5 Keys to a Smart Retirement Move

Relocating isn’t just about money, but factors like taxes and healthcare may be tiebreakers.

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It's not always about the money when it comes to deciding where to live in retirement. Four years ago, after more than three decades of living and working in New York City and environs, Jerrold Footlick, a magazine editor, and his wife, Ceil Cleveland, an author and New York University English professor, retired to Durham, N.C. It had nothing to do with lower taxes or a cheaper cost of living. "That was happy happenstance," Cleveland says.

That's not so unusual. About half of boomers expect to move to another state at retirement, according to a survey by Del Webb, a retirement housing corporation. And while a smart relocation decision will bolster a financial plan, the reality is that money matters often take a back seat to lifestyle issues in retirement.

Not that money doesn't matter (more on that later), but what's really key is living in a place that makes you feel comfortable. "Sure, the cost of living is very important," says Tom Wetzel, president of Retirement Living Information Center, a website. "But family, social networks, and other things often come first." Several criteria can trump financial concerns: climate, access to healthcare, crime rates, recreation, and culture—even shopping.

For Cleveland, 69, and Footlick, 72, moving to the Tar Heel State had everything to do with culture and the temperate climate. The couple was pulled in by the lively arts, sports, and intellectual scene around Durham's Duke University and the nearby University of North Carolina-Chapel Hill. But something else also struck a chord. "The area was Southern enough for me," says Cleveland, who grew up in West Texas, "and Midwestern enough for Jerry, who was raised in Ohio, and offered other things we loved about living in the Northeast—like changing seasons."

Plus, the couple knew the area and people living there. Footlick's daughter, Robbyn, is a Duke grad. Footlick had been on one of the university's editorial boards for well over a decade. So it was easy to fall in with a group of short-story writers, novelists, and journalists who had already migrated to the Research Triangle. "We don't consider ourselves retired," Footlick says. "We just write full time now, like practically everyone else we know here."

Living near their children and grandchildren wasn't a prerequisite for the couple, as it is for many relocating retirees. "We have five kids in five different states," Cleveland says. "We figured they chose where they want to live. Let's choose where we want to live."

Retirees Ina and Charles Logue followed the same thinking when they moved to Longboat Key, Fla., from Pittsburgh in 2002. "We had been visiting relatives here for more than 40 years while living through the gray, snowy Pittsburgh winters," Ina Logue says. So when she retired as assistant superintendent of schools in a district near Pittsburgh and Charles signed off as an outplacement counselor, they sold their four-bedroom home and headed south. They rented for three months before buying a two-bedroom bayside condo. One selling point: "Our four grown kids assured us they would rather visit us here than in Pittsburgh," she says.

There is plenty to be said for that. But where you live will be the key to a big chunk of your retirement budget. And if basic living costs like gas prices, utility bills, and groceries keep rising, moving to a more affordable area will pay off.

"Happy happenstance" is nice if it happens for you, as it did for Footlick and Cleveland. But if you have a few locations to choose among, making a strategic money decision can bulletproof your retirement budget.

Here are five financial factors to consider when planning to relocate.

1. Cashing in: One big reward of relocating is cashing in the equity you've built up in your home and moving to a more affordable area where you can buy a nice place for less. You might even be able to go further upscale. That's what Footlick and Cleveland did. They snagged a home half again as large as the one they sold on Long Island's North Shore.