relocating in retirement

Moving in Retirement? 5 Things to Consider

photo of a village - moving in retirement

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.

Is Relocating in Retirement a Good Idea?

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.

Homeowner insurance.

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.

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.

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Is Relocating in Retirement a Good Idea?

by Maggie Leave a Comment

houses next to mountains-relocating in retirement

According to studies, 36 % of those 50 and older want to stay in their current home when they retire. Yet almost 37% of retirees have moved since retiring. And 27% expect to move at some point.

What is right for you depends on your lifestyle, financial resources, and personal preferences on climate, activities, and proximity to friends and family.

If you have just retired or are a few years from retirement, you may be thinking ‘Where should I live in retirement?”

Sometimes there are good reasons to relocate in retirement.

You want to be closer to your family.

For many people, there is a good reason to move in retirement because they want to be closer to family or friends.

Right now you may have no real plans to go anywhere. But if your adult children are planning to move away, you do not have to feel stuck when your family no longer lives near you.

Some retirees prefer to move to another state or area to be closer to their children and grandchildren. As we age, having family members nearby can be crucial as we must rely on their help more than ever before.

Also, if you suddenly lose a spouse after moving across the country, you will find support by being closer to your family. On the other hand, if you move you will be leaving your friends behind.

You want to move where the cost of living is cheaper.

This may not matter to you if you have saved a good nest egg for retirement. But most people have a limited amount of retirement savings. Moving to a more affordable place to live could make all the difference in allowing your savings to last longer.

If you currently live in an expensive area, you should consider moving to a place with a lower cost of living. The sooner you relocate the easier it will be to make sure you do not spend your savings fast.

Keep in mind that housing is your biggest budget item. Even in retirement housing costs as a percentage of spending will remain around 35% on average.

Reducing your housing costs now will give you more cash to put toward your other retirement goals. Once you are retired, the fact that you have lower housing costs means you will need less income in retirement for this essential expense. Plus, you will have freed up more income for other retirement expenses. That could mean more travel or spoiling your grandkids.

You want to move where taxes are lower.

Even in retirement, you must pay taxes. The cost of living is important. But how much you pay in state income tax also plays an important role when you live on a fixed income.

Some states are tax-friendlier than others. The following states do not have a state income tax:

Florida
Nevada
New Hampshire
Tennessee
Texas
Washington

Moving to a state with low taxes and estate taxes may be worth considering if you have built a sizable amount of retirement assets that will be taxed as you withdraw them.

For example, if you move from Massachusetts to Florida, you rid yourself of state income tax. But if you move from New Hampshire to South Carolina, you have to start paying state taxes.

You want to downsize to a smaller home.

If your current home is too large for you, you should consider downsizing.

Find a house that is easier to maintain. Downsizing is not just a physical change. Sometimes it is a way to create a new life in a new space.

Moving also allows you to choose a home better suited to your needs during your retirement years.

By moving from a single-family home to a condominium you are trading stairs and mowing the lawn for less space and more amenities, including indoor and outdoor swimming pools, a gym, a club room, etc.

Also, it might be a good time to sell your home if you know that it will sell for a great amount of money in the current housing market. You may get a high bid for your home and then be able to move anywhere you want to.

If you have always wanted to travel in retirement, then selling your house may be a great decision. You can rent a condo or apartment so you will feel free to travel often and not worry about maintenance, repairs, and yard work. Even if you just downsize to a smaller home, you will have more money available for your travels, and hobbies.

A move can also reduce your costs if you are looking at relocating to a senior living community.

Some of these communities are all-inclusive with dining, shopping, and fitness/spa located in one spot. In exchange for an HOA fee, things like maintenance and lawn care may be covered for you which means less stress on your wallet and time.

You prefer to move to a place with a better climate.

If you want to avoid the Northern winters, you might want to relocate to a different geographical area with a better climate.

After living in a cold climate for years, many retirees prefer to move to a warmer climate so they can stay active and enjoy spending more time outdoors. I hear all the time people saying they want to retire at the beach. But have they ever spent time in a beach community in the off-season? It can be a very different place.

However, if you have never lived in a warmer climate before, you will need to get yourself time to adjust. Do not expect to get used to the new temperatures immediately. Be patient with yourself and learn how to adapt to the new climate.

Additionally, if you have health problems, talk to your doctor about planning to move to a different climate. Your doctor should help you make the transition easier. Some medications may even interfere with your body’s ability to tolerate temperature changes.

There are plenty of advantages to living in a warmer climate but there are also damaging weather conditions such as hurricanes, tornadoes, etc. Be sure to ask your real estate agent questions about special insurance policies you need to cover any weather-related damage if you own a home in that area.

Why to stay put and retire in place?

Ideally, retirement is supposed to be a time when people move to a warmer climate to sip drinks on the beach or to play endless rounds of golf. But in reality, a huge percentage of Americans are happy to stay put and retire in place.

There are many good reasons to retire in your hometown.

It is cheaper to retire in place if your mortgage is paid off.

Moving is an expensive task both in time and money.

You will spend a large amount of money and time looking for a new home, preparing your existing home to list, paying realtor fees and real estate taxes. Then hiring movers, moving, paying closing costs, and renovating your new home to fit your style and taste. If you stay put these expenses can be avoided.

Remaining in your community.

You are lucky if you can afford to stay where you are in your retirement years. You get to keep what is familiar and comfortable in a home filled with memories.

Additionally, staying closer to your friends and neighbors will help you fight the loneliness and isolation that often comes with retirement.

As we age, our ability to socialize and meet new people shrinks. Perhaps, that is because we are no longer working, or maybe we do not have enough energy to make a bunch of new friends. That is why remaining in your community gives you access to people who have known you for years, maybe even a lifetime.

Additionally, if you stay close to home, it might be easier to find work if you start depleting your nest egg fast. Perhaps you can reach out to the old group of friends or colleagues to find opportunities for a part-time or freelance job.

Great healthcare system

If you live in an area that has a great healthcare system, that is something to consider before moving somewhere else. Moreover, you will be seeing the same doctors that know you well.

In retirement, the typical household spends around 12 percent of its household income on medical expenses annually. That amount increases to nearly 16 percent by age 75.

If you are trying to keep your out-of-pocket costs as low as possible, do not rush to leave affordable health care behind.

Update your home for aging in place.

If you decide to stay put, make sure it works for you.

Take a critical look at your current home and decide what changes you have to make to your home that will pay off in the future.

Here are some items that might be on your future project plan:

Add, expand, or renovate a bathroom.
Extend your bedroom and add an ensuite.
Redesign your kitchen to fit your new lifestyle.
Create an office space. It will help if you plan to do any side work or freelance.
Create a guest room. If your children and grandchildren come often for a visit, having a separate room will help them feel more comfortable.
Create an outdoor space to be your sanctuary.

As we age, so will our homes. Today we move effortlessly around our homes. But as we grow older our mobility will decline.

house with a wheelchair person - retire in place

As a result, those stairs might not be so easy to fly up and down to get to the second-floor bedroom. Or how about the bathroom? Climbing in and out of your tub could become a slippery risk.

Even the simple task of climbing the entrance stairs to get into your home might be an issue at some point. If you plan to stay put and “age in place”, start figuring out how much it would cost to make your home senior-friendly.

You need to find ways to make your home easy to access no matter what your age, size, or abilities.

Options might include:

First-floor master bedroom
First-floor bathroom
Bathroom grab bars and railings
Curb-less showers
Shower seat
Non-slip safety flooring
Task lighting in the kitchen and other work areas
Wide doorways to fit walkers and wheelchairs
Entryway ramp
Well-lit hallways

Home Renovations for Aging-in Place

Deciding where and how to live always involves some research and detailed planning. So, put your planning skills to work and think about where you will be comfortable living in retirement.

Here are a few related posts you might want to read:

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Where Will You Live When You Retire?

by Maggie 2 Comments

A woman standing in sunflower field-where to live in retirement

Have you thought about where will you live when you retire? I am sure when you are busy with your life, career, kids, vacations, and holidays the everyday day routine keeps your mind away from these thoughts. But when you are getting closer to retirement you may realize that you need to plan for your next phase of life.

Many baby boomers will downsize, sell their homes, and move to a sunny state. But some of us will prefer to retire in place. The reason behind this decision that people love their homes and their communities where they often lived for several decades and feel comfortable to retire there. Even they decide to move it will be not far from their current location. According to the surveys many baby boomers prefer to live closer to kids, family, and friends than to relocate to a warmer climate.

There are a few options for baby boomers to decide on where to live when they retire:

Retire in place
Relocate closer to kids, family, or friends
Relocate to a warmer climate (from New England cold winters)
Move and live abroad

Retire in place.

two women on a bench - where to live in retirement

There are more and more retirees planning on retiring in place instead of relocating. I have read that this trend has become extremely popular in recent years. The baby boomer’s generation is more active and engaged in life and activities than the previous ones. Internet and technology make it easier to keep in touch with the kids, family, friends, and the whole world.

Wider variety of services such as home meal delivery, house cleaning, personal care assistance, paid caregivers and pet care make it easier for seniors to live in their homes independently. This trend is also driven by the growing cost of retirement communities and assisted living facilities.

Deciding on how to retire in place can come with its own challenges. If you want to stay in your own home for the next several decades you will need to make it age friendly. Most of the homes we live in today are not equipped for old age. We need to have fewer stairs and more accessible features in our homes with easy maintenance.

When you grow old you might consider doing some renovations to make your home more accessible:

No-step entry into the home
Grab bars installed in bathrooms and showers
Walk-in shower instead of a traditional bathtub
No-slip flooring to prevent slips and falls
Lower kitchen cabinets for easy access
Raised washer and dryer with adjustable height counter
Electric stairlift
Low maintenance yard, and more

While you might not be able to live independently in your home forever, these changes will help to make your home a safer and more functional place. Some changes could be simple modifications while others are big renovation projects.

According to the Home Advisors, the average cost of remodeling for disability accommodation can range from $5,000 to $20,000.

Home Advisors website.

Aging in Place Article: 18 Features of an Age Friendly Home

Move and live closer to kids and/or family.

women hands on laptop-move closer to kids in retirement

When planning on where to live in retirement, the first choice for many people is to live closer to their kids. According to the surveys, wanting to be closer to a family is one of the most popular reasons for baby boomers to relocate rather than a warmer climate. If you need to relocate to another state or town it might take some planning.

Moving can be expensive in terms of money and time spent. You need to consider many factors when planning for relocation:

Housing cost
Relocation cost
Access to health care facilities

Housing cost is one of the highest retirement expenses.

When you retire you do not need a big house because your kids are grown and live on their own. A bigger home is more expensive, and it is harder to maintain physically. That is why many baby boomers prefer to downsize either by moving to a smaller home or spending less for a home of equal size. It helps to save money on housing and maintenance costs.

Are you planning to buy a new home or prefer to rent while relocating?

If you are planning on buying a new home, you need to think about mortgage financing. What that means you will be carrying mortgage debt well into retirement while you start living on the fixed income.

Besides making a financial decision, you need to think about how it will fit into your retirement lifestyle. If you love to own your place you will have to deal with yard work, leaky faucets, broken A/C, or a water heater.

Renting is an attractive retirement option. Most retirees do not want to deal with maintenance and prefer a maintenance guy or a landlord to solve their problems. In addition to that, some rental apartment buildings have many amenities like swimming pools, gyms, saunas, and entertainment rooms.

Renting is also popular if you want to live closer to your kids but not sure you are ready to spend the rest of your life at that location. If you like to travel, renting has another advantage. You can lock the door and go away without worrying about the yard, home maintenance, or any other things you need to deal with as an owner.

Once you decided to move out of your home you will face the relocation cost. And if you will hire professional movers it will cost you a lot.

Most people feel overwhelmed by the idea of selling home. But moving out adds more anxiety to the whole process. Imagine that you have to take all your possessions, all your memories, and lifestyle you have created over the years and pack it in the boxes. In addition to emotional departure moving out will come with extra expenses.

First, you need to decide what to do with all your belongings – what to keep and what to sell. Next, you need to pack, figure out logistics, and hire movers.

The average moving costs depend on your local area. Usually, local movers charge by an hour. In the Metro Boston area where we live to hire professional movers is expensive. When we decide to move out it will cost us $119 per hour for 2 movers and truck.

According to the American Moving and Storage Association, the average cost of a move is $2,300 within your state and $4,300 between states. But an interstate move could be as high as $7,500 and depends on the amount of stuff you are moving, moving services, and the distance between your old and new homes.

When you think about relocation in retirement, access to good healthcare is a must. At the beginning of your retirement, you probably will be active and healthy and need only routine doctor visits. But as you grow older the access to retirement facilities, hospitals, and transportation for people with disabilities will become a necessity of life.

Relocate to a warmer climate in retirement.

When it comes to relocating, many baby boomers are searching for places with a lower cost of living. Others want a warm climate and beautiful scenery.

If you have lived in areas with cold climate and lots of snow you might want to relocate to a southern state with a warmer climate. If you like fishing and boating, you would prefer to relocate to a place near the river or lake. Finding a perfect retirement spot near the mountains will fit the lifestyle of many people who like to hike.

Taking climate into consideration is important if you want to stay active and involved in things you love to do.

According to statistics, Florida, Arizona, and South Carolina are the three states which see the largest arrival of retirees if you are looking for a warmer climate. Florida takes number one on the list because the Sunshine State has a perfect mixture of beautiful beaches, sunny weather, and low taxes.

When choosing where to relocate make sure to understand how new location and accommodations will fit into your retirement lifestyle. Because there is a difference between a place you loved while vacationing there and a place you will be living for a long time.

Move and live abroad in retirement.

mountain village - vineyards-tractor-move abroad in retirement

Retiring outside of the US is becoming a popular option among baby boomers. Moving abroad may be emotionally and physically difficult, but it can offer an exciting adventure in your golden years. Some of us are dreaming about exploring the rich culture, food, and lifestyle of other countries rather than playing golf or lying on the beach.

However, moving abroad is not only about packing your bags and buying a plane ticket. It is more complicated and needs serious planning.

First, think about how you will receive Social Security benefits. Then, how to withdraw money from your retirement funds if you move outside of the US. Another question is how to pay taxes and what to do with your belongings in the US?

There are other things to consider if you decide to move to a new country. You will need to get a residency visa, open new bank accounts, figure out how to transfer money from the US to your new place. Do not forget to look at the currency exchange rates and see if you will be losing money on the exchange.

Market Watch Article: Retiring Abroad Is a Lot More Than Living at the Beach

Access to good quality healthcare is a must as you get older. So, make sure that your new country has modern medical facilities, well-trained doctors and it must be affordable. Find out if you can join the national healthcare program or need to buy private medical insurance.

One of the most important factors is affordability. When choosing a retirement destination, it is important to move to a country where the cost of living is low enough so you can stretch your retirement savings.

It is hard to imagine that many baby boomers can afford to retire in Italy, France, or Switzerland. These countries may be the most desired to retire to, but they are not cheap. Countries such as Ecuador, Panama, Mexico, and Costa Rica offer low cost of living, solid healthcare, and public transportation system together with established expat communities.

Retiring abroad is not easy and it is not for everyone. But worth the efforts if you find the right place to move. You can live a more pleasant and comfortable lifestyle at a fraction of the price than retiring in the US.

International Living Article: The World’s Best Places to Retire in 2020

Putting It All Together

If you are getting closer to retirement you might already have an idea how and where you want to spend your days. But deciding on where you want to live for the next 20 or more years requires an open discussion with your partner.

There are many important considerations and questions to ask yourselves. Buying a nice condo by the water or on a golf course may fit many baby boomer’s retirement lifestyles. Others, like me, would prefer to sell the house, cash out, and spend money on traveling the world.

What about you? What are your plans for retirement? Where do you want to live when you retire?

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