Retirement often heralds a new chapter in life, prompting many to consider relocating to better align their living situations with evolving financial and lifestyle aspirations. This trend is more prevalent than ever; in 2023, over 338,000 Americans moved for retirement, marking a 44% increase compared to the previous year.
The motivations behind relocating in retirement are diverse. Many retirees seek states with favorable tax policies, warmer climates, or a lower cost of living. For instance, Florida has consistently been a top destination, attracting approximately 11.8% of retirees relocating in 2022. Similarly, states like Arizona and South Carolina have seen net migrations of 23,515 and 20,895 individuals aged 60 and older, respectively.
Conversely, states with higher property taxes and living costs, such as New York and California, have experienced notable departures among older residents. In 2022, three out of ten relocating retirees left one of these two states.
The decision to relocate in retirement is multifaceted. Beyond financial considerations, factors such as proximity to family, access to quality healthcare, and community amenities play pivotal roles. Therefore, it’s crucial for retirees to ensure that their new location aligns holistically with both their financial constraints and desired lifestyle.
In the following sections, we’ll dive into strategies and considerations to help you make an informed decision about relocating in retirement, ensuring your new home supports both your financial well-being and lifestyle aspirations.
1. Assess the Financial Impact of Your Move
Relocating in retirement isn’t just about choosing a place that looks appealing — it’s about ensuring it makes sense in both the short- and long-term. Moving to a new city or state can have significant implications for your budget, affecting everything from daily expenses to tax burdens and healthcare costs. Here’s a look at the key factors you should evaluate before making your move.
Cost of Living
The overall cost of living in your new location can drastically impact your retirement savings. Be sure to compare the following expenses between your current home and your potential new city:
- Housing Costs: Will you buy, rent, or downsize? Research median home prices, property taxes, rental rates, and homeowners’ insurance costs. Even if a home is affordable upfront, higher property taxes or insurance premiums (especially in coastal or disaster-prone areas) can eat into your budget.
- Utilities: Energy, water, and other essential utilities can vary widely based on climate and local infrastructure. Warmer states might have higher air conditioning costs, while colder regions require substantial heating expenses.
- Groceries and Dining: Everyday expenses like groceries and eating out can fluctuate significantly between regions. States with a higher cost of living generally have more expensive food prices.
- Transportation: If you plan to rely on public transportation, research availability and costs. If you’ll be driving, consider gas prices, vehicle registration fees, and insurance rates in your new area.
Taxes
Taxes can take a significant bite out of your retirement income, so it’s essential to understand how your new state or city will impact your tax obligations. Consider:
- State Income Tax: Some states, like Florida, Texas, and Nevada, have no state income tax, which can be a huge advantage for retirees relying on pensions or withdrawals from retirement accounts. Others, like California and New York, have high state income taxes that can eat into your nest egg.
- Tax on Retirement Income: Certain states tax Social Security benefits, pensions, and withdrawals from IRAs and 401(k)s, while others do not. Research your prospective state’s policies to avoid unexpected tax burdens.
- Property Taxes: Even if home prices seem affordable, high property taxes can make homeownership more expensive. Some states offer tax breaks or exemptions for retirees, so check if you qualify.
- Sales Tax: Some states have higher sales tax rates, which can increase the cost of everyday purchases. Others, such as Oregon and New Hampshire, have no sales tax, making them attractive for retirees who want to stretch their dollars.
Housing Costs
Your housing choice will likely be your most significant expense in retirement, so it’s crucial to evaluate all options:
- Buying vs. Renting: While buying a home can provide stability and long-term value, renting might be a better option if you’re unsure about staying in one location or want to avoid maintenance costs.
- Homeowners Association (HOA) Fees: If you move into a planned community or condo, factor in HOA fees, which can add hundreds of dollars to your monthly expenses.
- Maintenance and Upkeep: Consider the costs of maintaining a home, including landscaping, repairs, and renovations, especially if you choose an older property.
Healthcare Expenses
Access to quality healthcare becomes increasingly important as you age, making it one of the most crucial financial considerations when relocating:
- Availability of Medical Services: Ensure your new location has reputable hospitals, specialists, and healthcare providers, particularly if you have specific medical needs.
- Medicare and Insurance Coverage: Medicare benefits remain the same nationwide, but some supplemental insurance plans and Medicare Advantage plans may not be available in every state. Check whether your preferred providers accept your insurance.
- Long-Term Care Options: Consider whether your new area has assisted living facilities or in-home care services if you need them in the future. The cost of long-term care varies widely by state and can significantly impact your financial security.
Related: Webinar – How to Manage Health Care Expenses in Retirement
2. Consider the Lifestyle Fit
While financial factors play a crucial role in your retirement relocation decision, your overall happiness and well-being depend just as much — if not more — on lifestyle considerations. The perfect retirement destination should align with your personal preferences, social needs, and daily activities to ensure a fulfilling and enjoyable retirement. Here are some essential lifestyle factors to evaluate before making your move.
Climate Preferences
Weather can significantly impact your daily comfort, health, and activities, making climate one of the most important considerations in choosing a retirement destination. Ask yourself:
- Do you prefer warm weather year-round, or do you enjoy experiencing all four seasons? If you love mild winters and year-round sunshine, states like Florida, Arizona, and South Carolina might be appealing. If you enjoy autumn foliage and a crisp winter season, locations in the Northeast or Midwest could be a better fit.
- How will the climate affect your health? Extreme heat and humidity can be challenging for those with respiratory conditions, while cold and icy conditions may pose mobility risks.
- Are you prepared for extreme weather events? Some warm-weather destinations, such as Florida and the Gulf Coast, are prone to hurricanes, while other areas may experience tornadoes, wildfires, or heavy snowfall. Make sure you are comfortable with the potential weather risks and have a plan in place for emergencies.
Proximity to Family and Friends
Your support system and social connections play a vital role in your overall happiness and well-being in retirement. Before relocating, consider how your move will affect your relationships and access to loved ones:
- Do you want to be closer to children, grandchildren, or lifelong friends? Living near family can provide emotional support and create opportunities for frequent visits and shared experiences.
- Are you comfortable with long-distance travel to see loved ones? If moving far from family, consider how often you’ll be able to visit and whether travel costs fit within your retirement budget.
- Will you have opportunities to build a new social circle? If you’re moving to a new community, look for areas with strong social networks, active community centers, and clubs that match your interests.
Activities and Amenities
Your retirement years should be enjoyable, so it’s important to choose a location that supports your interests and hobbies. Research what the new area has to offer:
- Outdoor Activities: If you enjoy hiking, golf, fishing, or biking, look for areas with parks, nature trails, and recreational facilities. If you prefer coastal living, consider whether the area has accessible beaches or waterfront activities.
- Cultural Attractions: If you love museums, live music, theater, or historical sites, check whether your prospective city offers the cultural experiences you desire.
- Fitness and Wellness Options: Many retirees prioritize staying active. Look for gyms, yoga studios, senior fitness classes, and walking-friendly neighborhoods.
- Community Engagement: Volunteering, educational programs, and local events can help you stay engaged. Explore whether the area has opportunities to get involved in causes you care about.
Access to Transportation
Even if you drive now, having access to reliable transportation is important as you age. Consider:
- Proximity to Major Airports: If you plan to travel frequently, living near a well-connected airport with affordable flights can be a huge advantage.
- Public Transportation Options: Does the city have reliable buses, trains, or rideshare services? This is particularly important if you eventually decide to stop driving.
- Walkability and Accessibility: In some cities, you can easily walk or bike to grocery stores, restaurants, and healthcare providers, reducing the need for a car. Check a city’s walkability score to determine whether it meets your needs.
Before making a permanent move, consider spending an extended period — such as a few months — in your prospective new location. This allows you to experience daily life, interact with the community, and assess if it truly meets your expectations.
Relocating in retirement is a significant decision, but with thoughtful planning, you can find a location that supports both your financial well-being and the lifestyle you envision. Working with a financial advisor can help ensure your move aligns with your long-term financial plan. If you’re considering a relocation, we can help you assess your options and make an informed decision. Contact us today to start planning your retirement move with confidence.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.