Deciding when to retire is an important decision for every person, and there’s no single answer that is right for everyone. In the best case, that answer will come after careful financial consideration and working with a financial planner to make sure you have adequate resources to allow you to live at a certain level of comfort for the rest of your life.
While a lot of time and attention is given to the idea of when to retire, the question that might sometimes get overlooked in the planning process is where to retire. Retirement removes many of the constraints that might have kept you in a certain geographic location for a job. It opens the door to the possibility of moving to a different climate or an area with a lower cost of living and more affordable housing. You might want to move closer to adult children and your grandchildren—or closer to a beach or the mountains.
The truth is, there’s a lot to think about when making that decision; here are six crucial factors to consider:
Cost of Living and Affordability
When you enter retirement, you’re depending on what you’ve already earned to sustain you, so making sure that the cost of living aligns with your financial resources is top priority. Affordability plays an important role in choosing where to go, so define your budget so you can determine if where you’re living is your best choice, given your resources. For example, a 2018 survey by Bankrate found that the top three states for retirement based on cost of living were Mississippi, Arkansas and Missouri, while the most expensive were New York, California and Hawaii.
Factor in your everyday costs and housing costs, then research your options to see what areas might fit best in your financial plan. The more affordable an area is, the better use you can make of your retirement dollars.
The Local Tax Rates
After cost of living, taxes are the biggest financial consideration for retirees. States don’t share the same tax structures, so you’ll want to look closely at the tax laws for the state you’re interested in retiring to. Does it tax things like Social Security income and pensions?
The Bankrate survey named South Dakota the best state for retirement in part because it is the second most tax-friendly state in the U.S. (second only to Wyoming) and it does not have a state income tax.
Do some online research through the Tax Foundation to compare states’ rates and get more information about what you can expect to pay. You can determine the best tax rates, state by state, and balance that against your cost of living.
Crime and Safety Statistics
For your retirement, you want to know that you’re safe. Looking at crime rates in an area you’re considering is always important to making sure you’ll be happy. In addition to crime, look at how safe the weather is. Some areas are more prone to natural disasters than others. Are you willing to risk living in a hurricane-prone state, or will you be better off in an area that is farther away from the beach but has a safer track record? What about a flood plain?
Evaluate what this move means to your safety and make sure you’re comfortable with your decision.
Climate and Weather Considerations
Some like it hot, others not so much. Fortunately, whatever your climate preferences, you can find a place to match them. Do you want it warm and humid, like Florida? Hot and dry, like Arizona? Or is it important to have four clearly defined seasons every year? This might matter more than you realize once you’re living there full-time, so think about what kind of weather (and what kind of scenery) you want to experience year-round.
Warm climates can have many benefits, such as not needing to shovel snow (ever!) and having lower heating bills in the winter months. Look closely at what you think is the best fit for you.
Access To Quality Healthcare
From the cost of healthcare to its quality and availability, there’s a lot to consider in this category. Quality healthcare is important at every stage in life, but particularly so in retirement. You may have existing conditions that need to be checked, or you may develop a medical issue that you need to address. Ensuring that you are in an area that provides good medical care is a priority for retirees.
Comparing healthcare costs from one state to the next should be part of the decision-making process, as there can be tremendous disparities from one area to the next. Find out how the state(s) you’re interested in are ranked in terms of quality of healthcare as well as affordability.
Proximity to Friends and Family
Deciding whether to stay near your family and friends or relocate to a climate or city that you’ve always wanted to live in can be a tough choice. Having supportive, loving relationships are all central to being satisfied in retirement. In fact, it’s so essential for longevity that researchers recommend retirees have a strong social network and can participate in their community in ways that they find fulfilling. This can be anything from joining a church to volunteering for a cause you feel strongly about.
If you leave your current area, make sure that you are close enough to a major airport that you’ll be able to visit your loved ones whenever you feel the need—and they can do the same.
Cultural and Recreational Factors
Retirement is for you to enjoy, so you want to live in an area that appeals to you culturally. Whether that means a thriving arts and theater scene or the lifelong learning programs found in a college town, identify what is most important to you and look for areas that meet your cultural requirements.
You also want to think about the recreational options. Do you like walking in the woods? Riding your bike? Hitting the tennis court? Great recreation options help you enjoy your life more while keeping you healthy through exercise. This is the time to find new options that appeal to you or pick up a long-lost interest.
With so many great cities and states to choose from in the United States, there’s no reason to spend your retirement years missing out on the things you truly enjoy.
Planning your retirement is about more than setting a date for when you’ll retire; it’s also about prioritizing what you want and need, then learning more about where to find those things. As you plan your retirement, let Nationwide’s retirement planning service help you make the best decisions for your individual situation.