Villages Census 2013 was a national paper and online survey made up of 46 questions and completed by 5,220 retirement village residents from 23 village operators, equally distributed between private operators and not-for-profit church and charity operators. Reference: ABS 6554.0 – Household Wealth and Wealth Distribution.