There are pros and cons to living anywhere. Before you quit your job (retire), list your house, and move your life across the country, take a deep breath and ask yourself the questions we cover in this post.
As a Los Angeles Financial Planner, I often speak with people looking to save on taxes and living expenses. These are just two pieces of the puzzle of having a happy retirement.
Your retirement income needs can vary widely by where you live during your golden years. That being said, a lower cost of living or better weather may not give you the happy retirement you dream of.
With your happiness in mind, consider the following nine questions before finalizing a major retirement move.
1. What Do You Want to Do in Retirement
Many retirement brochures show happy couples walking on beaches, traveling, or spending quality time with grandchildren. Do you see yourself filling your days/weeks/months/years doing these activities?
Are there other activities you would love to be doing in retirement that you aren’t able to do (easily) in your current location? Remember to account for social groups or hobbies that you may or may not be able to do as frequently if you moved.
If you love to travel, access to a major airport may be more important than if you plan to spend your days gardening and with family (who live nearby).
2. Will You Be Able to Visit Family Easily?
I feel fortunate that my immediate family (mostly) lives in Southern California. A quick drive for Easter or Christmas is much easier than flying across the country during the holidays on many of the year’s busiest and most expensive travel days. If you move, will it be easier or harder to visit family?
On the flip side, I know a few retirees who have purposely put more distance between themselves and their families to get out of endless “free” childcare. While they love their grandchildren, watching kids can be exhausting.
If you are moving to be closer to your grandkids, ask yourself how likely your family is to stay put. You don’t want to put down new roots only to have them relocate due to a job transfer.
3. State Taxes
Income taxes can vary widely from state to state. If you are considering a move to a new state, make sure you know how this will affect the taxes on your retirement income. Getting a great deal on a new home may not be so great if your retirement taxes jump because of the move.
4. Moving Costs
How much will it cost you to move? Depending on your housing situation, you may be able to unlock substantial amounts of home equity. In other cases, you may be paying realtors five percent of your home’s value and incurring substantial taxes when selling.
5. Do You Want to Rent or Own Your Home in Retirement
When moving to a new city, you should consider renting. This will give you more flexibility in finding the right place to live. Many of the benefits of owning a home are reduced. Likewise, caring for a home can be more annoying the older we get.
I go more in-depth on this topic here, SHOULD RETIREES RENT OR OWN?
6. Will You Have Access to Great Healthcare
If you live in a big city, you may take having access to adequate medical care for granted. You may be dreaming of living on a grand country estate, miles from the hustle and bustle of the city. A several-hour drive to see a doctor (or the nearest hospital) could be the difference between life and death in an emergency or annoying for more regular doctors’ visits.
For those looking to retire abroad, make sure you have a plan to receive medical care. Will doctors accept your U.S. health insurance or Medicare? Will you get quality treatment for your current and future medical ailments?
7. Who Will You Spend Time With In Retirement?
Friends, family, colleagues, teammates, the list goes on of people you may want to spend time with. The longer you have lived in your current city, the more roots you have likely put down. That doesn’t mean moving in retirement won’t be the right move for you. Who knows? Many of your friends may have already moved.
Consider what social opportunities will be available if you choose to move. Do you have family or friends already living near your new retirement locale?
8. Why Do I Want to Move?
What is motivating you to move? Do you want to right-size your house? Find better weather? It probably seems like ‘everyone’ is moving in retirement. In reality, fewer people move (far) when they leave the workforce.
9. Will the New Cost of Living Help or Hurt My Retirement
I am writing this post as a Los Angeles Financial Planner, meaning many of my clients would lower their cost of living if they left Los Angeles. I also have clients in low-cost-of-living areas dreaming of retiring on the beaches of California, which will likely significantly increase their cost of living in retirement.
Simply put, make sure your plan for retirement income considers the new cost of living if you choose to move. This applies whether your cost of living will be increasing or decreasing. If you are moving from somewhere like Los Angeles, with a high cost of living to a lower-cost locale, you just might be able to retire earlier.
Ultimately, choosing to move or not in retirement will likely be an emotional and financial decision. Where will you be the happiest? Where will your money go the furthest? Think long and hard before pulling the trigger on selling a home and moving across the county. Hopefully, the nine questions above will guide you toward your own happy, healthy, and wealthy retirement.