Moving to Another State in Retirement? Here Are Some Financial, Practical and Emotional Issues to Consider First
Getting ready to retire? Chances are you and your significant other have given serious consideration to where you plan to settle down. There are definite advantages to staying put in retirement, but for many people, this new phase of life represents the opportunity – finally! – to relocate to that city or town in another state where you’ve long dreamed of living. Well, before you put up the “For Sale” sign and rent the U-Haul, you might want to check out this recent Kiplinger article written by investment advisor and attorney Peter Blatt. He lists at least five important considerations you need to take into account before you take the plunge.
Retirees Are on the Move – with Many Changing States
For every retiree who can’t wait to hunker down at home, comfortable in the familiar, there are many who choose to experience a complete change of scenery after they retire. And that wanderlust is not just about the old stereotype of moving to Florida either. Many retirees just want to be somewhere different from the place they’re used to, whether that’s sunny beaches, gorgeous mountains, country landscapes, cityscapes, or quiet forests.
According to a study by moving service HireAHelper, at least 400,000 retirees moved in 2020—the highest number in five years—and while most made their move within the state where they already live, fully 38 percent moved to another state entirely. The most popular destination states: Virginia, Florida, Wyoming, Pennsylvania, and Idaho. That’s a lot of movement!
If a move is on your horizon for any reason, whether due to finances, family, or just a desire to be somewhere new, there are definitely some important factors to consider. Let’s explore the ones Blatt highlights in his Kiplinger article.
Is Your New State Tax-Friendly – or Just the Opposite?
The last thing you want after retirement is to be startled by a new tax landscape. Before you change states, be sure to do your research on the reality of that state’s laws regarding taxes.
Some states don’t have income tax, for example. This is true for Florida, Alaska, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. So, depending on your move, you could either be moving out of an income tax or into it, so it pays to be aware. Blatt also points out that 33 states have neither an estate tax or an inheritance tax, compared with several states that are much less tax friendly.
Where you’re moving from and moving to makes a big difference. “New York has an estate tax,” Blatt cites as an example, “but Florida has neither an estate nor an inheritance tax, so once again, a retiree could ditch a tax with a Florida move. New Hampshire and North Carolina have neither of these taxes, so that’s a wash.”
Cost of Homeowner’s Insurance Can Vary Widely
Another surprise to unsuspecting retirees can come in the form of widely varying homeowner’s insurance costs. Different regions come with their own unique hazards and natural disaster considerations, and this can show up in your insurance.
Blatt illustrates his point using figures found in this recent comparison of premiums from BankRate.com. “The average cost of annual premiums fluctuates wildly, from $376 in Hawaii to $1,353 in Florida to $3,519 in Oklahoma. The potential for local natural disasters (such as hurricanes, tornadoes, and earthquakes) plays a role in those premiums.” If you’re not used to being in an area prone to tornadoes, earthquakes, or other dangers, a little research ahead of time can save a real shock down the road, whether safety-related or financial.
When House-Shopping, Bigger May Not be Better
It can be tempting to upsize after retirement, especially if you find what seems like your dream house. But it’s important to keep your expectations and dreams in check when house-shopping. A larger home may seem like a great idea at first, but the costs rack up quickly.
Be honest with yourself about the space you really need. Are multiple bedrooms and bathrooms really necessary if overnight guests are going to be few and far between? Keeping your living space a modest size can make a big difference. “Don’t forget that the larger the house, the higher the property tax, the higher the insurance bill and the costlier the upkeep,” Blatt warns.
When Relocating, Try Before You Buy
There are some things you simply can’t know about a place from research: they have to be experienced. Some communities may have strong homeowner’s associations, for example, or deed restrictions. Some neighborhoods may be more or less active than you’re looking for. The best way to get as many surprises out of the way as possible is by spending time in the place you intend to move to, either by renting first or even just taking an extended vacation there.
Blatt shares an example from one of his clients to illustrate his point: “I had clients who longed to move from Florida to the mountains of North Carolina in retirement, so for three weeks, they rented a house that was at an elevation of 3,500 feet. It was beautiful, but for them, the downsides became apparent quickly. The drive from the house to the main road took 20 minutes. Then it was another 20 minutes to the nearest supermarket. So, running out for groceries required an 80-minute round trip. They gave up the idea of living on the mountain and found a place closer to town.”
Be Honest About the Importance of Proximity to Family
While you may be thrilled at the opportunity to embark on a new adventure in a new place, don’t overlook the impact this may have on your ability to see family and friends. If you’re planning to move further away from those you love, how often will you get to see them? Is your new location easily accessible by airport or train? When the shine wears off, will you be sad if you can’t be nearer your family?
On the other hand, if you’re planning to move closer to family, this can also have unintended consequences. Sometimes proximity can be a double-edged sword if boundaries aren’t in place. Grandparents can at times become so immersed in family that they don’t form their own friendships. These are things not to dissuade you, says Blatt, but factors to be considered.
Blatt puts it best: “The good news is that many people create an enjoyable retirement for themselves by staying put in their home communities, and others create wonderful retirements by venturing out to new places. You just need to figure out which of these is financially and emotionally best for you.”
After retirement, the only wrong answer is to jump into something without a well-researched plan. With a bit of attention beforehand, no matter if you’re staying put or moving on, you can have a beautiful, joy-filled retirement wherever you find yourself!
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(originally reported at www.kiplinger.com)