Now that you're no longer chained to the same desk every day, relocating is a solid choice that can increase your living standard and improve your finances. However, it's not a decision that should be made quickly or without careful consideration. Here are a few questions you need answers for before you make the move:
What is the state's tax environment? While low or nonexistent state income tax rates may prompt you to consider moving, there are many more tax nuances you need to research. Property tax rates, sales taxes, whether retirement plan withdrawals are taxed as income and how the state taxes Social Security or pension income are all areas you should look into as well. This is highly dependent on your own circumstances, so it's best to write everything down and make your own comparison. It could be pretty complex to figure out all the state and local taxes you might pay in retirement, but this research is essential to make sure you will actually end up paying less tax in a new retirement location than you do now.
What is the cost of living? Once you figure out how much retirement income you will have, then it's time to find out what you can afford. Pull out your budget, and figure out how much certain things will cost in the new neighborhood. Exact figures will be impossible, but make some general estimates. Get a rough idea of how much restaurant bills and groceries will run you compared to where you currently live. And look into how much routine health care services you often use will cost in the new place. At least get an idea so you won't be surprised.
What is the weather like? Don't just listen to what everybody says about the weather. Live there yourself and feel the difference. Will cold mornings aggravate your stiff back? Is it so windy you always seem to get a headache? Find out if you will really enjoy year-round warm weather, or if the heat is too much for you.
Are there friends or family who can ease you into the neighborhood? Local acquaintances can give you the inside scoop on the best restaurants in town, the easiest ways to get everything done and even help you move. Best of all, they will provide companionship, and introduce you to even more friends. Your retirement years are likely to be happier when you are around people you know. Make this a priority.
Do you actually feel comfortable there? Don’t move to a foreign place just because your money goes further there. Money isn't everything. Take everything into account, and don't make any hasty moves based on one thing. Go there for an extended amount of time before you permanently move to the location you've decided to retire in. Take a test drive, and make sure you are ready before you make any moves.
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