Broker Check

My wife and I are considering moving to another state to retire

August 29, 2018

My wife and I are considering moving to another state to retire. What issues should we take into consideration?

This is a great question and there are a number important factors that should be considered before making such a major decision. An obvious concern is the amount of taxation but there are many additional issues such as; overall cost of living, availability of services, climate, community, proximity to family and friends, recreation and more. Therefore a more holistic approach is called for.

According to Kiplinger, the ten most tax-friendly states for retirees are AK, DE, GA, FL, LA, MS, NV, SD, TN, WY. While these states top the list for tax considerations that is only one piece of the puzzle. Taking a look at states with the highest cost of living, Alaska ranks number four which may negate the lower tax costs not to mention unlikely proximity to family and friends.

Here are some additional examples of the differences between states to consider: Florida and Delaware offer special property tax rates for seniors. Florida has a state sales tax, Delaware does not. Delaware has an estate tax, Florida does not. The point is that there is no one size fits all regarding taxes and your specific circumstances need to be factored into the decision. Do Not forget to take the Tax Cuts and Job Act into consideration. This new law may impact your tax liability either positively or negatively depending on where you chose to retire.

The availability of services is a big consideration. As people age, it is likely we can expect more frequent visits to health care facilities and services. You probably do not want to drive an hour for a doctor visit. You also need to consider the number of health care providers available in the area. The more rural areas will have fewer choices and this may be a tradeoff for which you need to decide.

Research what Medicare health insurance plans are available as they can vary depending on your geographic location. If you are retiring prior to age 65, then research health insurance available on the health exchanges but of course that is a huge question mark since Congress has not made any progress toward replacing the Patient Protection and Affordability Act. Also, you will need to take into account what extended care and rehab facilities are nearby.

Climate is a serious consideration. It has been said that in California we have the most expensive weather in the continental United States. Agree or disagree, you may not want to spend your retirement days shoveling snow or continually wiping the sweat of humidity off your forehead. My advice is to visit potential locations numerous times and at different times of year to get a realistic feel for how you will acclimate. What a great reason for travel!

This will also give you a chance to get to know the community. Does the community offer access or hold activities that interest you? Outdoor recreation, winter, and summer activities? Consider local fairs, dining, the theater, service clubs, churches, or any other activity that you may want to participate in.

What is the proximity to your friends and family? How close will you be to airports for traveling? Will other family members be living with you? There is a reason that boomers are sometimes referred to as the sandwich generation. Consider how well the new location will work out for a surviving spouse. If it is not practical to stay in the home or that location at that point, planning now for that contingency is well worth the effort.

According to a BankRate survey, approximately half of Americans ages 50 to 64 consider moving to a new retirement home. That number drops to twenty percent for those age 65 and older which, reflects a propensity for aging in place. We have all heard stories from people who have moved out of state only to return later due to disenchantment with their move. Moving back to an expensive state such as California can be very costly, and possibly create a financial hardship in your retirement years.

So be pragmatic and plan ahead. Do your research, make it a priority to travel and really learn about the communities you are considering to spend your golden years in. Until we talk again, be well.

Securities and advisory services through Independent Financial Group, LLC (IFG), a registered investment advisor. Member FINRA/SIPC. Dedicated Financial & Insurance Services and IFG are unaffiliated entities.