"My parents didn't want to move to Florida, but they turned sixty and that's the law." - Jerry Seinfeld
Where Will You Live in Retirement?
The question that I hear most often as a retirement planner is, "When can I retire?" The second most heard question is, "Where should I live?"
Many pre-retirees, especially those who live in the Northeast, dream of moving to a warmer climate in retirement in order to escape the cold and snowy winters. But is a warmer climate the only factor in deciding where to live? Of course not.
While sun and sand may conjure up images of vacation travel, a weeklong getaway is vastly different than living somewhere on a more regular basis. Living in a particular area can be vastly different than being a tourist in the same area. You should consider all aspects of living in a different area before making this important decision.
One of the key elements in crafting a retirement income plan is the amount of living expenses incurred each year. In retirement, it is imperative that your non-discretionary expenses are covered - at a bare minimum. Housing, food, and clothing costs are your essential expenses. Unlike discretionary expenses (ie. recreational travel, nights out on the town, etc.), it is very difficult to cut your essential expenses in retirement. You need shelter and nourishment. Those things are non-negotiable.
Many retirees look to move to more tax-friendly states. But income taxes are just one of the tax components of your retirement plan. Don't forget to consider real estate and sales taxes as well.
Due to the fact that housing and food costs, as well as discretionary costs like entertainment and recreational activities costs, are relatively easy to compare, the overall cost of living differences from state to state may be obvious. But this is just one factor to consider.
What's There To Do Around Here?
Adding to the complexity of answering the question, "Where to retire to?" are the factors that are non-financial. Don't get me wrong, living expenses are a major concern in retirement, but you also need to consider what the potential new community offers in the way of daily living.
If you plan to enjoy bicycling or hiking frequently in retirement, you will want to make sure that your retirement destination offers you access to bike paths and hiking trails. If you enjoy going to shows or art museums, living in a remote town in the mountains may not be your best bet.
The best way to determine if an area is right for you is to actually spend an extended amount of time staying there. One or two weeks may not be enough time to be confident that an area is a place where you want to spend your retirement years.
One last thing that I will mention regarding relocating to another geographical area concerns couples. You need to answer this question - will this new location still be comfortable after one person has passed away? A place that was exciting for a couple may not be when only the survivor remains. This is especially true if family members are far away. It is best to consider your entire retirement horizon.
While it may not be as important in the early retirement years, the quality of available health care in the surrounding area is a very important factor to consider. While pre-retirees and the newly retired may be thinking exclusively about all of the activities that they will be enjoying in retirement, it is important to remember that with age comes an increased need for medical care. The day will come when you will want to have access to quality health care. Make sure that your new retirement location has this access.
Putting It All Together
The interactive map below appeared on the website, WalletHub.com. It ranks the 50 US states for "retirement-friendliness" by assessing 47 key metrics having to do with affordability, quality of life, and health care.
To read the entire report and see all of the factors that went into these rankings, click here.
Developing your retirement plan is a complicated process. Where you live in retirement is just one component of your comprehensive plan, but it will have a major impact on the ultimate success of your retirement income plan. Don't leave it to chance. If you don't know the answer to this question - "Will my money outlive me, or will I outlive my money?", schedule a no-obligation "Get Acquainted Call" here. Or click the START HERE button on the right. I want to help you ensure that you can retire with confidence!