Wiser Financial Advisor – Ten Questions to Ask When Relocating in Retirement
Hi everyone, welcome to the Wiser Financial Advisor show with Josh Nelson, where we get real, we get honest and we get clear about the financial world and your money. This is Josh Nelson, founder and CEO of Keystone Financial Services. Let the financial fun begin!
Today we’re going to dive deep into a trend that we’re seeing with our clients. Our average age of client is right about 58, so we have a lot of people thinking about what their retirement might look like after they are done working. And of course, there are lots of different reasons why people might want to move. Our home and office are here in Colorado, and we think this is the best place in the world to live, but for various reasons, people do decide to move or relocate. So, today we’re going to talk about the top 10 questions to ask when relocating in retirement.
Question #1 is on cost of living. This is important because it can be very different depending on where you live. If you’re out in the boonies of Oklahoma versus in Manhattan, you’re going to have a different experience with regard to your expenses. This isn’t just about housing; it’s also about groceries, utilities, and other daily expenses. Take a look at what it actually costs to live there and in what ways that could work for or against you. Get clear about what it’s going to cost, and make sure you can afford it and have the same lifestyle to which you are accustomed.
Question #2 is about housing costs specifically. Whether you’re planning to buy a new home or rent a home or do the RV thing, it’s important to understand what that will cost depending on where you locate. Your house is where you’ll be spending most of your time, so from a personal standpoint, you want to choose wisely and make sure that not only is it in sync with your budget, but also is it really what you want? Years ago we had some clients that were dead set that when they retired, they were going to do the RV thing and spend lots of time driving around the country. And so they thought, “Hey, why don’t we just rent one and go on a trip and see how we like it.” And when they got back, they said, “Never again! That is not our thing.” They were so thankful that they hadn’t gone out and bought an expensive RV when that was a lifestyle it turned out they didn’t want.
Question #3 to ask when relocating in retirement: What are the tax implications? That’s always fun. Taxes can be very different depending on where you’re living because state tax varies from state to state. States like Florida or Nevada or Wyoming might be tax friendly, but others, like New York or California or Connecticut, might have quite the bite taken out of your pension or even your Social Security income. Sometimes you’ll even have local taxes if you live in a city, so you need to be fully aware of those. Tax implications might not just be income taxes. For example, in Florida you might not have a state income tax, but their property taxes are higher. And if you are near the coast, you might have to have hurricane insurance or flood insurance, or something else that could be quite expensive and kind of make up for that difference.
Question #4 involves healthcare costs. If you are under the age of 65, you probably don’t have Medicare or insurance other than what you’re buying on your own. Did you know that South Dakota, believe it or not, has some of the priciest healthcare because there’s a lot of rural area, so there aren’t as many medical facilities or doctors there. Whereas Michigan is actually more on the budget friendly side with a higher population and more healthcare options. So, this is an area to assess and compare beforehand.
Question #5 to ask when relocating in retirement comes back to healthcare. Accessing quality healthcare is paramount, so it’s not just about the cost. After all, it’s not a bargain if you have to travel 100 miles to see a specialist or get to a medical facility. So it’s important to make sure that not only is it inexpensive or affordable for you, but also, will there be a lot of healthcare options, especially as you age? Are there a lot of facilities and doctors available in the area? For example, down in Florida you have lots of people retiring. Does that mean there could be a shortage of docs that could take you on as a patient? Important to make sure that healthcare is available, especially as you age.
Question #6 is about climate. Luckily, here in Colorado we have some of the best weather in the country—we think, anyway. You could be sunbathing one afternoon and the next morning be snowboarding. Well, the climate of your new home could be a game changer, and it may be something that could affect your health as well as your hobbies and activities. It could affect your friends and the people you would connect with, too.
Question #7 to consider is about recreational and social activities. Retirement is the perfect time to chase those forgotten hobbies or maybe even discover new ones. Maybe you are a pickle baller and maybe you are not. Maybe you play bridge. It’s important to think about those activities and others widely available in the area that you are looking at, making sure that the things you enjoy doing are available, things you see yourself doing on a day-to-day basis. For example, if you are a huge golfer and you want to be able to golf year round, probably not a good idea to retire in Minnesota. It’s a lot more limited. I’m from Iowa, my wife from Minnesota. You can golf there, but you can’t golf year round. Consider what you are actually going to be doing and who you’re going to be hanging out with. What does your life look like once you’re there?
Question #8 is on lifestyle. An opera night or going out to the movies? A book by the fireplace? The overall vibe of a place, whether that be in a city or out in the country, whether it be in the suburbs or an RV park—all these can affect your daily happiness and peace of mind. One benefit of trying out a place is to get a feel for what it’s like and start to imagine what it would be like if you spent more time or maybe all your time there. We’ve had clients who spent some time in the area they were interested in, but they rented instead of buying at first. Some found that they loved it and ended up buying a place and staying there. Others found they hated it and ended up trying something different.
Question #9 is about proximity to family. Maybe you’ve moved and you’re trying to get closer to the kids and grandkids. Retirement is often about connecting and that often means family, especially grandkids. I had clients years ago from the UK who had moved to America, and their entire career was spent here. I asked them if they’d ever move back in retirement? And they said, “Oh no, we would never move back to the UK. We hate the weather there and it’s so nice here.” Then all of a sudden, one of their kids located in the UK had some kids, and that changed things dramatically. The grandparents were on a plane and moving before you knew it. So, it’s important to think about the people you’ll be spending time with. That doesn’t always mean family. Maybe it’s friends. Maybe it’s moving to a community that has a lot of activities and people that really want to connect as opposed to people who already have established relationships.
Question #10 is about vehicles. If you’re looking to rely less on your car, you probably shouldn’t move to South Dakota. Nothing against South Dakota; it’s a beautiful area with lots to see, but it will not work so well without a car versus living in Midtown Manhattan, where there are a lot of transportation options that are publicly available. So you may need to think about what your transportation situation looks like. You might also be moving to an area that will just be a part time place for you. Maybe you’ll only be there in the wintertime. Be thinking about what kind of transportation you want to have when you get there. Will you be driving to get there? My parents, for example, for years and years made the road trip from Iowa to Arizona every winter. It was kind of fun for them for a while, but as they got older, they really got sick of that. Also, there’s a safety factor, especially if it’s a big road trip, which could even be dangerous. So it’s important to be thinking about what transportation options there are. If you’re in an urban situation, you have Door Dash at your fingertips, and you have Amazon deliveries to get you your stuff within hours. If you’re off in the boonies, it could be a while until you get your stuff. You may not even be able to order a pizza.
So these are ten questions to ask when thinking about relocating in retirement. I hope that’s been helpful and hopefully it resonates either for you or maybe for a family member or friend going through this decision. So please share the episode. As always, we are about acquiring wisdom. We’re trying to acquire wisdom that affects our finances, our lives, trying to make our lives better by using other people’s experience from the past, because trial and error can be very expensive and time consuming.
Please give us any feedback by going to www.wiserfinancialadvisor.com . We’ve got all our episodes up there and other information that might be helpful for you. Have a great day and God bless.
The opinions voiced on the Wiser Financial Advisor show with host Josh Nelson are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine what may be appropriate for you, consult your attorney, accountant, financial or tax advisor prior to investing. Investment advisory services offered through Keystone Financial Services, an SEC registered investment advisor.