Making Moves: Financial Considerations for Retirement Relocation

Retirement is a time full of new choices and exciting change. One of the biggest changes we often see individuals and couples make is opting to move across state lines, or even abroad, where they can start fresh and enjoy their golden years in a new location. However, as with any move, retirement relocation does come with a unique set of considerations that pre-retirees should carefully think through.

It’s critical to do your homework ahead of this move, and to ensure that the new location is truly where you want to be. We often counsel clients to spend 3-6 months in the new location as a “test run.” Does the new location offer the social scene you are expecting? Is there enough between hobbies, restaurants, etc., to keep you occupied? Think about why you want to move there, and take time to explore the area to confirm it will check all the boxes. A retirement relocation can be expensive, but do you know what is even more costly? Deciding a few months in that this new spot isn’t where you want to be after all, and having to move again.

It’s also important to zero in on everyday expenses you currently have, and create a checklist of expenses you expect to have in the new location. Often, people move from a single-family home into some sort of resort or golf community, and there are a myriad of fees and annual expenses that can throw off a financial plan. Think about HOA fees, annual assessments to community grounds or infrastructure, whether homeowner fees will escalate on a yearly basis, or even if new hobbies will impact the financial plan.

Other big-ticket expenses with a relocation

After understanding and comparing discretionary spending expectations, there are other significant financial considerations to keep top of mind.

• State taxes. Before moving to a new state, do you know what the state tax laws are on income, pension income, and sales tax? People often overlook this, and if it increases from your current to new state, it could have a big impact on finances.
• Healthcare. Compare what you are getting in the current state vs. what is offered in the new state. In some cases, when you shift to a new state, you might end up paying more money for lower-quality care, which is a big deal in retirement as individuals and couples age.
• Family travel and expectations. Are you moving to a state that is farther away from adult children and grandchildren? Take into account the yearly expense of traveling back and forth for birthdays, holidays, impromptu visits, etc. – it might be a small expense, but it can add up. Another element is the size of the house you buy. Too often, we see retirees purchase a home with multiple bedrooms because they think the children and grandchildren will visit multiple times per year, and then can’t make the trip. If you are relocating, purchase a home that makes the most sense for you and your partner, not the extended family.

There’s a lot that goes into retirement relocation, but by planning ahead and thinking about how all costs can impact long-term funds, individuals and couples can be better prepared and more financially secure when ultimately making the move.