How to Best Choose a Location to Retire
With a jolt in recent retirees, here are key aspects to consider toward settling your roots.
We have heard a lot about how the pandemic has caused Americans to reassess their careers, leading millions of workers to quit their jobs. But COVID-19 has also had an impact on older workers, who in many cases, have decided to leave the workforce altogether. According to research by the Federal Reserve Bank of St. Louis, the number of retirees in the U.S. jumped seven percent from January 2020 to October 2021 (or by 3.3 million, primarily age 65 and older).
Maybe you are one of the three million professionals who recently opted for retirement. Or maybe you’re considering hanging it up in the near future. Either way, you might be thinking about where you want to live once you have more free time.
Colorado has one of the lowest property tax rates in the country — or place Utah, Idaho, Texas, or Florida on your radar.
There are many factors to consider when figuring out where to spend your golden years. The following, is a look at the various aspects that might play a role in your decision.
Cost of Living
For many retirees, finding a locale where they can stretch their nest egg is a top priority. Taxes are a big part of that equation. If you want to avoid extremely high property taxes, state or local, then you might want to opt out from high profile areas along east and west coasts. Instead, consider maintaining your roots locally — Colorado has one of the lowest property tax rates in the country — or place Utah, Idaho, Texas, or Florida on your radar, all states that have either low or no state income/inheritance taxes.
Housing costs can also make a big dent in your budget, and again, it may not surprise you that the majority of the top-10 most expensive U.S. cities are on the coasts. As well, due to the rise in remote work, some formerly more affordable markets have seen a huge increase in housing prices in the last year, such as Phoenix, Austin, and Boise. Areas with high housing costs often struggle to attract workers for the retail, healthcare, and transportation industries, which might make it difficult for you to access vital services as you age.
If you love beaches and big cities but don’t want to break the bank, it might make sense to consider southern states like Georgia, which has housing costs slightly below national average. A little research might yield other possibilities that provide both affordable cost of living and good quality of life.
If you plan to spend time skiing, hiking, fishing, or golfing, choosing a town that already offers those pursuits will make life easier.
If you are a foodie, love to go to the theater, or like to visit art galleries and museums, check to see how accessible you will be to such amenities. Most major U.S. cities will suffice, but if you don’t want to live in a metropolis, a suburb offering public transportation into the city might be a good compromise. If travel is a priority, having a major airport close by helps, but a good regional airport with a lot of connecting flights works well too.
Recreation might also be a consideration if you’re eyeing an active retirement. If you plan to spend time skiing, hiking, fishing, or golfing, choosing a town that already offers those pursuits will make life easier. Of course, many resort towns (such as Aspen and Lake Tahoe) fit the bill, but they can also be expensive. An alternative might be a city located about an hour away from the slopes or a lake, which could allow you to save some money and maintain relatively easy access to the activities you enjoy.
As we get older, living someplace warm or at least with a moderate temperature might be a lot more fun than say, shoveling snow, or incurring inclement weather. Unpredictable weather-related events, such as forest fires or floods, can also be cost prohibitive. Getting homeowners insurance may not be obtainable in some parts of the country or can be so expensive it may not make sense to live there. Check with your insurance agent before you move or buy a place in another part of the country to better understand the risks involved.
Are you someone who likes to volunteer, serve on boards, or give back to your local community? Before you move, evaluate the opportunities your new city offers for community involvement. Smaller towns tend to need more help, and may welcome your time and talent.
Maybe you want to teach at the local community college or mentor youth at the local YMCA. Does the not-for-profit organization you are now involved with have branches or affiliates in other locations? Could they provide good contacts or connections to help with your integration into the community? Reviewing options beforehand may help make a smoother transition.
Family and Friends
Nothing matters more than being close to family at the end of the day. Hopefully retirement will give you more time to spend with the ones you love. Personally, seeing my two granddaughters every weekend is the highlight of my busy week. So I know that when I retire, I want to be close to them or in a place my family can access easily and likes to gather. Being close to family is also practical, given that as we age, we require more care, which often falls to family. Having friends nearby is also crucial, particularly if you’re moving someplace new. They can help you get settled and introduce you to others.
All in all, before you settle on a place to spend your retirement, make sure you do your homework. Changing where you live is a huge decision, so the fewer surprises, the better. Make sure it makes sense financially and you aren’t giving up too many of the important things you like now. Make a list, and prioritize what matters to you most today. You may not be able to get all the things you want, but be picky — these are the best years of your life, and you deserve to live in a place you enjoy.
Fred Taylor is a managing director and partner of Beacon Pointe Advisors’ Denver office. He helps individuals and families build wealth, live off their wealth and leave a legacy for future generations. A former economic advisor to Governor Bill Ritter, Fred has more than 35 years of financial services experience.