2003 State Report: Where We Live
The perception that retirement age brings with it a move to warmer climates holds true for South Carolina, which has experienced a dramatic increase in the number of people 65 and over who have moved here since 1990.
The majority of older South Carolinians, however, do not leave home. National surveys show that most people prefer to grow old in their own homes and communities. In a survey conducted by the USC School of Business in 1998, 94.0 percent of senior citizens responded that they were not planning to leave their current residence.
Most older South Carolinians own their own homes: According to the 2000 Census, more than three-fourths (84.0 percent) of householders 55 and over own their own dwellings. Homeowners are mostly white (75.9 percent) and have a home with a greater value than their African American counterparts. The state‘s mean value of houses owned by whites outpaced that of blacks $105,300 to $67,300. 11.7 percent of South Carolina householders 65 and over own mobile homes.
Renters account for 16.0 percent of South Carolina householders age 55 and older. Of those householders that are 65 and over, 10.4 percent rent mobile homes.
In 2000, 64.5 percent of households with a member 60 years old and older were two-or-more-person households. But as we age, we are more likely to reach the end of our lives alone, particularly if we are older than 75. 44.6 percent of households with a person over 75 were one-person households.
Affordability Of Housing
With 12.5 percent of homeowners and 32.8 percent of renters 60 and older in South Carolina living below the poverty level, the cost of housing becomes a critical issue. South Carolina provides tax exemptions to residents who are over 65 and/or disabled and have lived in the state for at least one year. These exclusions, known as homestead tax exemptions, allow the first $50,000 in fair market value of a home to be exempt from municipal, county, school and special assessment real property taxes. During tax year 2001, 287,894 of the state‘s residents received these exemptions with an amount totaling $114 million.
According to a national study by the Department of Housing and Urban Development, about 30 percent of senior households in the United States are cost-burdened; that is, they spend more than 30 percent their income on shelter. Fourteen percent of elderly households are severely cost-burdened, spending more than half of their income on shelter. Some of these elders are burdened by the cost of rent or a mortgage payment. The rest own their homes but have difficulty meeting the other costs of ownership, such as utilities, taxes, and insurance. Renters and women, especially those living alone, are more likely to face cost-burden problems. Also, about 6 percent of the nation‘s elderly live in housing that needs repair or rehabilitation. In South Carolina, seniors may receive assistance with housing expenses through the Section 8 Rental Assistance Program, or the HOME program. In 2002, there were total payments of $96.8 million made through Section 8.
How We Pay For It All
Income after retirement comes from a variety of sources: pensions, asset income, Social Security, Veterans‘ benefits and any outside contract or part-time work performed. The U.S. Federal Interagency Forum on Aging-Related Statistics offers the following breakdown on retirement income sources for older households:
Sources Of Income For 65+ Population In 2000
| Lowest Fifth | Second Fifth | Third Fifth | Fourth Fifth | Highest Fifth | |
|---|---|---|---|---|---|
| Social Security | 82.3% | 81.6% | 64.0% | 46.0% | 19.4% |
| Asset Income | 3.3% | 5.1% | 9.4% | 12.8% | 24.2% |
| Pensions | 2.8% | 7.2% | 16.3% | 24.2% | 18.8% |
| Earnings | 1.3% | 2.6% | 6.7% | 14.2% | 35.2% |
| Public Assistance | 8.4% | 1.7% | 0.9% | 0.2% | 0.1% |
| Other | 1.9% | 1.8% | 2.5% | 2.5% | 2.3% |
| Total | 100% | 100% | 100% | 100% | 100% |
Source: March Current Population Survey.
The standard of living we can expect after retirement depends not only on benefits programs, but also on the financial decisions we make during our work years. Although we may eliminate a mortgage payment at retirement, there are still repair bills and utilities, food, clothing and credit card payments.
In a commissioned study, Merrill Lynch notes that American homeowners of the 1970s and 1980s came to regard their homes as their most important financial asset, yet they hesitate to draw on their home equity for retirement income. Therefore, the savings needs are greater. However, personal savings are at an all-time low, and not nearly sufficient to meet most Americans‘ retirement needs. Only about one-third of Baby Boomers have saved enough to be ready for retirement..
Below is an estimate of what should be invested by today to be on a comfortable track for retirement:
| Age | Years Until Retirement | Total savings required for $20,000 annual income from savings | Annual savings and interest required | Total savings required for $30,000 annual income from savings | Annual savings and interest required | Total savings required for $50,000 annual income from savings | Annual savings and interest required |
|---|---|---|---|---|---|---|---|
| 35 | 30 | $301,688 | $10,056 | $452,532 | $15,084 | $754,220 | $25,141 |
| 50 | 15 | $301,688 | $20,113 | $452,532 | $30,169 | $754,220 | $50,281 |
The following assumptions have been made to arrive at the above annual income from savings and interest: Inflation rate is 2% annually, and the investment return is 5.0%. The use of the savings and investment return will be used up after 25 years. Annual savings required would vary based upon the rate of return from investments. Calculations based upon a calculator provided by www.Bankrate.com.
Substandard Housing
South Carolina‘s aging housing stock indicates the quality of dwellings for some older residents. Older homes are more likely to face more extensive and frequent repair needs. According to the 2000 Census, one out of every three homes in South Carolina was built before 1960.
The state enacted building codes for manufactured housing in 1976, and also enacted legislation mandating the adoption of minimum building codes for all counties and localities by June 2000. This provided for unified building codes for site-built dwellings or standards for systems upgrades to existing homes. Unified codes or local codes will help maintain the health and safety of citizens and affect the quality and quantity of housing stock available to older residents who need it.
Housing, Energy Assistance
Financial assistance helps homeowners make repairs and improve home safety and accessibility. Two such assistance programs are Community Development Block Grants, administered through the Department of Commerce, and the Home Investment Partnerships Program (home), an investment partnership of the State Housing Finance and Development Authority. In 2002, SC received $28,223,000 in funds which were awarded to local government entities through Community Development Block Grants to be used for a variety of community development needs. In 2001, $12 million was provided to South Carolina through the home partnership and used for lease purchase, rental housing and home ownership housing.
A small number of South Carolina lenders offer Home Equity Conversion (reverse mortgages) to help older homeowners generate income from the equity in their homes. Generally, borrowers qualify if they are 62 or older, use the home as their primary residence, own the home or have a very low outstanding mortgage. Instead of making monthly payments, borrowers receive payments and gradually deplete his or her ownership in the house; essentially the homeowner “sells” their home to the bank but continues to stay there as long as they live. Medicaid, Supplemental Security Income and Food Stamps may be curtailed by receiving the reverse mortgage proceeds.
Low-income elderly households particularly need assistance with energy costs as heating and cooling are critical health issues for those 50 and over. Excessive heat and cold claimed the lives of 90 South Carolinians 50 and over from 1997–2001. For that same time period, resident data shows that fires claimed the lives of 179 South Carolina residents in that age group.
The federal Low-Income Home Energy Assistance Program (LIHEAP) helps many older Americans meet their heating needs. The state received $9.6 million in federal funding for PY2002. From October 1, 2001 to September 30, 2002, there were 22,200 applicants to the Direct Assistance Program who were aged 60 and over. Through its Weatherization Assistance Program, which allocates 50% of its funds towards weatherizing the homes of seniors, 496 seniors making up 468 households have been assisted as of the third quarter of PY2002. Present funding levels for these significant programs are incongruent with the state‘s populations in need of home energy and weatherization assistance.
Moving In
According to a survey conducted by the S.C. Department of Parks, Recreation and Tourism, when choosing a place to live during retirement years, adults 50 and over say the most important factors are climate or weather, health care availability and daily cost of living. Respondents compared South Carolina favorably to other states on these factors, particularly on climate and weather, followed closely by recreation/leisure activities and housing values. The state has also consistently ranked as one of the lowest per capita tax burden states in the nation. According to a 2002 article in Kiplinger‘s, South Carolina ranked fourth in the nation in tax-friendliness for retired persons.
South Carolina uses these assets to promote tourism #8211; one of its most important industries, bringing in $14.4 billion in 2002 #8211; and many who have visited as tourists come back to stay. The state‘s six military installations also give outsiders a taste of South Carolina, and many choose to stay or return after duty. In 2000, military veterans accounted for 14.0 percent of South Carolina‘s population aged 18 and over, and 27.6 percent of the population ages 65 and over were veterans.
Between 1995 and 2000, the state attracted almost 560,000 new residents from other states or abroad. The result of this steady flow of people moving into our state has been a net increase in population. The net increase in those aged 55 and over was about 23,000 for the same years. Of these, about 50.0 percent were white females, 36.4 percent were white males, 10.1 percent were black females and 3.5 percent were black males.
While this new population brings with it economic benefits, unique skills of retirees from other parts of the nation, cultural enrichment and a spirit of volunteerism, they bring challenges as well for communities undergoing an influx of growth.
Challenges For Communities:
- Availability of Housing
- Capacity of infrastructure (such as health facilities, roads, and public water systems)
- Preservation of natural resources
- Labor for service industries
- Access to health care facilities and services
- Stress on local culture from those with different expectations and willingness to pay for services
- Dislocation of other populations from major development
- Merging new residents‘ values with those existing in the communities where they choose to live
- Potential cost to the state as people become older, spend their assets and become eligible for Medicaid and long term care services
- Impact on property values and taxes