Flying South for Retirement? 6 Factors to Consider if Relocating
One of the biggest decisions you’ll make in the retirement planning process is figuring out if you’ll stay put or relocate. As a pre-retiree, there are countless reasons why you may choose to move.
You may live in Wisconsin, for example, but want to relocate to Atlanta to escape the snow and be closer to your daughter and three grandkids.
Or, you may live in Virginia but want to move to Texas where your money will stretch 32 percent further and you can enjoy a Southern lifestyle.
Or, you may decide to leave the hustle and bustle of New York for Alabama, where you can enjoy a slower pace of life, milder winters and your favorite SEC football team. (Roll Tide!)
At Linscomb & Williams, we have been helping families retire in the South for nearly 50 years. While the reason to move south varies, in our experience, there are 6 factors to consider if you’re thinking about relocating in retirement. If you have a concern that isn’t addressed here or would like more information on your specific situation, let’s talk! Schedule a no-strings-attached conversation with the Linscomb & Williams team, and get the conversation started!
Will You Downsize?
Downsizing in retirement can be beneficial. Not only can you possibly free up some cash for retirement, but moving gives you the opportunity to eliminate clutter, and having a smaller space means less to clean and maintain in your Golden Years (which can ultimately reduce stress).
Downsizing makes a lot of sense for many pre-retirees, but before you throw a “For Sale” sign in your front yard, make sure to discuss your plans with a financial advisor and run the numbers to see exactly how much money you can plan on pocketing.
Many pre-retirees overestimate the value of their current home (often because they have so many memories tied up in it), and/or they underestimate the purchase cost of their future home (because they assume they’ll get a good deal). Both of these factors drastically impact your after-sale profits, so take some time to do your research.
What Type of Housing Will You Live In?
Another important question: What type of housing do you want to live in when you retire? Do you want to live in a condo, so you don’t have to maintain a large home with a yard? Do you want to live in senior housing, where you’ll be surrounded by other retirees and potentially have more support if you need it? Do you want to buy or rent?
Housing is often the largest expense in retirement, so take time to think it through and calculate your potential costs so you know how it will affect your retirement budget.
How Close Will You Be to Family and Friends?
At Linscomb & Williams, we help a lot of retirees figure out how to relocate so they can be closer to friends and family in retirement. This is more important than you may think!
If you’re close to family and friends, you’ll have a built-in social network to keep you energized and focused. If you move to a new area where you don’t know anyone, make sure to think through how you’ll find your sense of community. This could include picking up a part-time job, volunteering, joining a local club or making an effort to meet new neighbors and friends. Retiring with no one around can lead to loneliness and depression.
Community is often an overlooked aspect in retirement, especially once you’ve left the workforce and no longer see the same people day in and day out. Finding a new community, whether that’s current friends and family, or future ones, can help you maintain your sense of purpose.
For more on why this is important, read our recent blog post: Retirement Panic Attack? 4 Questions to See if You are Emotionally Ready to Retire.
What Will Your Cost of Living Be?
Will your expenses look any different when you relocate? Will housing be more expensive? Costs can vary greatly from state to state, and even city to city. There are several cost-of-living calculators online to help you crunch the numbers and figure out how much you can expect to pay, but talking to a financial advisor who is familiar with financial aspects of a particular area, like retirement planning in the South, can provide more accurate numbers.
For example, let’s say you want to relocate to an area where an online calculator says the cost of living is 30 percent more expensive than where you are now. This means if you planned on living off of $50,000 a year in retirement, you’d need at least $65,000 a year to maintain that same standard of living. However, if you moved to a different, nearby location that offered similar features to what you’re looking for in retirement, such as a small beach house near Port Arthur, Texas versus a home on the Gulf Shores in Alabama, your cost of living could actually decrease by 3.2 percent.
If you’re relocating to be closer to friends and family, then your cost of living is pretty set in stone. But if you’re not tied to a specific area, talk to a financial advisor in the area you plan to move to. The financial advisors at Linscomb & Williams can help you compare the numbers to your current situation to see how it would impact your nest egg if you made the move.
How Will Your Tax Situation Change?
Cost of living may be at the top of your mind, but don’t forget about taxes. Georgia, Alabama and Texas are all considered tax-friendly states for retirees. But you may still be caught off guard by state taxes. You’ll also want to look into sales tax and property tax if you plan on buying a home. All of these expenses will determine how much you’ll pay to maintain your ideal standard of living once you relocate.
What’s There to Do in Your New Area?
How will you fill your time once you relocate? At the end of the day, cost of living isn’t everything. Even if you could make your money stretch three times as far in a smaller city, it may not be worth it if that area doesn’t have any of the activities you enjoy.
What do you need to be happy in retirement? Is it being in a bustling city where there are museums to visit and sites to see? Is it a quiet, secluded spot where you can grow a garden and fish on the lake?
You know yourself best. Consider what you need to be happy in retirement and find a new location that offers those amenities. If you’re not sure, read our recent blog post: What’s Your Retirement Personality? And How Does It Affect Your Future?
How Linscomb & Williams Can Help
If your ideal retirement involves relocating, you likely have a million questions on how to prepare for it. Before you make any sudden moves, talk with a financial advisor who can help you plan out your ideal retirement and crunch the numbers to ensure you’re on track to get there. If you plan to move South, talk to the financial advisors at Linscomb & Williams and establish an appropriate retirement plan for the South.
Our new guide will also help: Retirement Planning in the South.
Linscomb & Williams has offices in Alabama, Georgia and Texas. If your retirement planning centers around retirement in the South, our financial advisors can help you look at elements like cost-of-living changes and how taxes will affect your retirement budget and life goals.