Relocating in retirement can be a fantastic way to live out your dreams, experience a change of scenery, or simply enjoy a lower cost of living in your golden years. In fact, more than 234,000 Americans retired to a new location in 2022—a 4% increase from the previous year.
Although retirees are moving at an increasing rate, choosing the right place to retire can be a complicated decision that requires careful due diligence and planning. In this article, we’ll explore a variety of factors to consider when deciding whether to relocate in retirement, so your new home remains aligned with your financial and lifestyle goals.
5 Factors to Consider When Deciding If Relocating in Retirement Is Right for You:
#1: Your Priorities
When it comes to choosing your ideal retirement destination, you should first identify what’s most important to you. For example, you may want to lower your cost of living so your retirement savings last longer. Or perhaps you wish to live closer to family or move to a warmer climate.
No matter your motivations for moving, there will inevitably be tradeoffs to consider as you weigh your options. Being clear about your priorities can help you evaluate these tradeoffs and make a sound decision for your future.
#2: Cost of Living
In many cases, relocating in retirement can be an effective way to lower your cost of living and extend your financial resources. In 2019, for example, the average person aged 60 or older who sold their home and relocated to a cheaper housing market unlocked nearly $100,000 in home equity, according to a recent study.
Indeed, the cost of housing, groceries, healthcare, and taxes can vary significantly from one location to another. To ensure your potential new home fits comfortably within your retirement budget, it’s important to understand how differences in the cost of living may affect your income needs.
If you’re looking for a low-cost retirement destination, U.S. News & World Report updates its list of The Most Affordable Places to Retire each year. Alternatively, if you have a location in mind, you can use a cost-of-living calculator to see how much income you’ll need to maintain your current lifestyle in your new home.
#3: Retiree Taxes
One of the top reasons retirees relocate is to move to a more favorable tax environment. Since taxes can have a substantial impact on your retirement savings, establishing a residence elsewhere can help you preserve your nest egg longer.
Some states have no state income tax, making them attractive options for retirees. Currently, tax-free states include Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
In addition, New Hampshire and Tennessee have no state income taxes for earned income but do tax dividend and interest income. Other states offer specific tax benefits for retirees, such as exemptions on retirement income or Social Security benefits.
Also, keep in mind you don’t necessarily need to live somewhere year-round to benefit from local tax laws. In most cases, the IRS requires you to live somewhere for at least 183 days of the year to establish an official tax residence.
#4: Access to Quality Healthcare
When it comes to relocating in retirement, another important consideration is your access to quality healthcare.
According to the National Council on Aging, nearly 95% of older Americans have at least one chronic condition, and nearly 80% have two or more. Since healthcare needs tend to become more complex as we age, it’s crucial to have high-quality medical facilities nearby.
As you evaluate your relocation options, consider the availability and proximity of hospitals, specialty clinics, and healthcare providers. In addition, if you’re considering moving before age 65 and plan to purchase insurance from the ACA Marketplace, make sure your new state offers reasonable insurance options for your healthcare needs.
#5: Quality of Life
Quality of life is a broad term that can include everything from the local climate and culture to your overall sense of safety and security. Your quality of life in retirement will also depend in part on how closely your new environment aligns with your lifestyle goals, hobbies, and interests.
For example, if you enjoy outdoor activities, you may want to move somewhere that has easy access to hiking and biking trails, parks, and other recreational facilities. Or if you plan to travel frequently in retirement, you may want your new home to have easy access to a major airport.
For many retirees, your quality of life will also depend on less tangible factors, like your mental health and overall happiness level. Thus, it’s important to consider the local community and the social opportunities it provides, as loneliness and isolation can be particularly challenging for those in retirement.
Being close to children and grandchildren is also a high priority for many retirees. It’s important to consider how often you plan to visit them and how you will get there. Will you be okay taking numerous short flights or long drives throughout the year? Maybe it’s more important for your overall happiness to be located in the same city.
Ultimately, relocating in retirement isn’t just a financial decision but one that considers all aspects of your well-being. If relocating is part of your plan, make sure the destination you choose supports your various needs and values.
Additional Factors to Consider When Relocating in Retirement
In addition to the considerations above, other factors to consider when relocating in retirement may include:
- The local real estate market. If you’re planning to buy a home in your next location, it’s essential to understand the local real estate market. Housing prices, property taxes, and insurance costs can significantly impact your retirement budget. Therefore, it can be beneficial to work with a local realtor who understands the market and can guide you toward areas that suit your budget and lifestyle preferences.
- Climate and weather. The weather plays a significant role in our daily lives, and this holds true in retirement as well. While some people might dream of a beachfront condo where they can soak up the sun, others may prefer a mountain cabin with cool summers and snowy winters. Be sure to consider your climate preferences when choosing your retirement destination.
- Retiring abroad. Whether you’re drawn to the affordable cost of living in some countries or the allure of a new culture, retiring abroad comes with a unique set of opportunities, challenges, and considerations. Be sure to spend ample time in the country you’re considering, educate yourself on its healthcare and tax systems, and consider the emotional impact of living far from home before relocating to a new country.
- Proximity to loved ones. Lastly, you may want to consider the proximity of family and friends when choosing your retirement destination. Living closer to your loved ones can provide emotional support and practical assistance as you age, while moving to a far-off place might make visits less frequent. Ultimately, this is a personal decision that depends on your family dynamics and preferences.
Satori Wealth Management Can Help You Determine if Relocating in Retirement Is Right for You
Relocating in retirement is a significant consideration that can greatly affect your quality of life and financial well-being in your golden years. While it offers new and exciting opportunities, it can also present a unique set of challenges. Thus, it’s important to do your homework and consider the various tradeoffs involved with moving before committing to a new location.
If you’re considering relocating in retirement, Satori Wealth Management can help you develop a comprehensive retirement plan that considers your financial needs and lifestyle goals. To begin your retirement planning journey, schedule your Free RetireNow™ Checkup today.
Danny G. Michael is the founder and CEO of Satori Wealth Management, Inc. He has 20 years of experience in retirement planning working with individuals, families, and business owners.