Nearly two-thirds of retirees move or expect to move during retirement years. Whether you’re a decade away from retiring or nearing the career finish line, there are a number of important considerations to ponder before making a solid plan on what kind of home to live in and where you’ll retire. Take some time to do the research and explore your options.
Downsizing and Exceptions to the Rule
It might seem like a no-brainer to downsize your home once you retire. Larger homes often mean more maintenance and higher expenses. Most retirees are more money conscious once they’ve given up a full-time salary, so it’s natural to want to sell a mid- to large-sized home and buy a smaller one that saves money in the long-term. Also, retirees are typically empty-nesters who no longer need four or more bedrooms. And those with a fixed income especially need to find ways to reduce living expenses.
There are exceptions, of course. Some retirees actually upsize a home if they are moving away from family and friends and expect frequent overnight visitors. Also, as adult children find themselves needing to move back home for financial reasons, some retirees use a new home to accommodate multiple generations. Additionally, choosing a same-size or larger home might be a long-term financial plan to gift the home to family members.
More than Your Preferred Climate
For many of us, retirement means finally realizing a life-long dream to live in a warmer climate, near the mountains, or close to the beach. But weather isn’t the only factor to consider. What’s the cost of living like? Do the activities available in the area match your lifestyle? Is there an adequate healthcare facility for possible aging needs? It might make sense to spend time renting in a city you think you’ll love just in case you find out it’s not what you hoped. Moving is expensive and takes a lot of organization and energy. Take some time to test the waters before making the leap.
How Taxes Affect You in a Different State
Tax rules are different in every state. For example, some states have no property taxes. And while most states don’t tax Social Security benefits, some do. Choose a state that has favorable rules for your financial situation. Research property, income, Social Security, and estate and inheritance taxes in particular.
Research the Cost of Living
People are living longer, so it’s critical to think about how long your savings will last. Even with a healthy nest egg, you should consider the cost of living wherever you move. The lower the cost of living, the longer you can stretch your savings. Some retirees go so far as to move out of the country to areas like Mexico or Portugal where the cost of living is far lower than anywhere in the U.S. If this is too much of a change, consider lower-cost cities in the U.S.
Move to a Place that Matches Your Lifestyle
Change can be more difficult as we age, especially if we move farther from friends and family. Make sure that the culture, hobbies, restaurants, and entertainment of a new neighborhood or new city fit with your interests. For example, consider whether you prefer a walkable area with paths and public transportation or an area that’s easy to navigate by car. There are plenty of cities that might be fun for a vacation but don’t work for your everyday life.
Staying Put Is an Option
You might feel pressure from others to move simply because you’re retiring. But if your home is paid off and you love your life where you currently are, the choice to stay put is certainly an option. If that’s the case, you might choose to make some design changes to make it more enjoyable (or accommodating) for your retirement years.
Real Estate Term of the Week
Cost of Living Index: A theoretical price index that measures relative cost of living over time or regions. Specifically, it is an index of the variation in prices paid by typical consumers for retail goods and other items in a specific geographical location.