If you’re retiring in the foreseeable future, you might be considering a change of scenery. Moving to a different city, state or even country in retirement can be a great idea — especially for your wallet. Depending on where you choose to retire, you can save a ton of money on housing, taxes and other expenses. But although your potentials costs are definitely something to keep in mind when planning a move, there are other factors you’ll want to remember as well.
GOBankingRates.com talked to a number of retirement and financial planning experts to find the biggest do’s and don’ts of relocating for retirement. Click through to find out the best and worst things to do when looking for a place to retire.
Last updated: Mar. 31, 2019
1. Do Look for a Lower Cost of Living
“One way to help alleviate that stress is to move to a place where your money goes further,” said Aaron Hatch, a certified financial planner and co-founder of Woven Capital. “One of my clients is considering moving to Mexico so that their money goes further.”
You don’t have to cross the border to find a less-expensive city, though. According to a recent GOBankingRates study that looked at how much money you need to live comfortably in the 50 biggest U.S. cities, some of the places you might want to consider are Virginia Beach, Va., Bakersfield, Calif., Colorado Springs, Colo., Arlington, Texas, and more.
The key, according to Stephanie Genkin, a Brooklyn-based CFP, is to make sure you can afford your three biggest ongoing expenses besides your home: healthcare, food and energy.
“You want to find a city that is affordable particularly in these areas,” she said. “You’d be surprised how much variation there is across the country. Eventually, you may not play golf or tennis or be able to do as many activities as you did at the beginning of the retirement. These costs will drop off. But you’ll still need to go to the doctor, eat and heat or cool your home.”
2. Do Secure Access to Good Healthcare
“It’s a given that as you get older, your health will deteriorate in one way or another,” said Andrew McFadden, a CFP and founder of Panoramic Financial Advice. “It may be something as simple as arthritis or as debilitating as diabetes can get in some cases. You want to make sure that when problems arise, you will have fast access to high-quality healthcare providers.”
The solution? Do your homework. Investigate nearby hospitals and in-network doctors to see if you’ll have enough access to medical attention.
3. Do Consider Your Safety
“Let’s face it: As we get older, we become bigger targets of criminals looking to take advantage of someone,” said McFadden. “That’s why you want to make sure your city is known for its standards in safety — both in the day and night.”
To make sure you’re covering all your bases, do some research on crime statistics in your desired city and read up on your local law enforcement.
4. Do Make Sure You’re Close to a Grocery Store
How far are you willing to drive to reach the nearest grocery store? Or dry cleaner? Or library?
Once you’ve zeroed in on a city, check to see how robust its local amenities are — a little bit of inconvenience can become a big problem once you move there.
“If the closest grocery store is 30 minutes away, that’s not a big deal if you’re staying for a few weeks,” said Ed Snyder, a CFP with Oaktree Financial Advisors. “However, when you’re living there and you have to make that trip every week or just to run out to get milk and bread, it’s going to be much more inconvenient.”
5. Do Cater to Your Interests
Does the city you’re planning on moving to accommodate your hobbies? This consideration is crucial for an enjoyable retirement, said Andrew Wang, senior vice president of Runnymede Capital Management.
“The key is to evaluate the community and its activities before making the move,” he explained. “If you move to a gated community where most social activities revolve around the community’s two golf courses, but you do not enjoy playing golf, the transition could be challenging.”
Google Maps will be your friend here. “Find a city that has lots of good walking paths, great places to eat and shop — with senior discounts — golf courses, clubs or access to anything else that you plan to pursue as a hobby,” McFadden advised. “Retirement would be a shame if you just sat in your house all day watching TV because there was nothing to do outside.”
6. Do Look for States That Offer Tax Breaks for Retirees
Transitioning to a fixed income isn’t going to be easy. You’ll need every little bit of help to stay on top of your finances in the first couple years — and tax benefits for retirees can go a long way. In fact, the best places to retire tend to be tax-advantageous for retirees.
“When determining where to retire, it is important to consider how retirement income will be taxed in a particular state, as well as other tax implications of a move in retirement,” said Medora Justus, an Oxford, Miss.-based investment advisor with Hardy Reed.
“Retirees should review their income and financial plan from an after-tax perspective to accurately gauge their situation,” Justus added. “Taking this a step further and determining the after-tax scenario for each state they are considering for retirement can highlight which move is most appropriate and comfortable for their personal retirement scenario.”
7. Do Look for States That Protect Transfer of Assets Upon Death
Retirees face the dispiriting task of making provisions for after they’re no longer around. And this responsibility can be even more of a headache if you live somewhere that doesn’t have strong laws protecting the transfer of assets upon death, said Trey Henninger, an investing blogger at DIY Investing.
“Florida is one of the favorites for retirees because it has very favorable laws for asset transfer upon death, in addition to being a no-income tax state,” he said.
8. Do Consider the State’s Bankruptcy Protections
Another thing you’d probably prefer not to plan for is financial destitution, but it can’t hurt to consider a state with friendly bankruptcy laws. When you’re giving up your income and leaning hard into your savings, as you do when you enter retirement, you naturally become financially vulnerable.
“While a lot of states protect retirement assets such as a 401ks from seizure in bankruptcy, some states protect even more assets,” said Henninger. “In some states, a paid-off home that is your residence can’t be taken in bankruptcy — no matter how expensive the house is — while others protect up to a certain value. This can be favorable for a retiree to find in a state, so that if a medical emergency forces them into bankruptcy, they don’t lose their house or retirement assets.”
9. Do Factor in Transportation
“Moving to a place that is walkable and has good public transportation, a temperate climate and access to recreation is always advisable because it helps retirees stay active longer,” said McFadden. “This leads to healthier individuals, which in turn reduces medical costs over time. Additionally, if part of a retiree’s goal is to travel, having an international airport nearby never hurts.”
10. Do Plan a Trial Run
Those pros and cons lists you’ve now drawn up based on per-capita golf courses and tax rates can only go so far in determining whether you’ll actually like living somewhere.
“I strongly recommend that you make a trial run for at least a year before permanently relocating,” said Neal Frankle, a CFP and editor of WealthPilgrim.com. “I’ve had a number of clients who picked up and moved to a new city because the numbers looked good or because they had family there. But your actual living experience may be far different than what you expect, and the only way to know what it will be like is to live there. So, try it out before committing.”
11. Don’t Base Your Decision Solely on Proximity to Family
It’s a mistake financial advisors see again and again: Retirees move close to their much younger and more mobile children and grandchildren, who will likely relocate in the near future themselves.
“While in some cases this turns out to be a great idea, it is possible that their family has to be more mobile, due to work or other reasons,” said Henninger. “This can create a situation where the retiree moves to an area, only to have their family move away from them. A retiree doesn’t want to have to chase their children around the country. Just traveling to where your family is for long trips when you want to see them is usually the best bet.”
12. Don’t Forget About Property Taxes
It’s a lurking expense that’s just waiting to emerge and take a huge chunk out of your savings: property taxes, which vary wildly by state. In fact, many retirees are stymied when they realize states with low costs of living don’t necessarily have correspondingly low property taxes.
For example, “Texas does indeed have a much lower cost of living, and while we don’t have a state tax, our property taxes are typically twice that of California’s,” explained John Fowler, a CFP and wealth manager. “Even with the higher property tax, Texas is still way more affordable than California, but the sticker shock may be enough to sour an observant person when they get the bill.”
For some, a high property tax might not be prohibitive. The key, said Fowler, is to “do the math, and get a realistic understanding of how much you pay for each good or service, and come up with a total. If the total amount that you will end up spending is within a reasonable range that won’t alter your retirement plans — meaning that you won’t have to become a greeter at Walmart to make ends meet — then you should be fine.”
13. Don’t Move Solely for No Income Tax
On a similar note, retirees are often lured to states that have no income tax — Florida, Texas and Washington, among them — not realizing that they might be able to save more money by paying attention to other factors.
“I wouldn’t recommend moving simply on this basis,” said Andrew Mohrmann, a CFP and the founder of Modern Dollar Planning. “The benefits of a lack of state tax might not be so important if, for instance, you won’t have a high taxable income in retirement or you’ll end up traveling back often to see friends and family. As with many decisions, ‘don’t let the tax tail wag the dog.'”
14. Don’t Base Your Decision on a Vacation
“A common mistake for retirees is to return to a place they loved as a vacation spot, not realizing that living there year-round — and accepting local taxes, politics, social norms and climate — would be far different,” said Janet Groene, author of “Living Aboard Your RV.”
Additionally, most popular vacation spots tend to be overpriced, especially when it comes to food and entertainment. A good rule of thumb is if it’s a fun place to visit, it’s likely not a great place to retire in.
15. Don’t Rule Out Renting
Moving for retirement doesn’t necessarily mean you have to become a homeowner once more — in fact, taking on a huge amount of debt is a big risk when you’re easing into a fixed income.
“I suggest you take a good, hard look at the numbers before buying a new home,” Frankle said. “Many times, it makes far more economic sense to rent than to purchase real estate. The benefit of this is that retirees have a lot more access to capital and often have more income they can use to really enjoy their retirement.”
16. Don’t Think Short-Term
If you are buying a home, remember that you’re not only making one of the biggest purchases of your life — you’re also investing both money and substantial time in a city. For all the talk about the golden years of retirement, now is not the time to live in the present.
“I would recommend looking at the location from a long-term perspective,” said Erik Nicewarner, a CFP. “Will it still be attractive later in life if I have to rely on public transportation or can no longer drive?”
17. Don’t Rule Out College Towns
When brainstorming the best places to retire, a college town filled with rowdy students probably won’t make your list. Still, there are certainly ample reasons you might want to consider this move.
“I think the obvious things are proximity to cultural events and hospitals,” said Frankel. “Moving to a college town can be smart because there are many free activities that can be intellectually stimulating.”
18. Don’t Choose Your Home First
“Many times, boomers start by looking at homes first,” said Marian Schaffer, founder of SoutheastDiscovery.com. “That should be the last step because if it is the right house but the wrong area or community — then it’s the wrong house.”
19. Don’t Do It Alone
The decision to move in retirement is a big one, so it wouldn’t hurt to consult other people — especially someone who knows the region you’re considering. Reach out to local professionals and current residents, and ask them about the real estate market, taxes and what they like or dislike about the city.
20. Don’t Underestimate the Benefits of Moving
“The biggest mistake seniors make is thinking they don’t need to consider moving,” said Kyle Exline, the executive director of The Clare, a continuing care retirement community in Chicago. “It’s important to think 10 to 15 years down the road: Life can change very quickly, and you want to be sure you have a support system when you need it most.”
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