www.gae.org | 21 RETIREMENT The National Institute on Retirement Security’s (NIRS) 2014 study on the impact defined benefit pensions have on local and state economies confirms that retirees in Georgia, and those relocating from other states, are a significant economic force in the State. Most people do not consider how important retirees are to Georgia’s economic engine. As more people retire, this population continues to grow in economic strength—becoming an even more integral part of Georgia’s economy—creating a steady economic ripple effect within their communities. As the largest public retirement system in the State of Georgia, TRS paid out $3.76 billion in pension benefits to over 108,000 retirees during fiscal year 2014. As consumers, retirees will spend their benefits on a wide range of goods and services—from food and health care to cars and homes. These expenditures increase economic demand and encourage employment. Additional increased economic activity is generated from this and results in even more demand and employment. This is known as the ‘multiplier effect’ – a single dollar has an economic impact greater than one dollar as it ripples through the economy. Of the over 108,000 TRS retirees, 89% reside in Georgia and receive an average monthly benefit of approximately $2,900 or $34,800 per year. In many counties, TRS could be considered one of the largest employers. For example, Fulton County, which has the largest concentration of retired TRS members, has 6,778 retirees who receive approximately $288 million in benefits each year. In Cobb County, 5,184 retirees receive about $189 million and 2,682 retirees in Chatham County receive $93 million each year in benefits. Even Echols County, which has the smallest number, has 7 retirees who receive $245,000 in benefits annually. The unrecognized power of the retiree can make a substantial impact on Georgia’s economy. Fueled by Social Security, pension funds, and other savings, retirees often start small businesses of their own and create the need for service industry and medical jobs in the community. According to NIRS Pensionomics 2014: Measuring the Economic Impact of DB Pension Expenditures, each $1 in state and local retirement benefits paid to retirees, supported $1.94 in total economic activity in Georgia. Thus, the $3.35 billion ($3.76 billion times the 89% of TRS retirees living in the State) in pension benefits paid to our retirees living in the State during FY 2014 represented $6.5 billion in total economic activity for the State of Georgia. Economists and consultants believe that attracting retirees to a location will create a catalyst for strong economic development. A recent assessment of Georgia’s retiree population found two large clusters of counties with relatively high retiree populations at opposite corners of the state: a horseshoe-shaped cluster in northeast Georgia and a large irregularly shaped cluster in southwest Georgia. Most of the counties that comprise these two clusters are essentially rural, which may reflect retirees’ stated preferences for pastoral settings, low cost of living, less traffic congestion and a small-town atmosphere1. The Economic Impact of TRS Retirees 1 Jeffrey Humphreys, Golden Rules, Georgia Trend Economists and consultants believe that attracting retirees to a location will create a catalyst for strong economic development.
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