If you have been saving for retirement for some time, you may start to consider where you can live after retirement. If there were one perfect place that suits the needs of every retiree, choosing where to settle in retirement would be easy. However, there is no dream location that fits every dream, and there are many charming and comfortable options around the world.
Considering Local Settlement
Before making any decisions, potential retirees should determine if there’s a need to move. If your current city is affordable and close to family, friends, and activities, and if you do not have a mortgage, there is no reason to move just for the sake of it. In fact, moving in this scenario may take you away from the people and things you enjoy.
Assessing the Cost of Living
As potential retirees can expect to spend 55% to 80% of their current income in retirement, low cost of living and housing costs are critical for most individuals to help them make the most of their retirement income. These are also factors that will ensure retirees are safe, in case of financial changes (such as a spouse’s death, or the need for assisted living requiring more care, or simply a change of opinion).
Understanding Taxes in Retirement
You should also consider taxes when deciding where to live in your later years. There are three main tax aspects to consider in retirement:
- State Taxes: Currently, there are several states – Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, Washington, and Wyoming – that do not impose state personal income taxes.
- Taxes on Retirement Income: Four states – Hawaii, Illinois, Mississippi, and Pennsylvania – exempt all or most retirement income (such as Social Security benefits) from taxable income. Twenty-seven states tax certain types of retirement income and pensions, but not all. Ohio, Oregon, and Utah provide tax exemptions for these types of income.
- Taxes on Capital Gains: New Hampshire taxes capital gains on dividends and interest.
You must consider that a state with the lowest tax burden in any of the categories above does not necessarily mean it is the cheapest place to live. This depends on other taxes that may apply. For instance, choosing an area with a smaller tax break but a lower cost of living or lower property taxes might actually save you more money.
Evaluating Retirement Amenities
The place you choose to live after retirement should have high livability indicators – for example, an active economy where you can find work if your financial situation changes, mild weather, a low crime rate, and internet access to stay connected to the world. You may think you want to move away from urban areas, but it can feel isolating without connection.
Moreover, experts recommend that retirees look for areas with quality hospitals and assisted living facilities, adult day services, and abundant wellness opportunities (fitness centers, golf courses, or ski resorts, for example).
The best retirement locations also have qualities that attract newcomers, such as arts, shops, public libraries, and civic organizations. Excellent natural sites, such as recreational lands and historic landmarks, can make your stay more distinctive.
Due to their cultural, educational, and recreational resources, as well as access to top-notch university hospitals, college towns have become increasingly popular retirement destinations. Universities intentionally attract newcomers, and the surrounding towns often have better public transportation systems and stronger rental markets than other cities. Many state capitals also meet most of the criteria mentioned above and tend to be relatively recession-resistant.
Note:
If you are planning to move to a college town, consider acquiring property before retirement and renting it out to local students before the move, as an additional source of income.
Take a trip to find the best place to live after retirement
If there are several different locations that appeal to you, go explore them. Starting years before retirement, visit five or six places. Once you narrow down your options to three or fewer, spend a few weeks in each to assess the pros and cons of daily living.
Don’t spend all your time near the hotel, but go out and visit the neighborhoods to gain an understanding of the people and the community involvement. Most importantly, do not rely on average home prices you find online, which may be inaccurate. Meet with real estate agents in the area to understand actual home prices, and look for someone committed to helping you find the right place.
Research the best places to live after retirement
Before making any decisions about where to live, do some research:
- Get information about the economy: Visit the local chamber of commerce and economic development agency to understand the local economy and industries. Most cities also have a tourism office website that gives you an understanding of the population, quality of life, and local attractions.
- Check the weather: Use the National Centers for Environmental Information’s interactive climate data tool to view climate data by zip code.
- Determine the cost of living: The Council for Community and Economic Research uses data from the annual Cost of Living Index to run a cost of living comparison calculator. It measures the cost of living in over one hundred urban areas.
- Ensure the area has a low crime rate: The FBI’s Uniform Crime Reporting Program can provide a helpful glimpse into crime across all American cities and towns except the smallest ones. You can also easily access local crime reports once you narrow down your search.
- Find healthcare providers: Use the web to find available doctors and hospitals in the area and directories of the best hospitals by location or specialty.
- Military retirees: If you are retired from one of the service branches, some states do not tax your retirement pay. It would be beneficial to research this if it applies to you.
Frequently Asked Questions
What is full retirement age?
Full retirement age depends on the year you were born, but most people will reach full retirement age around age 67. Check the Social Security website for a full schedule of retirement ages.
How much should I save for retirement?
Retirement savings is a personal decision, so your financial circumstances will affect the best number for you. Where you live after retirement will impact your savings needs, but that is just one factor to consider. The general rule is to save 15% of your pre-tax income.
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Sources:
The Balance only uses high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we verify facts and maintain the accuracy, reliability, and quality of our content.
Vanguard. “Are You Moving in Retirement?”
Fidelity. “How Much Will You Spend in Retirement?”
BlackRock Investment Management. “The Best and Worst States for Retirement in the U.S.”
Tax Foundation. “States Without Income Taxes Rely on Varied Forms of Revenue.”
USA.gov. “State and Local Taxes.”
Wolters Kluwer. “Deciding Where to Settle: Finding a Tax-Friendly State to Call Home.”
Milken Institute. “Best Cities for Successful Aging.”
U.S. Department of Housing and Urban Development. “A Look at Housing Policy and Community Development.”
City
Austin. “Imagine Austin: The Comprehensive Plan.”
American Association
Source: https://www.thebalancemoney.com/where-should-i-retire-2894254
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