Here’s how to find better weather and a lower cost of living in retirement.
Now that the weather is colder, it’s fun to dream about a retirement in which you will never need to shovel snow or defrost your car again. Many sunny cities also boast a more affordable cost of living and lower tax rates than the rest of the country. But moving to a place with a warmer climate isn’t as simple as tossing out your hat and gloves. Here are some tips for a successful move to the Sunbelt.
Consider year-round weather. Although it’s tempting to move to a place where you can escape winter storms, consider what the weather will be like during the rest of the year. “If they are moving there full time, they need to think about what it’s going to be like in the summer,” says Andrew D. Blechman, author of “Leisureville: Adventures in a World Without Children.” “With a beautiful winter tends to come especially hot summers.” While you may be able to avoid heating bills in the Sunbelt, it might cost just as much for air conditioning in the humid summers. Some retirees solve this problem by maintaining summer and winter residences, but not all retirement budgets allow for this.
Look for lower housing costs. Housing costs are often significantly lower in the Sunbelt than in the Northeast and California, which offers opportunities to improve your retirement finances and boost your standard of living. “If you live in the Northeast, you can cash out of relatively high housing prices there and be able to afford much more house in southern states, and have your retirement money go longer in your retirement years,” says Michael Stoll, a professor of public policy and urban planning at the University of California–Los Angeles. “By cashing out and rebuying in a low-cost southern state, you certainly can take a big chunk of savings out of your house to increase your retirement income.”
Reduce your taxes. Tax rates vary considerably by state, and moving in retirement can provide opportunities to significantly reduce your tax bill. “People are tax shopping, and taxes often tend to be lower in the southern part of the country,” Blechman says. Several states don’t have an income tax, including Florida, Nevada and Texas. But it’s also important to look at sales and property taxes, and any special tax exemptions you may be eligible for as a retiree.
Find amenities for retirees. Retirees no longer need to live close to a job and can move to any place that suits their needs and preferences. “Many communities in those states are built for retirees and are designed for people as they age,” Stoll says. Some retirees choose to move to communities that cater to the needs of older residents, while others prefer a multigenerational environment. “I think Florida is still popular because they are moving to a warmer climate, and they have a lot of universities and colleges there,” says Andrew Carle, founding director of George Mason University’s Senior Housing Administration. “There’s a really nice combination of nice weather and intergenerational environments.” Almost all retirees will need to live near health care, transportation and entertainment options, and it’s a good idea to seek these services before you need them.
Prepare to start over. Relocating to a new community often means moving away from family and friends. You’ll also need to a find a new doctor, mechanic and pursue leads for every other service you use. It can take a lot of effort to set up a social network and build friendships in a new place.
Test it out. The best way to get a feel for a retirement spot is to try it out. Consider renting for the first six months or a year to get a feel for the area without making a big financial commitment. If the first place you try doesn’t fit your needs, then it’s relatively easy to move on to someplace new.