10 Things to Do When Looking for a Retirement Spot
These factors matter as much as, or more than, the local weather
(This article was previously published as 10 Best and Worst Things to Do When Looking for a Place to Retire, on GoBankingRates.com.)
With millions of boomers retiring each year, the 55-and-up population is swelling in warm weather places such as Florida, Arizona and California. But sunny days shouldn't be your only non-negotiable when figuring out where to retire.
At GoBankingRates.com, we talked to a number of retirement and financial planning experts to find the 10 best things to do before relocating for retirement. They can help you figure out where to move:
1. Look for a Lower Cost of Living
One of the worst-case scenarios in retirement is the possibility of outliving your savings. But “one way to help alleviate that stress is to move to a place where your money goes further," said Aaron Hatch, a Certified Financial Planner and co-founder of Woven Capital, in Redding, Calif. "One of my clients is considering moving to Mexico so their money goes further."
You don't have to cross a border to find a less-expensive location, though. The key, according to Stephanie Genkin, a Brooklyn-based financial planner, is to make sure you can afford your three biggest ongoing expenses besides your home: health care, food and energy.
"You want to find a city that is affordable particularly in these areas," Genkin said. "You'd be surprised how much variation there is across the country. Eventually, you may not play golf or tennis or be able to do as many activities as you did at the beginning of the retirement. These costs will drop off. But you'll still need to go to the doctor, eat and heat or cool your home."
According to Forbes' 2015 Most Affordable Cities report, retirees will be able to get the most for their money in Birmingham, Ala.; Knoxville, Tenn.; Buffalo, N.Y.; Oklahoma City, Okla. and Cincinnati, Ohio.
2. Secure Access to Good Health Care
"It's a given that as you get older, your health will deteriorate in one way or another," said Andrew McFadden, a Certified Financial Planner and founder of Panoramic Financial Advice, in Fresno, Calif. "It may be something as simple as arthritis or as debilitating as diabetes can get in some cases. You want to make sure that when problems arise, you will have fast access to high-quality health care providers."
The solution? Do your homework. Investigate nearby hospitals and in-network doctors to see if you'll have enough access to medical attention.
3. Consider Your Safety
"Let's face it: As we get older, we become bigger targets of criminals looking to take advantage of someone," McFadden said. "That's why you want to make sure your city is known for its standards in safety, both in the day and night."
To make sure you're covering all your bases, do some research on crime statistics in your desired city and read up on your local law enforcement.
4. Make Sure You'll Be Close to Necessities
How far are you willing to drive to reach the nearest grocery store? Or dry cleaner? Or library?
Once you've zeroed in on a city, check to see how robust its local amenities are — a little bit of inconvenience can become a big problem once you move there.
"If the closest grocery store is 30 minutes away, that's not a big deal if you're staying for a few weeks," said Ed Snyder, a Certified Financial Planner with Oaktree Financial Advisors in Carmel, Ind. "However, when you're living there and you have to make that trip every week or just to run out to get milk and bread, it's going to be much more inconvenient."
5. Cater to Your Interests
Does the city you're planning on moving to accommodate your hobbies? This consideration is crucial for an enjoyable retirement, said Andrew Wang, co-owner of Runnymede Capital Management in Morristown, N.J.
"The key is to evaluate the community and its activities before making the move," he explained. "If you move to a gated community where most social activities revolve around the community’s two golf courses but you do not enjoy playing golf, the transition could be challenging."
Google Maps will be your friend here. "Find a city that has lots of good walking paths, great places to eat and shop — with senior discounts —golf courses, clubs or access to anything else you plan to pursue as a hobby," McFadden advised. "Retirement would be a shame if you just sat in your house all day watching TV because there was nothing to do outside."
6. Look for States That Offer Tax Breaks for Retirees
"When determining where to retire, it is important to consider how retirement income will be taxed in a particular state, as well as other tax implications of a move in retirement," Medora Justus, an Oxford, Miss.-based investment adviser, said. "For example, Mississippi does not tax retirement income, and the first $75,000 of a personal residence value is exempt from property tax for those 65 and older."
Transitioning to a fixed income isn't going to be easy — you'll need every little bit of help to stay atop your finances in the first couple years, and tax benefits can go a long way toward helping with this concern.
"Retirees should review their income and financial plan from an after-tax perspective to accurately gauge their situation," Justus said. "Taking this a step further and determining the after-tax scenario for each state they are considering for retirement can highlight which move is most appropriate and comfortable for their personal retirement scenario."
7. Look for a State That Protects Transfer of Assets Upon Death
Retirees face the dispiriting task of making provisions for after they're no longer around. And this responsibility can be even more of a headache if you live somewhere that doesn't have strong laws protecting the transfer of assets upon death, said Trey Henninger, an investing blogger at DIY Investing.
"Florida is one of the favorites for retirees because it has very favorable laws for asset transfer upon death, in addition to being a no-income-tax state," he said.
8. Consider the State's Bankruptcy Protections
Another thing you'd probably prefer not to plan for is financial destitution, but it can't hurt to consider a state with friendly bankruptcy laws.
For one, the biggest cause of bankruptcy in the U.S. is unpaid medical bills, which affected some 2 million people in 2013, according to a NerdWallet Health report. And when you're giving up your income and leaning hard into your savings, as you do when you enter retirement, you're at your most financially vulnerable.
"While a lot of states protect retirement assets such as a 401(k)s from seizure in bankruptcy, some states protect even more assets," Henninger said. "In some states, a paid-off home that is your residence can't be taken in bankruptcy, no matter how expensive the house is, while others protect up to a certain value. This can be favorable for a retiree to find in a state, so that if a medical emergency forces them into bankruptcy, they don't lose their house or retirement assets."
9. Factor in Transportation
"Moving to a place that is walkable and has good public transportation, a temperate climate and access to recreation is always advisable because it helps retirees stay active longer," McFadden said. "This leads to healthier individuals, which in turn reduces medical costs over time. Additionally, if part of a retiree's goal is to travel, having an international airport nearby never hurts."
10. Plan a Trial Run
Those pros and cons lists you've now drawn up based on per-capita golf courses and tax rates can only go so far in determining whether you'll actually like living somewhere.
"I strongly recommend that you make a trial run for at least a year before permanently relocating," said Neal Frankle, a Certified Financial Planner and editor of WealthPilgrim.com. "I've had a number of clients who picked up and moved to a new city because the numbers looked good or because they had family there. But your actual living experience may be far different than what you expect and the only way to know what it will be like is to live there. So try it out before committing."