Many people opt to retire in the same places they spend their working years. And that makes sense. If you know the area and have a support network, it's understandable that you wouldn't want to uproot yourself just because you've stopped working.
On the other hand, relocating in retirement could benefit you in many ways. First, if you move somewhere with a lower cost of living, you can stretch your nest egg further. You might also have an easier time managing your bills if you plan to rely heavily on Social Security for income.
Plus, you may be eager to enjoy a more moderate climate as a retiree. That could mean abandoning a northern state and moving for warmer weather.
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But while there are plenty of good reasons to relocate in retirement, it's important to do so under the right circumstances. Before you put your home on the market and get ready for a big change, ask yourself these key questions.
1. What do state taxes look like?
Some states charge a modest income tax, or no income tax at all. And that could be a huge benefit. On the other hand, some states come with a higher tax burden, and at a time when you're living on a fixed income, that could prove problematic.
There are also some states that tax Social Security income. Granted, many of the states that fall into this category offer exemptions for low or middle earners, but if you're going to relocate, it's important to know what to expect tax-wise.
2. Will I have any family or friends nearby?
Retirement can be an isolating period, because instead of going to work every day, you might instead end up staying home a lot -- especially if money is tight. That's why it's important to consider proximity to friends and family if you're thinking of relocating.
Keep in mind, too, that as you age, your mobility could decline. Having people around to help you run errands and tend to household matters could be key.
3. What Medicare plan choices do I have?
If you're signing up for original Medicare, it doesn't really matter where you settle down in retirement because you should have solid coverage no matter where you live. But if you're planning to enroll in a Medicare Advantage plan, or are already enrolled in one, then you'll need to scope out your plan choices in your new area and make sure they meet your needs.
Some states offer more Advantage plan choices than others. And since healthcare is a major retirement expense, it's important to make sure that you're giving yourself plenty of options.
There's lots to be gained by relocating during retirement. But before you make that call, be sure to run through these important questions so you don't regret your decision. In fact, one option you may want to consider is paying for a short-term rental and spending two or three months in a new city or state before making the decision to call it your home on a permanent basis. That way, you can feel more confident in your choice.
