One challenge some retirees face is the cost of maintaining their lifestyles in the absence of their paychecks from work. If you spent your career in a higher-cost area, for example, and are now retired, you might be looking to relocate. Doing so could make it possible to stretch your savings and experience less financial stress.
But before you make the decision to relocate, it's important to consider both the benefits and drawbacks. Here are some to keep in mind.
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Pro No. 1: You might lower your housing costs
Once you retire, you might move over to a fixed income that's a combination of monthly Social Security benefits and withdrawals from the savings you've built. If you move someplace where housing costs less, it could result in a lot less spending, since housing typically tends to be a person's largest monthly expense.
In researching new locales, though, don't just look at home prices. Also look at property taxes -- what they are at present and how they've risen in recent years.
And don't forget to explore your options for homeowners coverage. Insurance has become increasingly hard to get in some parts of the country known for extreme weather, so make sure you're not signing up to pay a bundle.
Pro No. 2: You might lower your tax burden
Some states don't have income taxes. That's huge if you have your retirement savings in a traditional IRA or 401(k) plan, as opposed to a Roth account, because withdrawals from the former are generally subject to taxes.
Similarly, moving from a state that taxes Social Security to one that doesn't could help you keep more of those benefits. So if you're currently losing money in that form, relocating could improve your financial picture.
Pro No. 3: Your health might improve
Moving to an area with better access to medical care could work wonders for your health. But even if healthcare access isn't a problem at present, abandoning a city could mean breathing in cleaner air and encountering fewer health issues overall.
That said, one pitfall you might encounter is that if you leave a city, it could lead to a more sedentary lifestyle. That might not be so good for your health. So if you land in a more rural area, you may want to commit to some sort of fitness routine that keeps you moving.
Con No. 1: You might lose your support system
Chances are, if you've lived in the same area for quite some time, you have a support system. That network might consist of family, neighbors, friends, and former colleagues who recently retired alongside you.
Relocating could mean having to start all over again socially. It could also mean feeling lonely until you've found your footing, which could take a long time.
Con No. 2: You might spend more money in the absence of having help
Losing your support system might not just constitute a blow socially; it could also have a financial impact.
Let's say that once you relocate, you won't have your grown son living 15 minutes away to help you get to doctor appointments. You might have to spring for ride sharing each time you need to get somewhere essential if you're no longer comfortable behind the wheel.
Con No. 3: You're taking a gamble
Maybe your new locale will be considerably less expensive than your former one, allowing you to stretch your income. But anytime you move, you run the risk of encountering expenses you didn't plan for.
For example, you might buy a condo with homeowners association fees only to see your fees rise substantially year after year after you've moved in. Granted, this could happen if you move to a new home in your current city, too. The point, however, is to be mindful of the fact that a new location could lead to surprise costs.
Relocating could be a smart decision for your retirement. But make sure to carefully consider the pros and cons before taking that leap.
