Many people are planning to relocate to a new place in retirement. But everybody wants to move for different reasons.
Some want to be closer to family and friends, others want to reduce expenses and downsize to a smaller home. Many new retirees want to move to a better climate. People might feel quite isolated during long and cold New England winters especially when they are older and no longer working.
However, there are still many people who would like to stay in their homes as they age. But it’s not always possible or practical. It may be too large to maintain or to be too far from people you love.
Whatever your reason to move to another place in retirement, keep in mind that your new location meets your needs in the long run. Because relocating is not easy. It can be expensive and stressful.
Before actually moving to a new state or community (even abroad) in retirement, there are many things to consider.
Access to healthcare.
As much as we might want to deny it, we will all need more health care as we grow older. That means we will need easy access to good hospitals, medical centers, and quality healthcare providers.
Also, do not forget to consider other health services such as physical therapy, massage therapy, and other services you might want to use.
If you are planning to move to a small coastal town in Maine, you will be quickly disappointed if the closest hospital is two hours away. Not to mention the tedious task of finding new medical care providers whom you like and trust. So, before you move, make sure that you know the local healthcare standards.
To live closer to family or not?
Most of us have children, grandchildren, and a social network of friends. Numerous studies have shown that one of the absolute musts of a happy retirement is proximity to friends and family, which is good for us both mentally and physically. If you move away, you can make new friends, but you cannot make new family members.
How often do you think you will visit relatives you left behind? How much does it cost for you and your family to make a round trip? You should be asking yourself these kinds of questions if you are planning to retire in another state or abroad.
Don’t underestimate the emotional impact of leaving your family and friends behind. And perhaps the costs of staying connected. Will you feel the need to travel back often?
Certainly, we interact these days through Zoom and other virtual platforms. That’s a convenient way to speak with each other and share what is happening in our lives. But still, is it the best way to feel connected? You might miss spending birthdays, holidays, and other events together with your family or friends.
On the other hand, many retirees choose to move out of state to be closer to their children and grandchildren. While it can work great for some families but not for others. Maybe you leave your friends behind and move closer to your children only to discover that they are so busy with their careers and schools that you see them much less than you’d hoped for. It happens.
Just accept that moving your physical, financial, and social life to a new state is a big task and will come with some unexpected challenges. You just need to figure out what works for you both financially and emotionally.
Pay attention to taxes.
Even in retirement, you can expect to pay taxes. Some states are more tax-friendly than others. So, it is important to know the situation before you decide to relocate.
For example, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and Alaska states do not have a state income tax. All other states do.
So, if we move from Massachusetts where we live right now to Florida, we will get rid of a state income tax. But if you move from New Hampshire to South Carolina, you gain a tax. And there are other dues and fees to consider. Before moving to a new state and community, find out how much people typically pay in property and sales taxes.
The federal government taxes Social Security benefits. In addition to that, certain individual states also apply their own income tax to Social Security payout. Fortunately, even those states do tax Social Security, they often provide exemptions or ways to reduce or eliminate the tax, typically based on your age or income.
Hence, if you rely on Social Security as your main income, it is important to learn how Social Security benefits are taxed in your new state.
Can you really afford it?
One of the biggest reasons that people move to a new area in retirement has to do with money and the cost of living. We move to a state that is less expensive to make our retirement savings last. That could come in the form of more affordable housing costs, lower taxes, cheaper healthcare, or a combination of all of these together.
Cost of living in a new location.
It is not a secret that your cost of living will differ significantly from state to state and even town to town. If you have put together your retirement budget, you will know approximately how much you can afford to spend. What will your costs be in the new location?
Look at the houses in the area you are planning to relocate, and find out how much utilities, home repairs and maintenance, yard care, and other typical living expenses cost on average. Other costs are homeowner’s association fees, condominium fees, homeowner’s insurance, and transportation.
The average cost of annual premiums for homeowners’ insurance fluctuates from $376 to $3,576 depending on the location. The potential for local natural disasters such as hurricanes, tornadoes, earthquakes, fires, and flooding plays a role in those premiums.
It’s worth researching how much more or less you have to pay for homeowner’s insurance.
House size – big or small.
When shopping for your new home think about the size. Do you need three bedrooms and two bathrooms for two people even if you expect visits from your children, grandchildren, and other relatives? They can always stay at nearby hotels or rent an Airbnb.
Even if you help to pay for the hotel bill it will be cheaper than the extra money you have to pay for a large size house. Think about real estate taxes, insurance, maintenance, and yard care.
How to pay for your new home?
The cost of housing is typically the largest category in your budget. Keep this in mind while deciding how to pay for your new home. Do you have enough home equity or no mortgage at all to buy your new home with cash? In this case, you do not need a mortgage.
If you use the proceeds from the sale of your home to buy a new one with cash, consider how you will invest the rest of the money. But if you do not want to use all of the proceeds or the proceeds of the sale are not enough, you should consider a mortgage.
Keep in mind that retirees often face certain challenges when applying for a mortgage. The biggest challenge is to show lenders where their income is coming from.
Sources of income can be Social Security, dividend income, rental income, withdrawals from retirement accounts, etc. Your income should be well documented, sufficient, and sustainable to apply for a mortgage.
- Should I Pay off a Mortgage Before Retirement?
- Is It a Good Time to Sell and Downsize Your Home?
- 6 Ways to Fund Your Retirement Lifestyle with Home Equity
- 5 Common Mistakes to Avoid When Choosing a Place to Retire
Location and community.
When you are thinking about moving to a different part of the country, location is important. Every place is different.
First, think about the type of lifestyle you want as you age. What kind of activities do you enjoy and what location might be a good fit for you?
If you like entertainment and going out, consider a city with lots of dining-out options, museums, art galleries, and concerts. If you love to spend time outdoors, you may want to live in a place with a warm climate and lots of outdoor activities.
Before you move, do your homework, and find out what is available in the town you will be moving to.
For example, if you choose to move to an active adult community, ask people who live there what is their lifestyle. Plan to visit the community to check it out yourself. Would you be comfortable living there on a full-time basis? Would you like the lifestyle and the whole atmosphere there?
If you are relocating to a single-family and condominium neighborhood, find out what kind of recreational activities and social life are available. If there are any good quality medical services and hospitals nearby.
If you plan to travel or expect visits from the family, consider the proximity to an airport. Will you need to have connections to international flights?
Hence, before you decide to buy a house in your new location, rent a place first to give it a trial. A place that seems like a dream may be less than what you expect in reality.
As we age, our comfort and sense of happiness are important. If you consider moving in retirement to a new place, you should find a place that brings you joy and happiness.
- Are You Thinking About Retiring Abroad?
- Moving Abroad for Retirement – The Pros and Cons
- Is 55+ or Active Adult Community Right for You?
- How Do I Decide When Best to Retire?
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