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Should You Make a Move In Retirement or Stay Put?

Most people assume that once you hit retirement, it’s time to pack up and move someplace sunny. But surprisingly, many American seniors aren’t interested in straying too far from home. A survey from The American College of Financial Services found that 83% of retirees or near retirees had no plans to relocate in their later years.

While staying put in retirement has some financial upsides, it’s not without certain drawbacks. If you’re contemplating whether you should stay or go once you retire, it helps to look at it from both angles.

When Staying Put Can Help Your Bottom Line

Making a move to a new city can be exciting but it may not save you any money if you’re increasing your cost of living in the process. For instance, if you own a home and you’ve paid down most of the principal or cleared the mortgage entirely, starting over somewhere else may drive your monthly expenses up if you’re paying a significant amount in rent or getting another home loan.

Try out our cost of living calculator to compare cities.

The same goes for your tax situation. If you live in a state that doesn’t assess any income tax on retirement income, such as pensions or Social Security benefits, it may not make financial sense to move to a state that does. You may also be increasing what you’re paying in property taxes or sales taxes at the same time, all of which can shrink your spending power. Not to mention estate and inheritance taxes, which could eat away at any assets you’re planning to leave to your children.

Should You Make a Move In Retirement or Stay Put?

If you live in an area that has an affordable health care that’s something else to consider before going ahead with a move. The typical 65 to 74-year-old spends just over 12% of their household income on medical expenses annually. That amount climbs to nearly 16% by age 75. If you’re trying to keep your out of pocket costs as low as possible, leaving affordable health care behind is something to think twice about.

When a Move Makes More Sense

On the flip side, moving in retirement has its advantages if it allows you to hang on to more of your nest egg. Trading in life in the big city for a more rural setting, for example, can reduce the amount you need to maintain your expenses each month. Moving to a state with low taxes may also be worth considering if you’ve built up a sizable amount of retirement assets that will be taxed as you withdraw them.

A move can also reduce your costs in other ways if you’re looking at relocating to a senior living community. Some of these communities are all-inclusive, with shopping, dining and recreation located all in one spot. In exchange for an HOA fee, things like maintenance and lawn care may be covered for you, which can mean less strain on your wallet and your time.

Find out how tax-friendly your state is for retirees.

Final Word

Should You Make a Move In Retirement or Stay Put?

Whether or not you should move in retirement ultimately depends on several factors, including your current income and spending, as well as what you project your income and spending to be once you’ve left the daily grind for good. Crunching the numbers to see if a move would actually save you money or take more of a toll on your savings can help if you’re on the fence.

Talking to a financial advisor can be helpful as you assess your financial situation to make the right decision for your retirement. A matching tool like SmartAsset’s SmartAdvisor can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to up to three registered investment advisors who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.

Photo credit: ©iStock.com/Geber86, ©iStock.com/shapecharge, ©iStock.com/Squaredpixels

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She's worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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