When people picture retirement, many of them picture a retired couple enjoying their days in the Arizona sun, or camped out at their beach house by the ocean. The stereotypes of snowbirds, or of retirees uprooting their lives to relocate somewhere warmer, exist for a reason. Close to 25% of retirees are looking to leave their current community for one reason or another, with the vast majority of retirees moving to sunnier states like New Mexico, Florida, and Arizona.
If relocating in retirement is on your to-do list, there are several financial (and non-financial) considerations to take into account before packing up the moving truck. Let’s go over what you should think about, and how to make relocation a financially savvy move.
Having a clearly defined “why” before making a move is critical for your long-term happiness and financial security. If you make a major move in early retirement and aren’t clear on why you want to make the transition, you may find that you’re underwhelmed by your new location - and wanting to go back to what’s comfortable and familiar. Taking the time to uncover the kind of lifestyle you’re looking to build in retirement can help you clarify whether or not relocating fits into your ideal lifestyle.
For example, wanting to relocate to Florida full time because you can’t stand the cold northern winters may seem like a good idea on the surface. However, you may be surprised to find out that your kids and grandkids don’t love Florida, and are less than keen to come visit you for extended periods of time. This might conflict with your desire to be close with your grandkids throughout retirement and to spend more quality one-on-one time with your family. A compromise solution might be taking an extended vacation to Florida every year, or spending winters there.
Understanding why you want to relocate, and what your new location will bring you, can help you to make the best decision about your living situation - or find a compromise if necessary to help you achieve the best of both worlds.
Moving in retirement can be a challenge, and making a major out-of-state move might be draining on your finances. Before you commit to relocating somewhere new, make sure it’s somewhere you’re interested in staying for the long-term. A few considerations might be:
Remember that while your location is only one part of your lifestyle in retirement, it’s a pretty large piece of the puzzle. Before you make a big move, it might be smart to “test drive” relocation before you dive in. Consider taking an extended vacation to the location you’re looking at. Live your daily life just as you would if you were there full time. Visit in all four seasons.
How do you spend your time? Does the area provide you with a sense of community? Is it easy to navigate? “Test-driving” relocation before committing can help you answer a lot of questions about whether or not it’s a good fit for your long-term lifestyle.
Once you answer your non-financial questions about your lifestyle after relocating, it’s important to make sure your finances add up, as well. It can be problematic if you’ve been planning to retire in your local area, which may have a relatively low cost of living, and are suddenly looking to move to a much higher cost of living area.
Determining whether or not your current savings supports your desire to move to and live somewhere new long-term is critical. Don’t leave out any lifestyle expense when running the numbers. For example, if you’re moving to somewhere that has a similar cost of living, but you plan to spend several thousand dollars a year in traveling to visit family back home, that’s an added recurring expense you need to take into consideration when building your budget.
When you want to make a lifestyle change, it can be easy to think of only the positive potential outcomes. It’s a very human thing to focus on what you want to have happen - not what may happen in reality. If you’re planning a big lifestyle shift like relocating in retirement, it’s important to think through and plan for all potential outcomes.
It’s true that you may love living across the country from your family and friends in the sunny mountains of Colorado, and that you immediately fall in with an exceptional community of like-minded retirees when you get there. However, it’s also true that you may get to Colorado and realize that you’re struggling to find a group of friends, your new home isn’t as comfortable as your previous one was, and you desperately miss Friday night ice cream with your grandkids.
Be open to all potential outcomes of a move, and do what you can to plan for negative possibilities. Test driving the move first can be helpful, but you can also put moving into your financial plan to mitigate some of the possible issues you face. Budgeting to see family and friends regularly, to purchase a home you love, and looking for a great doctor ahead of time can all help to alleviate small everyday stress points, and make your transition easier.
If moving is part of your retirement goals, talking to a financial planner about how you can make it happen should be on your to-do list. Reach out to Wood Smith Advisors today to learn more about how your financial plan can support your ideal lifestyle.
Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs, and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.