Should you consider relocating when you retire? For many of our clients, the answer is yes. Does anyone move to Maryland when they retire?
Sometimes having too many choices can become overwhelming. Move closer to the grandchildren, or live in a college town? Escape cold weather, or move to a mountain village? With the freedom to move anywhere, you’ll need to do some serious homework. A recent article titled “Don’t Relocate in Retirement Without Answering These 5 Questions” from Nasdaq contains some wise and practical advice.
There are some regions that are more retirement-friendly than others. If you end up in the wrong place, it could hurt your retirement finances. Therefore, ask these questions first:
What are the state’s taxes like? If you are living on Social Security benefits, retirement savings, and a pension, the amount of money you’ll actually receive will vary depending on the state. There are 37 states that don’t tax Social Security benefits, but there are 13 that do. There are also some states that do not tax distributions from retirement accounts. Learn the local rules first. If you currently live in a state with no income tax, don’t move to a state that may require a big tax check.
If you live in a high tax state and don’t have enough money saved for a comfortable retirement, then moving to a lower tax state will help stretch your budget.
Is there an estate or inheritance tax, and is that a concern for you? If leaving money to heirs doesn’t matter to you, this isn’t a big deal. However, if you want to pass on your assets, then find out what the state’s inheritance taxes are. In some states, there are no taxes until you reach a pretty large amount. However, in states with inheritance taxes, even a small estate may be taxed, with those who inherit sometimes owing money on even small transfers.
What’s the cost of living compared to where you live now? When you’re thinking about relocating when you retire, moving to a place with a higher cost of living when your income stops growing can be a mistake. However, if your cost of living goes up and your income remains fixed, that’s a problem. The last thing you want to do is move to a place where the cost of living is so high that it decimates your retirement savings.
If you live somewhere with high taxes and high prices, moving to a lower cost of living area will help your money last longer and could make your retirement much easier.
Is it walkable or do you need a car? Cars present two problems for aging adults. One, they are expensive to maintain and insure. Two, at a certain point along the aging process, it becomes time to give up the keys. If you live in a walkable community, you may be able to go from having two cars to having one car. You might even be able to get rid of both cars and do yourself a favor by walking more. This also gives you far more independence later in life.
What’s healthcare like? Even people who are perfectly healthy in their 50s and 60s may find themselves living with chronic conditions in their 70s and 80s. You want to live where first-class healthcare is available. Check to see what hospitals and doctors are in the area before moving. You should also find out if medical care providers accept Medicare. Consider the cost of a nursing home or home care in your potential new community. Some areas of the country have much higher costs than others.
How close are you to Family Members when you are aged? As is so often stated for star football players, the best ability is availability. When in your mid-80s, it might be better for everyone if you are close to those family members that are your support system. When you consider relocating when you retire, do some simple math about your age and miles between you and those who care most about you. It can be burdensome on your family to be located hours and hundreds of miles away when health considerations begin to rule your days.
Reference: Nasdaq (Aug. 9, 2019) “Don’t Relocate in Retirement Without Answering These 5 Questions,