If there's a part of the country you've lived in throughout your career, then you may be inclined to stay put once retirement rolls around. But for some people, relocating in retirement makes more sense.
It may be the case that you've lived in an expensive area for many years because it gave you access to a higher-paying job -- one that's allowed you to build up a nice amount of retirement savings. Once you're no longer working, you may no longer feel compelled to live someplace so expensive.
Furthermore, a lot of people move as retirees to escape the cold. And there's nothing wrong with that.
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In a recent Nationwide survey, 40% of workers today plan to move to a different city or region after they retire. And the most common reasons are to lower their expenses and pay less taxes. But before you make the decision to relocate as a retiree, you'll want to ask yourself these questions.
1. How is Social Security treated from a tax perspective?
Many retirees end up relying heavily on Social Security to pay the bills. But if you move to a state that taxes Social Security, you might lose a chunk of that income by virtue of relocating.
As of now, there are 12 states that impose taxes on Social Security benefits:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Missouri
- Montana
- Nebraska
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Some of the states on this list, however, do offer an exemption for lower and/or moderate earners. So before you get too turned off by the idea of having your Social Security income taxed, do your research. And remember, some of the states on this list might offer a relatively low cost of living, which can help offset taxes on benefits.
2. What sort of access to healthcare will I have?
Health issues tend to arise as people age. And so it's important to retire somewhere that gives you access to a robust network of hospitals, medical facilities, and providers.
Before you relocate, research local healthcare networks. And while you're at it, research Medicare Advantage plans. If there aren't many in the area you're looking to move, it could be a sign that you might struggle with access to healthcare. And that's not something you want.
3. Will I have a support system?
You may be motivated to relocate to a part of the country that's cheaper or warmer than where you live now. But if doing so takes you away from all of your family members and friends, then that's a decision you might end up regretting.
Going from full-time work to retirement can be jarring enough in its own right. And many retirees end up struggling with feelings of isolation by virtue of no longer having a job. You don't want to compound that issue by putting yourself somewhere you don't know a soul.
Relocating in retirement could benefit you financially, mentally, and socially. Or it could backfire. So if you're thinking of packing up and moving to another area, run through these key questions before committing to that decision.
