On the Move

AS WE GROW OLDER, maintaining the family home can become a burden. Eight years after I retired, my wife and I moved to a 2,000-square-foot condo. It’s about the same size as our old house. But it has no stairs, no basement—and no attic full of stuff. There’s also no exterior maintenance or landscaping work required of us.

I’ve been asking near-retirees how both downsizing and relocating figure into their retirement plans. Although there’s much talk about it, a majority of retirees don’t move during retirement.

Several people I questioned had a unique way of assessing where to live. Visit local stores, they said, especially Walmart and Home Depot. They claimed it could tell you a lot about the community.

When I asked about downsizing and kids, l learned that my views are not typical. I say the kids leave the house when they marry. Or, if circumstances allow, they move out after they graduate college or have a fulltime job.

The alternate view I heard was that the kids are never moving back home once they’re off to college, so downsizing is immediate. A few people took the concept even further, saying there’s no more room at the inn right after high school graduation.

Family and friends are important considerations. One woman said they had always planned to retire to the South. And they did—when there were no grandkids. Once the grandchildren arrived, they reversed course and headed back north.

I recently played golf with an 85-year-old who has been married 63 years. For the past 13 years, he and his wife have lived in a 55-plus condo community similar to mine. He enjoyed playing pool and cards with friends there. Then his wife decided she wanted to move 50 miles closer to the children. We live in an apartment, he said with a tinge of regret, and hardly ever see the kids.

Here’s an interesting—and thoughtful—perspective. One person said he would never move far from his children. Why? As we age, we may need help, most likely from our children. It would be stressful for them if they were hundreds—or thousands—of miles away.

Among those who move, relocating boils down to a few main objectives:

Better weather. I understand seeking better weather, especially to avoid northern winters. Better weather has its tradeoffs, however. Warmer winters often mean blistering hot and humid summers. Still, I have yet to find anyone who feels sizzling Florida summers outweigh the benefits of warmer winters with no snow.

Lower costs. If lower spending is a necessity, relocation is a viable option, especially if you’re moving from the Northeast, or a coastal state, to the South.

There are tradeoffs for that lower cost of living, however. Areas with lower costs typically have lower incomes, too. There can be fewer public services and less spent on education, although the latter may not be too significant for a retiree.

One fellow I asked about relocating said, “Save enough to live where you want. But there’s a big difference between Paris, France, and Paris, Texas.”

For those serious about retirement planning, one goal should be to avoid relocating out of financial necessity. Moving under financial stress may mean you can’t return to your old home base if things don’t work out as planned.

Lower taxes. Retirees heading to Florida delight in not having to pay state income taxes. But that doesn’t mean there are no taxes or fees. There are only nine states without an income tax and, of these, only Florida is a major draw for retirees. At the other end of the spectrum, 12 states with a state income tax also tax Social Security benefits.

If taxes are a reason for relocating, all taxes should be considered. This includes taxes on income, state and local sales taxes, property, estate and inheritance taxes—even the tax on gasoline. A state needs revenue, and it’ll get it somewhere.

A WalletHub tax survey says 38% of people would move to a different country for a tax-free future. That seems a bit drastic to me.

Safety. For some, the crime rate is a consideration. Looking at the data, I was fooled. Some states popularly associated with crime actually have low rates. For example, New Jersey is lower in crime than 44 other states, including the relocation destinations of South Carolina and Florida.

A woman told me, “We moved south to Myrtle Beach. Too much crime. We moved back north, close to our daughter and granddaughters. It was an expensive lesson.”

My wife and I are never moving far from our children and grandchildren. We would save $10,000 a year in property taxes alone if we moved fulltime to our vacation home on Cape Cod. But that was never an option. It’s five-and-a-half hours and 300 miles away from the people most important to us.

Money may be the primary consideration in retirement planning. But where you choose to live, and why, is close behind. If you get it wrong, the consequences may be as dire as underfunding your retirement.

Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.

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