Rule the Roost

Jonathan Clements

I AM AGE 57 AND I’M planning to move, so you might imagine I’d be interested in the best states to retire. On that score, there’s plenty of advice available.

Bankrate says the best option for retirees is Nebraska, followed by Iowa, Missouri, South Dakota and Florida. Meanwhile, WalletHub gives the nod to Florida, with Colorado, New Hampshire, Utah and Wyoming rounding out the top five. Want a third opinion? Blacktower Financial Management puts Iowa at No. 1, with Minnesota, Vermont, Wisconsin and Nebraska also ranked highly.

The three surveys use somewhat different criteria, but all consider things like cost of living and crime. What about New York, where I currently live? Depending on which survey you look at, the Empire State ranks 42nd, 37th or 49th. Clearly, I should have left years ago.

What about my destination? Pennsylvania ranks 11th and 13th, which sounds promising, but also 34th, which doesn’t. But whatever the rank, it wouldn’t make a jot of difference to my decision. Why not? I don’t think your retirement destination should hinge primarily on the crime level, the weather, the number of museums or any of the other criteria that these surveys use. Instead, it should be about people.

My daughter and son-in-law live in Philadelphia—as do some friends—so that’s where I’m moving. Happiness research, as well as my own experience, has taught me that it’s crucial to surround yourself with those you love. Indeed, when retirees tell me they are moving to a place simply for the warmer weather, the low taxes or the affordable housing, I worry that they’re making a terrible mistake—because they may be miserable without the network of friends they leave behind.

Heading home. While I think being close to friends and family is paramount, I do have secondary criteria. Indeed, it’s crucial to figure out exactly what sort of house you want, because buying the wrong place is such a costly mistake.

Between title insurance, moving costs, legal fees, transfer taxes, mortgage-application fees, the real estate commission and more, you could easily lose a sum equal to 10% of a home’s value if you buy and then sell. That cost may be okay if you live in the place for 10 years, but not if you have a change of heart after 10 months.

Want to avoid making such a costly mistake? Research suggests we aren’t very good at what’s called affective forecasting—meaning we don’t have a good handle on what will make us happy. To counter that problem, some months ago, I created a wish list of what I want in a house and I’ve been refining it ever since. Here are my 10 criteria, pretty much in order of importance:

  1. I want a place where, if my physical deterioration necessitates it, I can live on one floor. That means I want at a bathroom on the same floor as the kitchen and living room, and I’d prefer the entire house be no more than two stories.
  2. I want a place within walking distance of my daughter and son-in-law—but not so close that any of us could casually drop by to borrow the sugar.
  3. I want an extra bedroom for guests. (This is not a blanket invitation.)
  4. I want outdoor space—either a small garden or a balcony. As I get older, spending time outside has become increasingly important to my sense of well-being.
  5. I want to be able to walk to restaurants and the grocery store.
  6. I want to have relatively easy access to roads or trails where I can bicycle without too much cavorting with cars.
  7. I don’t want high carrying costs. I looked at apartments in Philadelphia’s prestigious Rittenhouse Square. While I wasn’t put off by the prices, I was deterred by the maintenance payments, which can run as much as $1,900 a month for a two-bedroom apartment. Among other items, that monthly payment covers a chauffeured car that’s available to residents. Yes, you read that right.
  8. I want to look out the window—and walk out the door—and see people. I like meandering down the sidewalk and exchanging smiles with strangers (and, thus far, I’ve managed to do so without triggering a police visit).
  9. While I’d remodel the place if I had to, I’d rather not. I’ve overseen enough remodeling projects in my lifetime. I don’t want the disruption and it isn’t how I want to spend my time.
  10. I’d rather not have a basement or, failing that, a finished basement. I realize my aversion is somewhat irrational. But to me, basements mean vermin and possible flooding. What if the basement has French drains? Puh-leeze. That’s just an admission of defeat.

Following rules. Even if homebuyers draw up this sort of detailed wish list, there’s still a danger that—in the heat of the moment—they’ll make some snap judgment that overrides the rules laid down earlier by their calmer self.

Don’t think that could happen? Folks often ignore rules, even when those rules are designed to save their life. Consider the tragedy on Mount Everest in May 1996, which has been the subject of countless articles and books, including Jon Krakauer’s bestseller Into Thin Air. The expedition leaders instructed the amateur climbers involved that, if they hadn’t reached the summit by 2 p.m., they should turn around. Yet—once they were on the mountain—many simply ignored this rule. In all, eight climbers died, including two expedition leaders who were supposed to enforce the rule.

None of us, I hope, will die in the act of house hunting. Still, there’s an important lesson here: We often draw up sensible rules for ourselves—and then blithely ignore them, often to our own detriment.

We might get caught up in a bidding war and pay too much for a house. Or focus on some feature that isn’t crucial, while forgetting the criteria we fundamentally care about. That’s why I like drawing up rules and then reviewing them right at the moment when I make the decision. Such rules won’t just help us make smarter choices when buying a home. They can also help with numerous other financial decisions, including what car we buy, how we manage our portfolio and what college our teenagers select.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Nobody Told MeGreat to Gone and Five Freedoms.

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Rick Connor
Rick Connor
3 years ago

Best of luck on the move and new location. Philadelphia is a great city with lots to offer, and family makes it great.

3 years ago

If it helps, I applied much (not all) of the same criteria within the last year and so far have been very pleased with the outcome. One part in particular I concur with is NOT moving solely “for the weather”. Strange, but folks I know who’ve done that never struck me as outdoor folks anyways. But then again, maybe their circle of friends made similar choices to move to the same place. Me? I didn’t want to shy away from a vibrant neighborhood, where I could still be a functioning part of society. That’s been invaluable.

Jim Gentile
Jim Gentile
3 years ago

Go where it’s warm, you will never go back! I moved to Tucson 15 years ago from Chicago and I can’t wait for the snowbirds to leave so I can play in 100 degrees, It’s a dry heat you know?

Peter Blanchette
Peter Blanchette
3 years ago

Since you are 57 this does not apply. However, if the person moving is 62 or older they could use a reverse mortgage vehicle called an HECM(Home Equity Conversion Mortgage) for Purchase created 4 years ago.

“Before, seniors would buy a new home, incurring closing costs, and then take out a reverse mortgage on the new home, triggering new closing costs. The HECM for Purchase rolls this into one transaction and one set of purchase costs. Unlike a conventional HECM, the HECM for Purchase requires a downpayment. When you take out a conventional reverse mortgage, the loan proceeds are based on the equity in your home. With the new product, you start out with no equity because you don’t own the new house yet. For there to be equity to cover the accrued interest, the HECM for Purchase requires that you pay about half the home’s sales price with your own cash. The reverse mortgage picks up the difference.” For people with substantial equity in a previous home this is a possible option.

Most people reading this blog would not need to do this because they are often living on much more than SS. However, many millions of Americans are living solely on SS if they can retire at all.

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