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:
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.