Most Retirees Desire a Post-Retirement Move, Study Reveals
Posted By Marisa Sanfilippo on February 17, 2017 at 6:02 pm
More than 60 percent of U.S. retirees have moved or plan to move during their retirement, according to a study by Merrill Lynch and Age Wave. The post-retirement move reasons vary – some want to be near water, mountains, and/or golf courses; others might want to be close to family.
To determine if a post retirement relocation is right for an individual’s situation, it is important to consider one’s motivations for moving, the financial implications, and the available social network at the new location.
Financial considerations of a post-retirement move
There are several questions people should ask themselves as they approach retirement.
First, they should consider whether they can truly afford to retire. According to the 2016 Retirement Confidence Survey completed by the Employee Benefit Research Institute, only about 20 percent of respondents felt secure in their financial situation.
Less than half had attempted to calculate what they would need in savings to sustain their preferred lifestyle. Vanguard has created a retirement income calculator to help provide clarity for those who are unsure of their financial needs.
The next thing people must consider is the affordability of the location to which they intend to move. John Hillis, president of Hillis Financial Services, listed several items retirees should consider when creating their post-retirement financial plan.
- Property taxes
- Sales taxes
- Tax consequences of owning property in two states
- Energy, utility, and food costs
- State income or estate taxes that devalue a 401k
Finally, retirees should consider the financial implications of selling their current home and then deciding whether to rent or buy a home in the new locations. The first step is to research the taxes associated with selling a home they currently own. Then they should evaluate the cost of renting versus buying a new home. The Federal Housing Finance Agency has a variety of tools to make researching housing prices easier.
Importance of a social network
Various studies from the Centers for Disease Control and Prevention have indicated people are happier when they have a more robust social network. Those who feel emotionally supported also tend to self-report feeling healthier and happier.
Patrice Jenkins, Ph.D., is an organizational psychologist specializing in the emotional and psychological sides of retirement. She has noticed that being closer to family is one of the most common reasons people relocate after retirement.
She points out, “If relocating to be closer to family, it is important that retirees do not depend on their children for socialization.” She suggests retirees create their own social network by making new friends, getting involved with local organizations and community activities, and continuing to focus on personal growth and development beyond their role as parent or grandparent.
This helps ensure that a broad social network is established and retirees do not become too dependent on their family members, which can lead to resentment and depression.
Motivations for a post-retirement move
In addition to financial security and wishing to be closer to family, some common motivations for moving to a new location are to enjoy a more hospitable home environment and climate and to pursue personal interests. As one ages, the type of preferred home environment changes as well. Instead of multi-level houses in climates with extreme weather patterns, people often prefer to live in single level homes in areas with milder weather.
Another common reason for relocation is the desire to pursue a favorite hobby or to begin a second career. Moving to an area that has a school or program that can help develop skills or to a location that is ripe for an entrepreneurial endeavor is common.
Regardless of the reason one is interested in a post-retirement move, it is advisable to give the new location a trial run before committing to a permanent move. Renting a space for a year will provide invaluable insight into the culture, climate, and challenges associated with the new location that may otherwise be impossible to infer from research.
In Florida, for example, the average temperature in February is between 42 and 67 degrees Fahrenheit. This may seem idyllic to someone from northern Minnesota. However, the heat index can soar to well over 100 in the summer with humidity at 90 percent which. This can be insufferable to those from cooler climates. Without experiencing this first hand, it would be difficult to truly comprehend the difference and make a well-informed decision.
Deciding whether a post-retirement move is the right decision requires a significant amount of research and planning. It is important to take the time to talk to financial planners and family members before making a final decision.