When physician Jim Brown, 71, retired two years ago, he decided to stay in Wenatchee, Wash., his home since 1970. There, in the central part of the state, he skis, fishes, travels, does consulting work for the local hospital, and regularly attends his grandchildren's sporting events. It may not be Palm Springs, but Brown and his wife enjoy both local leisure activities and the comfort of familiar faces. "You have your long-standing friends nearby, and it's kind of nice," Brown says. "We didn't seriously think of going anywhere else."
Like Brown, the majority of retirees are staying put after leaving the workforce. In 2008, the overall migration of Americans reached its lowest point since World War II, according to a recent Brookings Institution analysis. Of the 36.8 million people ages 65 and older, only about 1.4 million—roughly 4 percent—moved to a new locale, according to the Census Bureau. Even the most popular retirement spots in the Sun Belt have drawn fewer retirees in recent years: Florida gained only 8,766 people ages 65 and older in 2008, down 54 percent from 16,209 in 2005.
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The poor economy and declining home values are increasingly keeping retirees rooted. Traditionally, many seniors have financed their move by selling their house. "They are having difficulty selling their home, or their housing value has dropped so much that they do not want to sell it for the lower price," says Mark Fagan, a sociology professor at Jacksonville State University in Alabama who studies retirement migration.
No place like home. Many employees retire where they spent their final working years. No doubt, it's comforting to know the best mechanic in town, keep your dentist, and run into friends you've known for years. People who need to continue working during the traditional retirement years may also find it easier to land a part-time job with the help of their network of local contacts.
Of seniors who did change places in 2008, most stayed in the same state and the same county. Only 486,000 Americans took up residence in a new state, and about 89,000 people ages 55 and older moved abroad. Not surprisingly, the likelihood of relocating decreases as people age. While 5.5 percent of those ages 50 to 59 moved to a new city or town, just 3.9 percent of those ages 65 to 74 relocated.
Sometimes, even those who don't move far find their hometown ties so strong that they eventually return. Curt Brown, 74, a former general manager for a radio station in Springfield, Mo., moved 40 miles to Branson, Mo., in 1999 after retiring. In 2007, he moved back to Springfield after a divorce. "I like the area, and I have a lot of friends here—from the chief of police to the head of the chamber of commerce—and they know me. So it's a comfortable place for me," says Brown, who had spent more than 50 years in Springfield. He recently remarried, and his network of friends in Springfield helped him land a part-time job selling advertising.
Relationships with grandchildren are another common reason retirees don't consider far-flung destinations. Relatives can also help out with yardwork or transportation to the doctor's office—small tasks you would otherwise have to pay someone else to perform. Just over a quarter of Americans ages 51 and older who moved between 1992 and 2004 did so to be near children or ther relatives, according to a recent analysis by the Center for Retirement Research at Boston College. About 1 in 5 households moved primarily to save money during the same period.
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Lee Warner, 67, moved from Naples, Fla., to Valdosta, Ga., in 2008 after her husband sold his landscaping business. The main motivator was to live closer to two of her daughters, who work at Valdosta State University. "Anyone in retirement can go pretty much anywhere you want if you've got the money to pack up a U-Haul," says Warner, who now lives two streets over from two of her three grandchildren. "We packed up and followed them."
Making the switch. When you are no longer tied to a job, there's plenty of appeal in choosing your own corner of the globe. Even if money is an obstacle to relocating, you may be able to make it work. Choosing a lower-cost locale is one option—and in some cases, it can give your nest egg a boost. "If you sell an expensive apartment in Manhattan and move to a state with less income tax or to a more rural area, you can cut your overhead substantially and increase the amount of your portfolio," says Michael Goodman, a certified financial planner and president of Wealthstream Advisors in New York. If you don't have a penthouse to sell, downsizing to a smaller house or condo can still help improve your retirement prospects.
Marti Hurley, 62, is a retiree with a sense of adventure. In 2007, the former executive assistant sold her San Francisco home and relocated to Jalisco, Mexico, where her dollars stretched further. Hurley, who does not receive a pension from her former job, was able to retire early by moving abroad. "I could have worked until 67 and kept up the lifestyle I lived in San Francisco," she says. "But I was really tired of working, and in Mexico I could live quite well and be happy and not have to work." She purchased a three-bedroom, two-bathroom house with a swimming pool about six blocks from Lake Chapala, Mexico's largest lake. She now lives off the proceeds from the sale of her San Francisco home, Social Security payments, and savings and investments.
Another way retirees can afford a change of scenery without breaking the bank is to consider low-tax places to retire. "The pattern of retirement mobility usually goes from expensive places to cheaper places, and lower taxes is a big plus," says David Savageau, author of Retirement Places Rated. The state and local tax obligations in the United States vary considerably by location: Seven states have no income tax, two states tax dividend and interest income only, and five states don't levy a sales tax. In addition, look for tax breaks on pension income and age-related property tax exemptions or deductions.
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Clearing the hurdle of finding a destination that makes financial sense is the hard part, but it's not the only challenge. Your first priorities will probably include things like finding a place with a low crime rate and access to high-quality medical facilities. But you will also need to forge new connections with friends and associates. "You have to cut social ties [from your former community]," cautions William Frey, a Brookings Institution demographer. "When you're a senior, you have your whole lifetime invested in your community, and you have to make a break with your barber and your doctor and the people you go to social clubs with."
Patty Wirtz, 50, did her research. She visited Hot Springs Village, Ark., eight times before she relocated there in 2008 from Colleyville, Texas, with her husband, Douglas Verke, a retired computer consultant. "We wanted to be in the mountains with trees and to be someplace a little bit more rural," Wirtz says. The couple bought a home there in 2007, which they rented out for a year before moving. Although it has taken Wirtz a while to adjust, she eventually established ties and all the comforts of home in her new community. "I found someone who I really like to do my hair. We both found new doctors that we like and great dentists," says Wirtz, who continues to work part time as a voice actor on the kids TV show Barney & Friends.
The reality is that most Americans will retire among friends and relatives in the town they already know, which is predictably comfortable and likely to keep their nest egg intact. But some still strive for retirement that's more of a permanent vacation. With a little creativity and flexibility, that can work for almost any budget.
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