Experts: How To Find the Perfect Place To Retire
Choosing where to live in retirement is a major decision, as there are many things to look for in a place to retire. According to a recent GOBankingRates survey, the factors Americans consider most when choosing where to retire include cost (73%), location (70%), climate (58%), crime and safety (51%), and proximity to family (50%), with cost being the No. 1 factor for 25% of Americans.
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Ultimately, the choice you make can affect not only your finances but also the social aspects of your life. There is no one “perfect place” to retire either — it really depends on you and your needs.
To help find the perfect place for you, GOBankingRates spoke with financial experts about what you should keep in mind when deciding where to live out your golden years.
Consider All the Living Costs in the Area
Housing is a major expense, but living in a place with affordable housing — especially if it is more remote — may mean that other goods and services are more costly.
“In some retiree locations, grocery stores are limited and the cost of food and staples can be a lot higher,” said Craig Dangar, senior partner and principal consultant at Vault Group. “Accessing trades and services can also be a lot [more expensive], as availability is often lacking.”
Access and cost of medical care also need to be considered, Dangar said. And in addition to routine medical expenses, you should also consider the cost of long-term care.
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“As you age, long-term care can become a major concern — and one cost that can vary greatly by region,” said Herman “Tommy” Thompson Jr., CFP, a financial planner with Innovative Financial Group in Atlanta. “Before relocating, I recommend examining both the cost and the types of long-term care that are available in the area. Genworth provides a free online database that allows you to compare the average cost of care in different communities across the United States.”
The cost differences can be upwards of $1,000 a month, so it’s important to do your research before making any decisions. For example, the average monthly cost for a home health aide in The Villages, Florida, is $5,911, while in San Francisco, the average cost is $8,580 per month.
Don’t Forget About Taxes
Taxes can vary greatly from one place to the next, so don’t forget to factor this in when deciding where to live in retirement.
“State income taxes are an important consideration in retirement since distributions from pensions, IRAs, 401(k) [plans] and 403(b) [plans] are generally taxable,” Thompson said. “Even a low state income tax can add up when satisfying your required minimum distributions and pulling tens of thousands of dollars from retirement accounts year over year. Some states — like Florida, Texas and Tennessee — have no state income tax at all.”
There are additional states that do have income tax but that do not tax Social Security.
“My home state of Georgia has a state income tax but does not tax Social Security and gives retirees age 65 and older an exemption on [$65,000] of retirement income per year,” Thompson said.
You also need to look beyond income taxes when considering your overall tax burden.
“Don’t automatically assume that a state without an income tax is going to have a lower overall tax burden,” said Paul Peeler, a financial advisor at Integrated Financial Group. “Take a look at other levels of taxation, such as sales and excise taxes, and how they might apply to you.”
Examine Non-Financial Elements
It’s important to find a place to retire that’s within your budget, but you also need to take social factors into consideration when searching for your ideal spot.
“Do you have family close by? Do you have friends close by? It is important to have a social group and stay engaged,” Thompson said. “This will keep your mind sharp and ensure there is a network that will notice if you stop showing up. The effects of isolation can be just as detrimental to your health as smoking.”
You should also be close to the things you love, whether that’s a beach or a golf course.
“If you’re a golfer, living 30 miles from the best course wouldn’t be the best decision,” Thompson said.
Survey methodology: GOBankingRates surveyed 1,395 Americans ages 18 and older from across the country between Feb. 26 and Feb. 28, 2024, asking 12 different questions: (1) Do you have a specific retirement savings goal?; (2) Will you need to work part-time in retirement?; (3) In retirement, what type of housing/living situation would/do you prefer?; (4) How important is/was proximity to family and friends in choosing a location to retire?; (5) Are you considering downsizing in retirement?; (6) Do you plan to or did you move for your retirement?; (7) Where is your ideal location for retirement?; (8) Which of the following will you/did you consider when deciding where to live in retirement? (Select all that apply); (9) What is the MOST important factor in deciding where you want to retire?; (10) What are you looking forward to in retirement?; (11) How much do you plan to spend monthly in retirement (outside of housing/rent)?; and (12) Which of the following countries would you be most interested in spending your retirement? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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states.aarp.org/georgia/state-taxes-guide
This article originally appeared on GOBankingRates.com: Experts: How To Find the Perfect Place To Retire
