Where Should I Retire?

You may have a vision of where you want to live or the things you want to do when you think about your retirement years. But one of the biggest factors that will impact these decisions is your financial status. Anticipating your future living expenses is important regardless of where you live but you’ll want to pay close attention to some of the hidden costs of moving if you want to relocate.

It’s critical to make a decision that’s based on your specific goals and what you can afford.

Financial Issues to Consider

Working with a financial planner can help you estimate what your expenses will be and how much income and savings you’ll have available when you retire. You’ll have some additional calculations to make, however, if you’re contemplating moving when you retire. You might be selling your home and buying or renting a new one and expenses can be drastically different depending on where you go.

Here are some of the main financial factors to think about.  

Cost of Living

Any incremental increase in expenses is going to have a big impact on your retirement lifestyle when you’re living on a fixed budget, says Eric Mangold, financial planner and founder of Argosy Wealth Management in Westfield, New Jersey. “You definitely want to make sure you have an idea of the cost of living wherever you’re going,” Mangold says.

He suggests doing a trial run, even if it means renting out an Airbnb for a few days and checking out local supermarkets and other services to get a feel for the average costs in a new area. Then ask yourself how the cost of your typical grocery list there compares to what you’re paying in your current hometown. What are the gas prices?

The cost of living is an even bigger factor during periods of inflation. Try choosing a location that has a comparable or lower cost of living than you’re used to so you can be on the safe side.

Housing Costs

Nearly a third of retirees’ monthly income goes toward housing expenses, according to the Employee Benefit Research Institute’s (EBRI) Spending in Retirement Survey. You’ll want to be mindful of how much your housing will cost you when you’re shopping for a residence in a new location. This can involve rent or a mortgage, maintenance or homeowners association (HOA) fees, and property taxes.

The good news is that average housing costs do tend to drop over time among retirees, according to Fidelity’s Spending in Retirement study, from just under $23,000 per year at age 55 to around $20,000 by age 65 and less than $18,000 by age 75. People tend to downsize or make strategic moves to less pricey areas when they retire, which should be your ultimate goal if you’re trying to lower your expenses.

“Some states are horrible to retire in,” Mangold says. “I have clients who lived in New Jersey all their lives, moved to North Carolina, and went from paying $15,000 to $1,100 in property taxes.”

Another item you’ll want to research is maintenance or HOA fees if you’re moving into a community development or condo. You’ll want to be sure you understand what’s included and what amenities might require an additional cost.

Healthcare Access

Housing costs tend to decrease as you age but you can expect healthcare costs to rise. Households will incur an average of $67,000 in out-of-pocket health costs over the remaining years of their lives at age 65, according to a study by the Center for Retirement Research at Boston College.

Where you move in retirement can also impact the cost of medical care. Will you be able to find the care you need in your new location or have to fly back to see your current practitioner if you have a condition that requires highly specialized treatment?

You’ll want to consider not only the quality and availability of the specific care you need but also how far you’ll be from health facilities like urgent care centers, hospitals, and regular physicians.

Taxes

One of the big financial factors when moving in retirement is how tax-friendly the new state is. A handful of states don’t have an income tax as of 2024: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming.

You’ll also want to investigate whether the state you want to relocate to is “pension-friendly” if you’ll be receiving a pension in retirement: It won’t tax your pension income.

Taxes should be high on your list of financial factors to consider, says Mark Charnet, founder and CEO of American Prosperity Group in Sparta, New Jersey. “The lower the tax cost of a new area, the more cash flows back into your pockets,” he says. In a perfect situation, you would select a state with no income tax and lower property taxes if you’re hoping to save a lot of money.

How Relocating for Retirement Impacts Planning

Part of your decision should involve how your move will impact your family dynamics, your lifestyle, and ultimately your budget as well.

Distance From Family

Where will you spend your holidays? Will you visit kids and grandkids a few times per year? If so, you’ll want to consider the cost and feasibility of traveling. Beyond just airfare if necessary, you’ll want to think about where you’ll be staying when you arrive. The expenses will add up quickly, Charnet says, if you’ll need a hotel or car rental each time.

The other concern is whether you could afford to hire a home health aide if your health isn’t stellar or if you develop an illness later on and your loved ones are too far away to pitch in for your care. Many retirees end up having to move back for this reason, says Mangold.

Lifestyle

Thinking about the lifestyle you want to have and the costs of maintaining it is one of the most important considerations. You’ll want to be sure that you’re close to the activities you enjoy and scope out the cost of continuing to engage in them, Charnet says.

You might choose a “walkable” city or someplace with access to a lot of nature trails if you enjoy walking and biking. Does the community have amenities on-site if you play pickleball or like pool swimming? What are the golf fees at nearby courses?

Aging in Place

It will likely be where you live the rest of your life if you’re making a move when you retire. You may want to make sure that the home has “age in place” features if that’s your plan so you can accommodate any physical limitations that could come. Is it all on one level? Does it have a walk-in shower?

Charnet is semi-retired himself and he said that he designed his own home intending to be there for the rest of his life. “If you cannot afford a long-term care facility, you can plan to build certain features within your own home,” he says.

Job Opportunities

Yes, you’re retired so you might not want to think about the job market. But what if you get bored and want to pick up part-time work or do some consulting? Perhaps you decide that having a little bit of income will help fund a new hobby you’ve picked up or maybe you want to continue your volunteer work in a new location.

“There should be some job opportunities in the location you’re going to,” Charnet says, even if it’s just being a greeter at Walmart or giving some time at a local food bank. “The psychological impact of that is very important.”

Climate Considerations

Not only do you want to move somewhere that matches your weather preferences but you should also consider the financial impacts involved. Many popular retirement areas also happen to be susceptible to hurricanes, such as Florida and the Carolinas, or record heat like Arizona.

“I have clients in North Carolina who just spent extra money for hurricane shutters and another in the Fort Myers, Florida area who just had their flood insurance increase from $1,300 to $3,300 this year,” Mangold says.

You’ll want to be sure that you have extra funds available to cover insurance if you move to an area with wildfire, storm, or flood risks and for any extra protections you might need to fortify your home.

Leaving the U.S.

You might decide that it’s more cost-efficient to retire to another country if you can’t afford to retire to the most expensive states and aren’t interested in lower-cost areas. That’s not for everyone but it could be worth considering if you have family ties to another nation or enjoy a particular locale that you’ve visited before. Be aware that each country has its own rules and regulations for retirees coming from other countries.

The Bottom Line

Moving in retirement is an exciting transition into the next chapter of your life but thinking about the big-picture financial implications of your location choice is important. Where you move can have a big impact on your overall costs in ways that you might not have thought about.

Work on becoming as financially prepared as possible before you begin exploring a new place to live. Having a bigger nest egg opens up more options. Work with a financial planner to help you understand the amount of monthly expenses you can afford before you start packing. This can allow you to make an informed choice regarding where you should retire.