Should You Relocate When You Retire?
Where do you see yourself when you picture your dream retirement?
Lounging on the beach? Playing golf with new neighbors in a gated community? Taking a quick walk from your condo to watch your grandkids play soccer? Moving abroad for an authentic international experience? Enjoying the hustle and bustle of big city living?
Let’s examine some of the pros and cons of relocating in retirement, including potential effects on your financial planning.
1. Downsizing and moving to the city.
Once your kids move out, your big suburban home might start to feel a little too empty. It also might start to be too much work as you age, especially if you don’t enjoy cutting the lawn or coordinating with contractors on repairs and improvements.
Buying a condo or renting an apartment in a major U.S. city can scale down retirement to fit your housing needs while also broadening the range of experiences available to you. Instead of heading downtown a couple times per year, you’ll be able to incorporate a huge variety of entertainment, dining, and shopping experiences into your daily routine. Major cities often have major perks for seniors as well, such as memberships at theaters and museums, discounts on public transportation, and easier access to healthcare.
However, while moving to the city might reduce your monthly housing costs, you might end up spending more on groceries, entertainment, and if you buy a condo, property taxes. The change from wide-open suburban spaces to city living can also be uncomfortable for some seniors who value their personal space. And even on quieter residential blocks, you might have to get used to being around folks who don’t have the same bedtime that you do.
2. Moving closer to your friends and family.
For many seniors, retirement is defined by the people they spend their time with. Moving closer to your loved ones can provide feelings of security, companionship, and love that will make your days fuller and more fulfilling. You’ll be near people you can exercise with, share meals with, or just relax with in the backyard when the weather is good for a cookout. And if you have grandchildren, you’ll have a chance to be an active participant in their daily lives, not just on holidays and special occasions.
Just remember that your loved ones have their own lives as well, especially adults who are still working and raising their own families. In many families and friendships, there’s a fine line between enjoying each other’s company, and relying too much on other people. Relocating retirees should make sure that their new home also offers amenities they’ll enjoy when the grandkids are busy with their friends. And seniors should make efforts to make their own community connections, such as meeting other retirees or taking volunteer positions.
3. Moving to a favorite vacation destination.
If the “endless vacation” retirement scenario appeals to you, moving to your favorite vacation destination might help you relax into your golden years. Rather than looking forward to a week on the beach or on the lake, you can turn your usual vacation routine into your retirement routine. You could even settle into a whole new country and completely change how you live and how you experience the world.
It's important that you analyze the financial implications of a big out-of-state move. You might need to make changes to your Medicare coverage, and adjust your monthly budget and annual withdrawals to account for cost of living adjustments and tax rates. If you’re no longer living in the U.S., Medicare won’t cover your health care. But, as we reminded a listener on a recent episode of our podcast, if you stop paying for Medicare, you won’t have coverage if you decide to move back, and you could be subject to penalties. You’ll also have to comply with your destination country’s requirements for establishing residency and qualifying for public health care, unless you plan on paying out-of-pocket for private insurance.
4. Retire in place.
Home sweet home has become the dream retirement destination for a growing group of seniors. Wherever you live in today’s interconnected world, you’re never more than a few taps or swipes away from fine dining, entertainment, enrichment, or a familiar face. The friends, family, and neighbors you have spent a huge part of your life with can continue to be a part of your life in retirement. Depending on your mortgage, you might have financial flexibility to fund home improvements. You might even consider buying or renting a second vacation home, or a place that’s closer to your kids and grandkids if you plan on making frequent visits.
But don’t assume that retiring at home is the best choice because it’s the easiest, or the least expensive. Establishing a new retirement routine within the familiar comforts of home might actually be harder. And as you age into new phases of retirement, you might start weighing the pros and cons of relocating all over again.
Maintaining the flexibility that will keep your finances and your goals in sync through every state of your life – including retirement – is an important part of our comprehensive planning process at Keen Wealth. We’d love to hear about your dream retirement destination and start building your blueprint to get there.
Bill Keen is a financial advisor with nearly 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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