Financial Factors to Consider When Deciding Where to Retire

For most retirees, taxes are the first financial consideration that comes to mind when deciding where to retire. Many clients want to know the state or area where they would pay the least in taxes. However, minimizing your tax burden could still end up costing you more if you are not happy with where you live.

Besides taxes and budgeting, consider how you want to spend your retirement, what your housing needs are or will be, and how close you are to amenities and activities. These three financial factors can help you make the best decision possible regarding where to retire.

1. How you plan to spend your retirement

Before even thinking about other financial factors, you must take some time to understand and define what will bring you joy in retirement. Moving somewhere without access to friends, family, resources, or experiences to enjoy may cause you to travel more, spend more, or even move again to be closer to all those things.

Figuring out how you plan to spend your retirement will help you prioritize your financial needs more accurately. For example, research has shown that retirees who are part of a community tend to live longer, be happier, and display better financial habits. So, what kind of community, activities, and amenities are most important to you?

2. What your housing needs are or will be

Once you have thought about how you plan to spend your retirement, consider if you have the financial means to support your housing needs. This step can help you find a place in which to truly enjoy retirement. Housing needs could include any of the following:

  • The type of area you want to live in, such as a remote or outdoorsy area, a college town, or a city
  • How many rooms you want and what you plan to do with those rooms
  • What kinds of features or amenities you want or need in your home, including:
    • Potential accessibility needs like a chair lift, wide doorways, or flashing alarms instead of audible alarms
    • Areas to support your hobbies such as a nice kitchen or entertainment system
    • Outdoor features you might enjoy, such as a garden or porch

Your housing needs may change as you progress through retirement. For example, you may initially be looking to sell your larger home and move into a smaller house or condominium. Later, you may be interested in housing with amenities designed for people aged 55 or older, a retirement community, or a long-term care community.

3. How close you are to “everything”

Transportation and proximity are also crucial considerations. How accessible is “everything”: all the activities and experiences you want to enjoy, as well as any resources or amenities you need to access? This can look different depending on your unique lifestyle. For example:

  • If you plan to travel or have your family visit, are you close to a good airport?
  • If you want to be out and about, are you close to parks and trails, restaurants, museums, and other activities?
  • Can you easily reach quality healthcare or communities that matter to you?

If you have significant health issues or require specialized care, this financial factor should be higher on your priority list. Without adequate local health resources, you may find yourself frequently visiting a specialist some distance away, incurring travel and lodging expenses on top of healthcare expenses. In that case, you might benefit from moving closer or buying a small condominium nearby.

Think of proximity as a commute. Your life is better, your spending is more controlled, and your transportation costs are typically much less when you are just minutes from “everything” as opposed to an hour or more.

Where taxes and budgeting should fall on your retirement priority list

While taxes and budget items such as eating out, traveling, and more are necessary to consider, other financial factors should come first when deciding where to retire. Being satisfied with where you live during your retirement is a much higher priority.

One exception to this recommendation is if you carry a significant debt load, as many retirees do these days. In this case, it is best to reprioritize these items in a way that will allow you to pay down this debt quickly. Removing that burden can help reduce overall stress levels and increase happiness.

For example, to pay down your debt quickly, you may not be able to live in your ideal house or location for the first two or three years of your retirement. However, once your debts are paid, you can consider moving to the place you want.

Did this guide help you feel more informed and in control of your retirement plans? Your experienced Williams Financial team is here if you have any other questions.

Get in touch with us for the opportunity to discuss how your lifestyle, priorities, and other financial factors fit into your decision regarding where to retire.