When you think about retirement, you may tend to focus on saving enough money to live out the rest of your life comfortably. But don't get so hung up on the question of “How much” that you forget to ask yourself this very important question: “Where do I want to retire?”
Many retirees plan to stay exactly where they are, and there's certainly nothing wrong with that. But many soon-to-be retirees realize that the cost of living where they currently live will be a heavy burden to bear on a fixed income. Therefore, they plan to sell their homes and move to a new city or state – or even another country – where the cost of living is much more friendly to retirees. But before you decide upon a retirement location, consider the following factors.
Proximity to loved ones. That remote island might sound fantastic now, but when your daughter announces that she's expecting twins you may suddenly wish you lived closer to family. You might also miss your friends or your old community traditions. Traveling to visit home a few times a year can be expensive, so be sure to leave room in your budget.
Taxes. Obviously, federal income taxes are calculated at the same rate in all 50 states. But you would be surprised by the differences in state income taxes. Many retirees try to avoid states which tax Social Security income at high rates. Property and sales taxes are other important considerations.
Your lifestyle. If you love warm weather and the beach, you probably won't be too happy living in, say, North Dakota. Carefully weigh your hobbies and interests against the cost of living in a location which offers those options.
Access to health care. An exotic location may seem ideal, but remember to consider proximity to quality health care.
Consider a trial run. Once you've decided upon a retirement destination, consider trying a short-term rental in the area. After a few months, you will have a better idea of whether this place is “right” for you. Hopefully everything will work out as you hoped. But if it doesn't, you haven't invested all of your money in a mistake.
Carstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future.