10 Necessities for a Great Retirement Spot

Here is how to select the ideal place to retire.


In Pictures: 10 New Retirement Hot Spots

By + More

The following article comes from the U.S. News ebook, How to Live to 100, which is now available for purchase.

Retirees aren't moving to new places as often as they have in the past. Just 3 percent of people age 65 and older relocated between 2010 and 2011, according to recently released Census Bureau data. "Their 401(k)s have taken a dive, the housing market fell, and people who once thought they might have been able to retire and move are now not doing so," says William Frey, a demographer and senior fellow at the Brookings Institution. "We're at the lowest level of migrations since the end of World War II." But some seniors continue to seek retirement spots with more affordable housing, better weather, and fun things to do. Here are 10 tips for selecting a great retirement location.

[See 10 New Retirement Hot Spots.]

Affordable housing. Selling your current home and moving to a place where housing costs significantly less could give your nest egg a quick and significant boost. Carolyn Kauffunger, 71, a native of Boston, moved to Pittsburgh during the final years of her career and decided to stay for retirement. "The housing stock is very affordable here," she says of Pittsburgh. "We would never be able to afford our house in Boston." The median home price in Boston was $329,000 in 2010, more than three times as much as the $97,900 median home price in Pittsburgh.

"If you own a home in California or New York, you can cash out on that and use that money to move to an affordable place," says Frey. About 125,000 people age 65 and older say they moved someplace new in 2011 in search of cheaper housing, the Census Bureau found. In 2010, the median home prices in San Francisco and New York City were $635,000 and $457,000, respectively. If you sold your home in one of these pricey cities and relocated someplace less expensive, you could free up cash for other retirement expenses. Homes cost a fraction of that amount in places like Columbia, S.C. ($144,950); Memphis ($71,000); and Cape Coral, Fla. ($86,916).

[See 10 Places to Buy a Retirement Home for Under $100,000.]

Lower taxes. Tax rates vary considerably by state, and moving to a place with lower taxes could increase your spending power. There are seven states with no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Additionally, New Hampshire and Tennessee tax dividend and interest income only. There are also fives states that don't levy a sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. The taxation of Social Security and pension benefits also differs by state. However, states without these taxes often have above-average property tax rates, so it's best to run the numbers based on the sources of your retirement income.

Better weather. Many retirees choose to spend the coldest winter months in a sunnier climate or permanently relocate to a place with better weather. Approximately 30,000 seniors moved in 2011 primarily to live in a better climate. The Phoenix metro area, which is sunny an average of 85 percent of the time, saw an average net gain of 14,233 people age 55 and older annually between 2008 and 2010. Riverside, Calif., the second-sunniest city in the country, brought in an average of 8,393 older residents each year over the same time period.

[See The 10 Sunniest Places to Retire.]

Recreation and culture. Throughout much of your life, your career dictates where you live. Retirement allows you the freedom to select a desirable place to live, whether than means surrounding yourself with golf courses, art galleries, water views, or hiking trails. Linda Nelson, 63, a retired teacher's aid in Pataskala, Ohio, spends part of each month in a mobile home community in Gatlinburg, Tenn., primarily to take advantage of the recreational opportunities there. She likes to go river tubing and hiking, especially in the Great Smoky Mountains National Park. "You can go see a different waterfall every day of the week," Nelson says.