10 Tips for Picking the Right Retirement Spot

How to find a place that fits both your budget and fits your interests

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Slide Show: 10 Tips for Picking the Ideal Retirement Spot

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Most people retire in the same town where they spent their final working years. But some seek out a new locale with ski slopes or perhaps ocean views. Of course, budget is a big concern. "Many people move close by and move to a smaller home or condo where they have less upkeep," says William Frey, a Brookings Institution demographer. "But they still want to stay close to their children and stay involved in the business world by consulting and remaining close to their clients." Here are some tips for finding a place that fits your budget and interests.

[Slide Show: 10 Tips for Picking the Ideal Retirement Spot.]

Cost of living. Moving to a place with lower housing, food, and entertainment costs is an obvious way to stretch your nest egg. "A lower cost of living is the major factor behind retirement mobility," says David Savageau, author of Retirement Places Rated. "I don't know anyone moving from Kansas to Hawaii." Some 22 percent of Americans age 51 and older who moved between 1992 and 2004 did so to save money, according to a recent Center for Retirement Research at Boston College analysis. Estimate how your expenses will change if you move.

[See America's Best Affordable Places to Retire.]

Low-tax locales. Tax rates vary considerably by location. Seven states don't levy an income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. New Hampshire and Tennessee tax only dividend and interest income. And five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Be sure to evaluate property taxes and state and local tax exemptions for seniors.

[See 10 Great Low-Tax Places to Retire.]

Healthcare facilities. Your healthcare needs are bound to increase as you age. Make sure your prospective retirement spot has adequate health and elder-care facilities and a doctor who can treat any condition you may have. "You can call and see how difficult it is to get an appointment," says Michael Perskin, a geriatrics physician at the New York University Langone Medical Center. "If you're on hold for more than 10 minutes or you leave a message on voice mail and you don't get a call back, then you know."

[See America's Best Healthy Places to Retire.]

Proximity to family. Many retirees would like to become more involved in their grandchildren's lives. Living near family sometimes has another bonus: help with lawn care or transportation for grocery shopping—services you would otherwise have to hire. More than a quarter (28 percent) of older Americans who have relocated after age 51 did so primarily to be near children or relatives, Boston College found. "People often migrate toward someone because they have become more disabled or have lost their spouse and they need some support that they are not getting in their current location," says Mark Fagan, a sociology professor at Jacksonville State University in Alabama who studies retirement migration. "They will move toward their children or some friends to help them with their daily life."

Job opportunities. Many people who haven't saved enough or have seen their investments drop significantly in value will need to work during the traditional retirement years. More than a third (38 percent) of Americans between the ages of 62 and 74 worked in 2008, up 39 percent since 1993, according to the Census Bureau. Although the national unemployment rate has been climbing, cities such as Kennewick, Wash.; McAllen, Texas; and Danville, Va., have added thousands of jobs over the past year. Look for a place that has plenty of part-time job opportunities or consulting work in a field that interests you.

[See The 10 Best Cities for Job-Seeking Retirees.]

Recreation and culture. When you're no longer tied to a job, you have the freedom to live in wine country or within walking distance of a beach. Perhaps your ideal retirement spot has plenty of art galleries, golf courses, and hiking trails. College towns often fit the bill and host world-class speakers and entertainers, and they often have an affordable cost of living.