What if you could blink and suddenly be living the retirement of your dreams?
What would that look like?
Would you be relaxing by glittering waters on a warm, white sandy beach?
Would you be on a new adventure in the great outdoors?
Or maybe you'd be enjoying more time around your favorite stomping grounds. Whatever
you imagine — and no matter when you retire or what you want to do with all
your new free time — where you live in retirement matters. It can
affect everything from your day-to-day expenses and how you get around, to your
relationships and your quality of life. And all of that can cost you or pay off
in a BIG way, depending on where you choose to live.
So, how can you get it right and figure out your ideal spot?
Let's find out by looking at what to consider when you're thinking about
where to live in retirement.
Factor #1: Cost of living
How much are groceries, gas, and average utilities where you want to
retire or live next as a retiree? What's it going to cost you to dine out,
golf, see a movie, or even live month to month in one place versus the next?
Look for that sweet spot where you can access the things you like, enjoy
the good life, and still stretch your dollars far.
Tip: Research the latest cost of living data online, starting with credible
sources, like the Federal Reserve.1 Or take a trip to experience
different places firsthand, visiting as a tourist to really get a feel for what
it costs to get around.
Factor #2: Climate
Will you have to deal with dramatic temperatures or seasonal changes in
certain retirement locations? How could that restrict your activities, create
extra work, or present new risks for getting around?
Weather and climate year-round can shift wildly, depending on where you
want to be. That could mean anything from more tourists and traffic to
weather-related risks, like ice and snow.
Tip: Rent for at least 6 months in your chosen retirement spot before taking
the plunge to buy a house. That could uncover climate-related issues, like more
bugs in the summer or freezing temperatures in the winter, that could be deal
breakers for you.
Factor #3: Where loved ones are
How far will you have to travel to visit your loved ones, especially any
kids or grandkids in your family? Would certain locations limit visits to a
couple of times a year, like the holidays only?
Your close relationships can be a near-endless source of joy before and
after you retire. And if you stay close in terms of physical location, it can
be easier to stay connected, enjoy the company of your loved ones, and
occasionally get (or offer) help when it's needed.
Tip: If you want to live somewhere that's not necessarily close to your
loved ones, consider locations with or near a commercial airport. That can make
traveling anywhere, including back and forth to see loved ones, much easier.
Factor #4: Ability to stay active
Where can you get out and do what you like to do? What different
opportunities are available or would you have to give up in one potential
retirement spot versus another?
Staying active and social can be key to your happiness as a retiree. And
being able to enjoy your favorite activities won't be as fulfilling if you
can't enjoy them with the folks you care about.2
Tip: Look for areas where it's not going to be difficult to stay active and
make new friends around your age. That doesn't mean you have to look at
retirement communities. Instead, keep an eye out for places that will give you
regular access to events, activities, or volunteering opportunities you can
enjoy.
Factor #5: Access to healthcare
What doctors, dentists, and/or specialists are available in different
retirement hotspots? What type of access would you have to pharmacies and
emergency healthcare in one area versus another? And how easy or difficult will
it be to get the medical equipment or supplies you need in one spot or the
next?
Even if your health is stellar right now, there's no telling what
tomorrow will bring — and it's no secret that age can open up the door to more
health issues. Plus, many retirees end up having to move late in life, like in
their 80's, to get access to better healthcare. That could be avoided by simply
thinking about healthcare needs before making a move in retirement.
Tip: Consider telemedicine, medication subscriptions, and/or medical supply
delivery options. That can eliminate the need to travel at all for some of your
healthcare. Also, if you're considering moving abroad in retirement, remember,
Medicare does not cover the healthcare you receive overseas.3
Factor #6: Tax responsibilities and
opportunities
How tax friendly are different retirement locations? Where will you have
to shell out more in income or Social Security taxes?
Currently, some of the most tax-friendly states to retire in are Alaska,
Florida, Hawaii, Illinois, Mississippi, and New Hampshire because they don't
tax Social Security or pension income.4 Of course, that's just one
tax responsibility to consider. Beyond those taxes, you'll also want to look at
sales and property taxes.
Tip: Sit down with a financial professional to evaluate your tax situation
and how it's going to change when you retire. Don't forget to factor in any
plans you may have to work part-time because that could change your tax
situation too.
Factor #7: Inflation
The higher prices that come with inflation can put the squeeze on
retirement savings. And not every area is hit the same when inflation rears its
ugly head. In fact, some areas can be hit much harder, seeing prices skyrocket,
while others are more insulated.
So, which cities have been hit the hardest by recent bouts of inflation?
Anchorage, Phoenix, Atlanta, Seattle, and Miami are just a few, according
to recent data. On the flip side of the coin are Los Angeles and San Francisco,
both of which haven't seen huge price jumps due to recent inflation.5
Tip: Check out food prices for a quick and easy gauge of local prices and
inflation impacts. Also, think about whether you're open to working part-time
in retirement if inflation drains your savings. Having a backup plan and
knowing when to put that in play can give you some priceless peace of mind.
Financial Lesson:
How to Make Better Plans for
Tomorrow's Life in Retirement
What do you automatically consider when you're thinking about where to live
in retirement?
What tends to be an afterthought — or what have you never
considered before?
However you respond to those questions, the truth is you may never move once
you retire.6 In fact, if you're like most retirees, you'll end up
staying in the same house you live in during your 50s.6
Does that make sense (or cents) for you?
Do you think you will end up moving at some point after you retire?
There are no cookie cutter answers or solutions here, and what makes sense
for your friends or your loved ones may not be realistic for you. Plus, what
fits for you now may not work in 10, 20, or even 25 years as your family and
your health change. Beyond your situation and your preferences, it's also
crucial to think about the bigger picture. After all, shifts in the economy,
changes in local culture, and general tech advancements can open up new
possibilities. That can mean today's plans don't pan out to the life you want
to live tomorrow. It can also mean that changing gears puts your dream
retirement and a brighter future in closer reach, as long as you're able to
stay flexible and reasonably weigh out what matters most. That's just one piece
of the puzzle. Another one is staying connected to the folks you trust and
getting a fresh perspective as you make those big decisions.
Sources:
1 - https://meric.mo.gov/data/cost-living-data-series
3 - https://travel.state.gov/content/travel/en/international-travel/while-abroad/retirement-abroad.html
Risk Disclosure: Investing involves risk
including the potential loss of principal. No investment strategy can guarantee
a profit or protect against loss in periods of declining values. Past
performance does not guarantee future results.
This material is for information purposes only and is not intended as an
offer or solicitation with respect to the purchase or sale of any security. The
content is developed from sources believed to be providing accurate
information; no warranty, expressed or implied, is made regarding accuracy,
adequacy, completeness, legality, reliability, or usefulness of any
information. Consult your financial professional before making any investment
decision. For illustrative use only.
This information is not intended to be a substitute for specific
individualized tax advice. We suggest that you discuss your specific situation
with a qualified tax professional.
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 or Beacon Financial
Group. Beacon Financial Group is a member firm
of PartnersFinancial. Beacon Financial Group is
affiliated with Kestra IS and Kestra AS. Kestra IS and Kestra AS are not
affiliated with PartnersFinancial. Neither Kestra IS nor its affiliates provide
legal or tax advice. 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. Kestra Disclosures Beacon Disclosures