Retirement serves as a great opportunity to move wherever you want, since you are no longer tied to one location for work. However, there are some key considerations to make when thinking about moving after retirement.
What to Consider when Moving after Retirement
1. Health Insurance Costs and Quality of Care
As we age, the risk of serious health issues increases, even for those who live healthy, active lives. It’s important to be in close proximity to quality hospitals and doctors in retirement, so that it’s easier to address any health issues that may arise.
Also, retirees under the age of 65 are not yet eligible for Medicare. Health insurance costs vary widely from state to state, so research your options if you’re under the age of 65.
2. Cost of Living
In addition to health insurance costs, overall cost of living is a huge factor when thinking about moving after retirement.
Cost of living factors into the prices of different goods and services that retirees are likely to buy. There are several cost of living lists around the internet, such as this one from U.S. News.
3. Tax Rates
Distributions from some retirement accounts, such as 401(k)s, are taxed as ordinary income. As a result, some retirees elect to relocate to states that have relatively low income tax rates, or no state income tax at all (which is one reason why Florida is such a popular option).
When moving after retirement, many people elect to go somewhere with a warm climate because the higher temperatures are easier on the body. In addition, warmer locales can help avoid budgeting for high heating bills or snow removal services.
5. Proximity to Transportation
Retirement is a great time to travel, whether to see friends and family or visit new locations, since retirees typically have freer schedules and fewer obligations. This is why it’s recommended to choose a location relatively close to an airport.
Also, it’s important to remember that as we age, everyday tasks like driving become a bit more difficult. A city with a robust public transportation system may be a smart decision for retirees.
6. Renting vs. Buying
The rent or buy question is one of the biggest ones retirees must answer.
Home ownership has plenty of benefits. It can be passed down as an inheritance, its costs are typically relatively stable and it offers tax benefits.
However, homes also tend to require a significant amount of upkeep, whereas rental properties often do not. Also, a rental gives you the opportunity to downsize and relocate again without as much hassle.
Meet with your Certified Financial Planner™ professional to discuss the upsides and downsizes of renting and buying.
7. Don’t Move Just Because
As we mentioned previously, the thought of starting fresh in a new location after retirement can be attractive. Even if you find a place with a low cost of living, great tax breaks and close proximity to an airport, remember that you’re probably limiting the amount of time you can spend with your family.
Moving after retirement is a risk, but it may also be a wonderful reward. Be sure to research your options thoroughly before deeming it to be the right decision.