Where to live out your retirement

Dreaming of the perfect retirement venue? Be sure to ask the right questions before you pack your bags.

With an estimated 4.1 million Americans turning 65 each year between 2024 and 2027, the question of where to spend your retirement years has never been hotter¹. The thought of where and when to retire has likely already crossed your mind. Do you envision a picturesque retirement without a care in the world? Warm weather, golf courses and relaxing afternoons by the pool? But where to begin? And what planning steps should you consider before taking the leap?

Go beyond financial considerations, cost of living and taxes

While any discussion about retirement relocation must include financial concerns, lifestyle and taxes, let’s not forget to take in the bigger picture. In an ideal retirement situation, your location within a city or proximity to work will likely no longer matter. That said, your location must be close to the niceties you hope to enjoy in retirement, as well as the conveniences you have become accustomed to during your working years. These may include shopping, recreation, clubs, social groups, weather, scenery and distance from your friends and family. After all, working hard and making smart financial decisions should earn you the well-deserved right to live where you want and do what you want in retirement.

Taxes in retirement—who needs 'em?

For many of us, one of the first things that jumps to mind when considering where to retire is taxes. And why not? You have been paying taxes all your working life, so why would you want to pay more in retirement? When you think about taxes in retirement, be sure to look at the whole picture. Several states offer little or no income tax, other taxes may be higher. Remember, states need to pay their bills too, so collection of revenue is a necessity one way or another. And while moving to a state with lower income tax may seem appealing at first glance, other costs may actually be higher.

Health care in retirement—more important than ever

Prior to retirement, we were likely healthy and active. With any luck, we may remain so throughout retirement. Routine doctor visits have been, well, routine. But can you really count on that throughout retirement? Like it or not, it’s a question that we all need to consider. And also a question that, if addressed in our retirement location decision, can give each of us a sense of security in our later years. The availability of quality health care and, potentially assisted living facilities, will become crucial. And let’s face it, living longer during retirement is not only attainable, but also increasingly a reality. It’s also easy to forget that, when you’re older, it will become more challenging to relocate for better healthcare options. As part of your decision-making process, be sure to investigate the services available in the area that you are considering.

Better safe than sorry—choosing a retirement lifestyle that’s comfortable for you

The home you lived in during your working years may still be great for your retirement. Or maybe not. Will the layout be conducive to an older you? Are there steps and stairways that might prove challenging when you become less mobile? A prime consideration is a home that will make it easy to navigate later in life, such as elevator-accessible condo, a ranch home or a senior housing community. Many retirees increasingly opt for a main-floor bedroom with easy access to living and kitchen space. Larger bathrooms that might one day accommodate a walker and a walk-in shower with seating should also be a consideration.

Another option—self-contained retirement communities

For decades, millions of retirees have chosen to move to either self-contained retirement communities or simply age-restricted housing complexes surrounded by activities, pools and like-minded adults. The benefits are obvious. Safe, recreation-focused living isolated from the busy day-to-day toil of everyday life.

But before jumping in, give some thought to things like your interests and hobbies. Think about the kinds of activities that you look forward to on a daily, weekly or monthly basis. Do you want convenient access to the outdoors, cultural events or social gatherings? Are there senior activity centers, clubs and transportation options available? Your location should offer the activities you will enjoy in retirement. Think about your preferred lifestyle and choose a location that best complements your retirement dreams. And don’t forget to visit potential locations in person. There’s no substitute for walking the community firsthand, talking to your potential neighbors and experiencing the amenities for yourself.

What about your family and friends?

Many retirees find that staying close to family is an important consideration when deciding where to spend their golden years. If you’re moving away, think through the cost of return trips and your expectations regarding family visits. Driving long distances can prove tedious and we all know the joys of air travel. Though if you do expect to entertain visitors, living near an airport will make transportation easier for everyone.

Don’t forget to figure in capital gains implications in any relocation scenario

And while we touched on taxes earlier, a mention of capital gains tax on the sale of a home is also worth noting. Depending on your situation, selling your home may trigger capital gains. However, sale of a home that was your primary residence in at least two of the last five years allows gains of up to $250,000 tax-free. And that goes up to $500,000 for a married couple.²

Do your research and dig into today’s online data treasure trove

Unlike previous generations relegated to old-school libraries and in-print magazines, current generations have access to an unprecedented amount of information over the web. So take advantage of it. Most of the factors discussed earlier can be readily researched online with just a few clicks.

A few of our retirement resources might help get you started on your research journey as well:

• Explore the best places to retire
• How to become debt-free before retirement
• Potential average income needs during retirement
• Choosing an income protection option that can last a lifetime

Make the smart move—before you move, plan ahead

Deciding where to spend your golden years necessitates both financial and personal planning. Envisioning your future living needs is no easy task, but you don’t have to plan the transition alone. A financial professional can help.

Consulting with a financial or tax professional can help you sort through the costs associated with a retirement relocation, a retirement community or just staying put where you are. A financial professional can walk you through the ins and outs of managing your nest egg to ensure the retirement lifestyle of your dreams.