By Eric Reich
“I’m retiring and I can’t wait to get out of here!” That’s a phrase I hear a lot as an advisor to retirees. Many retirees are looking to relocate due to any number of reasons including warmer weather, lower taxes, a more laid-back environment, etc. I certainly understand the appeal of packing up and heading to warmer winters. Actually, I get all of the reasons why retirees want to move. I have thought about it many times myself. While I see a Florida winter home in my distant future, I will likely always keep a home here as well. One of the major mistakes I see retirees make time and again is packing up and moving without a lot of forethought into the details. This week, let’s explore some of the considerations that need to be factored into a major life changing event such as moving away after retirement.
My first piece of advice to retirees looking to move is to really get to know the area you plan on moving to. I typically recommend that you do not buy a house there until you fully understand the area. Vacationing somewhere and living there are two very different experiences. I suggest you rent in the new intended area for as long as you need to in order to feel comfortable with a home purchase. When you live there, you start to make new friends in the area. If those friends happen to all live across town, you may be sorry if you bought a house on the wrong side of town. Sometimes it’s as simple as living near a traffic light so that you can get across traffic without waiting 15 minutes each time you want to leave the house. It’s difficult to quantify the importance of being near friends, restaurants and stores you frequent.
Other considerations before making the move include:
- Access to healthcare. If you are retired, I don’t need to tell you that you aren’t getting any younger. While it is important to focus on your health more than ever, there will be times when you need doctors and hospitals that are convenient to get to.
- Routines and social schedules. While being close to friends, etc. is important, so are establishing daily routines and social events. Many retirees give little thought to what they intend to do once they retire, only that they want to stop working at their current job. Having a routine is key to not feeling a lost sense of identity after stopping working for 40+ years.
- Financial considerations. Does the area you want to move to tax pensions and/or 401(k) withdrawals? How stable is the tax rate? Some areas of Florida have seen their property taxes double, triple or worse in the last few years due to revaluations. Are new schools being built? Is the area growing with younger families? All of these things could point to potentially higher future taxes. Be mindful of the costs associated with the place you hope to move to.
- Crime rates. If taxes are high, then increasing crime in the area can cause the taxes to go even higher, adding even more to the tax burden of retirees.
- Long-term care. One of the perks of modern medicine is that we are living longer. The downside is that we aren’t necessarily living well longer. The future need for long-term care will affect 71% of couples who are presently age 65.
Clearly there is a lot to take into consideration before riding off into the proverbial retirement sunset. Have open and frank discussions with your spouse about all of these factors before making a major life change.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
