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Deciding Where to Retire

active senior couple chooses to retire where they can enjoy their favorite hobbies

6 Important Considerations

One of the greatest freedoms that comes with retirement is the ability to live wherever you want. No longer are you tied to a job’s location or a particular school district. The possibilities are endless!

However, your choice of where to retire can have a big impact on your lifestyle and retirement budget, so it’s important to choose wisely. Here are six considerations to keep in mind as you decide on a retirement locale.

#1 – Cost of living

The amount you pay for daily living expenses can vary widely between different cities and states, which makes it essential to choose a retirement location that allows you to live the lifestyle you want. By choosing a location with a more affordable cost of living, you may be able to do more in retirement, such as travel, pursue hobbies and purchase a nicer home.

When evaluating a potential location’s cost of living, be sure to consider the following expenses.

  • Housing
  • Food and groceries
  • Healthcare
  • Transportation
  • Recreation and hobbies
  • Entertainment
  • Taxes
  • Utilities

#2 – Healthcare availability

During your early retirement years, you may not need to worry much about healthcare. However, as you age, it may become more likely that you need access to quality healthcare and, potentially, long-term care. That’s why it’s important to consider the quality and availability of healthcare as you choose a retirement location.

Before settling down, be sure to evaluate the availability of good doctors, hospitals, senior living facilities and long-term care facilities. It’s also wise to evaluate the accessibility of gyms and recreation facilities, which can help you stay active and healthy in retirement.

#3 – Taxes

The amount you pay in taxes can have a big impact on the retirement lifestyle you’re able to afford, which is why it’s important to consider how much of your retirement income may go toward paying Uncle Sam. Be sure to evaluate the impact of the following taxes as you consider your retirement location:

  • State income taxes – Different states impose different tax rates on retirement income.
  • State tax on Social Security benefits – There are currently nine states that tax Social Security benefits (Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont). Regardless of where you live, up to 85% of your Social Security income may be subject to federal income tax.
  • Taxes on retirement plan distributions – Assets held in tax-deferred accounts, such as traditional IRAs and 401ks, are subject to federal ordinary income taxes when withdrawn in retirement. However, some states don’t tax these distributions, which can help lower your tax exposure.
  • Pension income – Some states differentiate between public and private pensions and may tax only public pensions. Other states tax both, and some states tax neither. Again, the amount of state tax you pay on this retirement income source can have a big impact on your lifestyle.
  • Capital gains – Long-term capital gains are subject to more-favorable federal tax rates than ordinary income. However, many states don’t differentiate between earned income and capital gains, which means, depending on where you live, you may face significant tax liabilities on your investment income.
  • Estate taxes – In 2024, the federal government allows individuals to pass on up to $13.61 million without any federal estate tax ($27.22 million for married couples filing jointly). However, depending on where you live, your estate may be subject to state taxes. It’s important to understand the estate tax requirements of your current state as you’re planning your legacy.
  • Property Taxes – Property tax rates vary significantly from state to state — and even between counties within the same state. They’re an essential consideration, as they have the potential to greatly impact your retirement budget. Depending on which state you live in, you may be eligible for a property tax exemption (which can add up to big savings over time).

#4 – Leisure activities

How do you envision spending your free time once you retire? If you’re an avid golfer, it’s probably important to live in a location with ample golf courses and a moderate climate. If you hope to hit the slopes on a regular basis, mountains and snow are likely essential. If your retirement dreams include immersing yourself in an art community, you’ll want to find a location with various museums and art supply stores.

While finding an affordable retirement location is important, it’s just as vital to live somewhere that meets your lifestyle needs.

#5 – Climate

If you’ve ever felt the impact of seasonal affective disorder (SAD), you know how big an impact a location’s climate can have on your mental health. Once you’re retired, you may have fewer responsibilities to occupy your time, which can give you more freedom to enjoy the outdoors. Be sure to choose a location with a climate you enjoy.

#6 – Family and friends

Some retirees choose to move closer to their kids and grandkids, while others prefer the social aspects of an active adult community. Regardless of your preference, choosing a location that provides you with an adequate amount of social interaction can help you avoid loneliness and isolation in your retirement years.

Could you use some help evaluating your retirement options? Creative Planning is here for you. Our teams have experience navigating a wide range of tax and financial challenges, always with the goal of helping clients achieve their long-term goals. For custom retirement planning guidance, please schedule a call with a member of our team.

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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