What to Consider When Choosing a Place to Retire
When planning for your retirement, where you’ll live will be one of your biggest and most important decisions.
According to AARP, most Americans “retire in place.” They enjoy being near family, friends and their current amenities. Those who want change can be satisfied by frequent vacations or stays at a getaway home.
If you do decide to move, make a list and visit five to six places. Narrow it to three favorites and spend up to three weeks in each place. Visit the neighborhoods, check out the amenities and get a feeling for the people. Living somewhere that has low taxes and cost of living, but nothing interesting or in close proximity to family and friends, will probably not make you happy.
Here are a few things to consider when making your decision:
Climate: A generation ago, most retirees had climate as their primary concern. Retirees today are more influenced by financial concerns. Still, it pays to do your research, and you can use the National Climatic Data Center.
Health: Even if you’re healthy now, you’ll likely want to live close to good medical care. How close depends on your judgment and how prepared you are to handle a medical emergency. If you have a chronic condition, you’ll need access to specialists. In later years, you may need to hire a health aide, or, if you live close to family, they may be able to assist you.
Remember that if you move out of country, Medicare doesn’t cover out-of-country medical expenses. Plus, care in some countries is substandard, so you might have to come back to the United States for some treatments. Columbia and Malaysia are exceptions and have high-quality health care that’s affordable by U.S. standards. The U.S. News Guide to Best Hospitals is a good resource to compare health systems in other countries.
Housing: Housing will be your most expensive budget item. Downsizing can save you on mortgage payments, taxes, insurance and upkeep. A medium-size house is 2,400 square feet — which generally is more than many retirees need. Equity from selling your house could provide substantial cash.
Housing costs vary from state to state and city to city. However, don’t base a decision on home prices you find on the Internet. A Realtor knows the territory and has access to current prices and can match your needs to your budget.
Location: Look for a location that supports your interests. If you love the outdoors, want to continue your education or have a specialized hobby, look for locations that will support those pastimes. You should also consider whether being close to your family is a priority.
Many retirees move abroad for the adventure and cost savings. Nicaragua, Panama and Ecuador are considered some of the most affordable countries. Estimates show that a retiree could easily live there on $2,000 per month, but you quickly can deplete your savings if you fly back to the States frequently to visit family. The Council for Community and Economic Research has statistics on the cost of living in many locations.
Experts recommend retirees choose areas with a population of 10,000 or more. Anything smaller will probably have lower levels of health services and fewer amenities such as shopping areas, public transit, an airport and recreational and educational opportunities. Retirees often choose college towns or state capitals because they have educational and recreational resources. To learn more about a town, visit its Chamber of Commerce, city website and Visitors Bureau.
The FBI’s Annual Crime in the United States – Uniform Crime Reports will give you an analysis of crime in the places you’re researching.
Taxes: Twenty states offer favorable tax breaks on retirement income. Some states don’t tax Social Security benefits.
Seven states — Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming — have no income tax, according to the Tax Foundation. And while that might be a compelling reason to move if you’re paying 10 percent income tax, it might not be an attractive factor if you currently pay two percent income tax.
Also, that savings can be offset by other taxes. New Hampshire and Tennessee tax interest and dividend income even though they don’t tax most other types of income. New Hampshire, generally a low-tax state, has the highest property taxes in the nation. Texans pay few taxes, but they have a steep state sales tax.
While doing your research, look for hidden expenses. A town or state may have low taxes, but you might have to pay significant money for insurance. In Florida, you’ll probably need hurricane insurance, and in low-lying areas, you might have to buy flood insurance.
Life insurance, annuities and other financial instruments can help you finance your retirement dreams while protecting your assets. For more information, please contact us.
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In this issue:
This Just In...
What to Consider When Choosing a Place to Retire
Take Charge – DIY Healthcare Cost Reduction
Ensuring a Good Life for Your Family with Life Insurance
Retired? Need a Dentist? Here Are Your Options