The following is a post by MPFJ staff writer, Kevin Mercadante, who is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com
An increasingly important retirement strategy is relocating to a place where the weather is warmer and the cost of living is lower. There is considerable debate as to which states offer the most advantages to retirees, and a new list seems to come out just about every month.
Some favor low house prices, others low taxes, and still others, a low cost of living overall. This is of course an important consideration for retirees, since lowering living expenses is the critical other half of retirement planning (retirement investing being the first half).
AARP has a list of preferred states – and the reasons why they are included – on its website, which is actually provided by a site known as MoneyRates.com;:
1. Hawaii — great weather and high life expectancy
2. Idaho — low crime rate and good economy
3. Utah — good economy
4. Arizona — good weather and high life expectancy
5. Virginia — good economy
6. Colorado — high life expectancy
7. Florida (tie) — good weather
7. New Mexico (tie) — good weather
9. South Dakota — low crime rate and high life expectancy
10. California (tie) — good weather and high life expectancy
10. Texas (tie) — warm weather and solid economy
I don’t think that this list is any better – or any worse – than any others that I’ve seen, but since people tend to like lists I decided to include it here as well. It does strike me as a bit peculiar that two very high cost states, California and Hawaii, appear on the list. High cost and retirement are not usually found in the same sentence.
As is my preferred way of blogging, I’d like to take a contrary position on the idea of relocating for retirement. It’s not that relocating to take advantage of certain benefits at remote locations is a bad thing. But as a transplant myself, I would like to point out some of the downsides of relocating so that if you are considering such a move for retirement, you will be fully aware of some of the less attractive (and less reported) aspects of relocation.
Home is where the heart is – and that includes family
As I wrote above, when it comes to retirement, people often look to relocate to take advantage of milder climate and lower prices. But, there can be a cost to chasing those advantages that doesn’t involve money. If your family and friends are concentrated where you live now, a move to another state will take you farther away from them. You have to give very serious consideration to whether or not that is a price you’re willing to pay.
The greatest cost will be emotional of course, but there are more tangible expenses as well.
If you are retiring at 65 or thereabouts, you’ll probably find that you will have a greater need for support from family and friends than ever – after all, you’ll be older. You’ll also have to factor in the hard costs of traveling to visit your suddenly distant kin. In addition, as you get older you may find that you’re neither physically nor emotionally able to make the trip on a regular basis.
There’s still another factor that’s retirees often don’t consider when making an out-of-state move and it’s the inability to adjust to living in a different location. This can be especially true if you’ve spent all or even most of your life living in your current location. The prospect of taking on the unknown in retirement is exciting – but the comfort of familiarity tends to increase as we get older.
Lack of amenities that you take for granted now
If your primary purpose in relocating is to lower your retirement living expenses, you may not realize some of the amenities that you’re giving up by making the move. Consider some of the following:
Cultural amenities. The older, higher cost cities (New York, San Francisco, Chicago, Boston, etc.) that so many people want to flee in retirement, also offer cultural amenities not found almost anywhere else. If you are leaving a large city in favor of a beachfront community or small rural town, you’ll almost certainly be saying goodbye to those amenities in your everyday life. The theater, the variety of restaurants, the museums, quaint old neighborhoods, and shady parks may not be a part of life in the new location.
Medical facilities. Another common feature of high-cost cities is that the health care community tends to be very large and comprehensive. As you get older, this will become an increasingly important factor in where you live. Small, low-cost communities typically don’t offer anything close to the level of medical facilities that large cities do. Just as the case will be with visiting family and friends, you may find yourself traveling to get needed medical care at significant additional expense.
Economic benefits. This is an often overlooked benefit of living in a large, high cost area. The area is typically high-priced because it has a strong economy. While we might not think that this is important in retirement, it very well may be if you are hit by a rash of expenses that forces you to seek some form of employment in order to keep from digging too deep into your retirement portfolio. In many less expensive locations that retirees tend to favor, there may be little more than minimum wage part-time jobs available. In a large city – especially if it is your home turf – you may have significant contacts that would enable you to return to the workforce even temporarily, at a much higher wage.
Inconvenient geography
We’ve already touched upon the need to travel that comes with moving to remote locations, but there’s a lot more to geography than just travel distance.
If you grew up in a mountainous area, you may find yourself uncomfortable living in an area that is primarily flat lands. Similarly, if you grow up in a lush, heavily forested area, you may not be entirely comfortable living in the Arizona desert.
Apart from natural landscape, you may find it difficult to adjust to a small community, after living in a large metropolitan the area. While we usually think of America as being one country, life can be quite a bit different from one region or state to another, and even from one city to another within the same state.
Some people can adjust to this change fairly easily, but not everyone can. If you are really comfortable with “the way things are” in your current location, you may want to think long and hard about your ability to make what could be a radical change in a completely different location.
The weather may not be as great as is seems at first glance
Undoubtedly, there’s been a massive shift of the retirement population from cold weather climates to warm/hot climates. While that may seem like a natural move, it doesn’t always work out so neatly for everyone.
Some people find upon moving to the Sun Belt, that they never fully appreciated the change of seasons where they used to live. If you relocate from the Northeast to Florida, you’ll find out if you can handle this change pretty quickly. Not everyone can and some return home after a few years. You may discover that your primary appreciation for warm weather was the fact that it’s different from the cold weather that you knew so well. As a result, living in an area of perpetual summer may not be quite as enjoyable as you anticipated.
Where the weather is concerned there can also be subtle differences. For example, if you live in a fairly dry climate, and you move to one that is more humid, you may find it to be a lot less comfortable. It can also interfere with, or even cause, respiratory ailments.
If you plan on relocation in retirement, measure the costs – all of them
Does this mean that you should not consider relocation as part of your retirement strategy? Not at all. But if you are planning to relocate, it’s well worth doing some advance planning.
Years ahead of your retirement, you should begin investigating various locations to find the one that is most appealing to you. When you do, you should visit that area as often as you can. This is partially so that you can learn as much as you can about the area, but also so that you can develop some level of familiarity with it.
The worst thing you could do is move to an area at retirement, after having visited only once or twice. The more you visit an area, the more you’ll discover what it is about the area that you like – and what you might not like so much. Give yourself plenty of time to make adjustments before you retire.
You may find that you’ll miss your family, friends and home town too much to replace them with beaches, palm trees and perpetual summer.
How about you all? Are you planning to relocate when you retire? Have you thought about any of these considerations?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/teegardin/6669045131/sizes/n/in/
