What's your dream retirement? Is it a vision of a cold cocktail on a nice beach, perhaps with a cigar in hand? Maybe it's the feel of cold air on your face as you finally master that double black diamond run in the Rockies. It may be the slow-count rhythm of a fly-rod as the sun dips behind the hills and all your worries begin to fade. Or perhaps your dream retirement keeps you busier than ever as you explore new hobbies and finally get around to that book you always said you'd write.
What I'm getting at here is simple: Retirement looks different for all of us. Whether it's relaxation on the beach, exploring the big city, or traversing across the world, we all have different ideas of where we'd ideally like to retire.
However, in my experience, many people I've worked with haven't considered how their desired location actually fits in to what they need out of retirement. It's important to understand both why location is important and what factors you must consider when you're searching for that place to settle down and enjoy the fruits of your labor.
Define Your Dreams
This is your retirement we're talking about, so the best place to start is with your goals in mind. Whether it's being close to family, the pleasantries of a certain neighborhood or the proximity to some of your favorite pastimes, it's important that when searching for a retirement destination you build your own criteria. You can start by answering some of these questions:
- Is living by friends and family important?
- Will you be caring for an aging or ill relative?
- Will your hobbies play a major role in your decision?
- Will you be working, and will this affect where you'll be living? (e.g., transit, public transportation, distance of commute)
Tangle With Financials
Your next step is to factor in cost of living. Different locations will offer different financial benefits, and what equates to a suitable retirement nest egg in one location may not carry over if you're heading to a more expensive locale.
Further, taxes may be a priority for you when assessing where you'd like to settle down. A select few states offer no personal income tax and several others offer an array of tax breaks for the purchase of a retirement home. Tax breaks such as these could be key when deciding where we end up settling down. However, the benefits of a tax break can often be outweighed by a variety of other economic factors in certain areas, especially if these breaks are not all they claim to be. Elizabeth Rosen explains in an article for the IRS' US Tax Center website:
"While not having to pay state income taxes generally sounds like a good deal, individuals who are thinking about relocating to states with low or no individual income taxes should also consider the other taxes that may be levied. States that have a low income tax burden often fund their governments by collecting other types of taxes."
The lesson: do the due diligence in determining all the financial factors before committing to one location or another.
Understand the Stress of Moving
Beyond financials and your goals, consider some other criteria about relocating. Making the move to another country, even other states, often means there will be at least a small amount of culture shock to which one must adjust. Further, if you or your spouse have medical complications that require regular evaluations, it may not be in your best interest to go gallivanting off to a small island in the Caribbean. Considering that retirement can be a time of significant change and adjustment in our lives, it can be quite stressful to add a big move to what is an occasionally unnerving experience.
You'll almost always have the option of staying put. If you have a good home, are in a good financial state and already have an in-depth knowledge of the way the city runs, it may be most logical for you to remain there. As Melissa Phipps writes in AboutMoney,
"If your current hometown is affordable [and] close to friends and family, consider whether the need for change can be satisfied through more frequent brief vacations, or by purchasing or an inexpensive weekend getaway home."
Enjoy the Next Chapter
Wherever you choose to spend your golden years, I'm a big believer that home is where the heart is. Spend your retirement years surrounded by loved ones, having new adventures, and doing the things you find most important, and I'm sure you won't have a single regret.