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Retiring to Another State? Here’s What You Need to Know

Category: Best Retirement Towns and States

November 22, 2022 — So you’ve done your research and found the best town and state for your retirement – great! But before you pull that trigger, here is one last checklist to go over. This last bit of research will help to make sure that even if the climate and the location and the community are just perfect, that something unexpected doesn’t come in to play to spoil your decision.

A lot of people do decide to move far away once they retire. According to the website hireahelper.com, 234,000 American retirees moved last year, up slightly from the pandemic reduced 2020. Being close to family and cheaper/better housing were the top 2 reasons for moving. Florida was the number 1 state for retirees who moved out of state (12% moved there), with the mid Atlantic Coast coast region (Melbourne) area attracting the most. Other states in the top 5 were North Carolina, Michigan, Arizona, and Georgia. Oregon and Maryland were the top 2 states retirees moved away from.

Consider these:

Insurance rates. This is one of the biggest surprises many retirees have when they move to a new state. Insurance is local – the cost of insurance can vary widely from state to state and even within relatively small areas of the same state. Areas prone to coastal flooding, hurricanes, tornadoes, and forest fires will have costly rates. The best plan is to contact your insurance company before you buy to find out how much that will be. You can also consult FEMA maps. Even moving a few miles away could make a huge difference in the premiums you pay – and even if you can get coverage in a shrinking market.

Community personality. A week’s vacation will tell you something about a place, but a season will bring out a lot more detail. We know too many people who got very excited about a place to retire, only to tire of it after they got to know the area well. It could be the political environment, unfriendly neighbors, recreational facilities, stores, or the medical establishment that just isn’t a good fit for you.

Natural disasters. Mother nature is really making it hard to live in some areas like the coastline of Florida, tornado central in the midwest, and the bone dry west. The area you’ve selected for retirement might be perfect for its beauty, recreation, and natural attractions, but the threat of evacuations and danger can take all the fun away.

State taxes. While we would never recommend moving somewhere just because of the taxes, they can be an important factor for some people. If you have a very high income (maybe because you have high 401(k) or IRA RMD withdrawals), you might consider moving to one of the 9 states with no income tax. There are other states that have one, but are favorable to retirees. Likewise some states tax pensions and retirement distributions more favorably than others. And then there are sales taxes – a few states like Oregon don’t have one. But for most people sales tax should not be an important reason for choosing a retirement state. See Best States for Retirement.

Property taxes. Property tax can be a big burden retirees in some states. These taxes are based on the worth of your home, but they have no relation to your income or ability to pay. Most, but not all, southern states have low property taxes, whereas the old industrial states of the northeast and midwest tend to have high property taxes. Alabama has the lowest and New Jersey the highest property taxes in the nation. For example in a recent year, the per capita property tax paid in Alabama was $582, whereas in New Jersey it was $3,304 (of course the value of the homes was certainly higher in New Jersey).  California has a law limiting property tax increases. Florida’s Save Our Homes law limits the limits the annual increase in the assessed value of homesteaded properties to 3% or the change in the National Consumer Price Index (CPI), whichever is less.

State and inheritance taxes. Seventeen states have inheritance or estate taxes. If you have a huge estate, this might be worth thinking about.

Family and friends. If you are the sort of person who really needs to be friends or family, consider that if you are planning a move to a state where you will have no one nearby. Several factors can mitigate that though. One is how social you are and how easily you make friends. In an active community it’s easy to meet new people, and that can help. And, if where you are moving is a very attractive place to visit, you might have plenty of visitors to keep you company. But if you really want to be near your grandchildren, don’t move too far away from them.

Location. A retirement home in the mountains might seem perfect. Great views, peace and quiet, etc. But if that also means driving an hour round trip to buy some milk, it could get old fast. Can you walk or ride your bike safely on local roads, or do you need to drive somewhere to do that? Spending time in a location will give you the answers to those questions.

Bottom line

Moving to another town or state in retirement can literally be a great move. You can improve your economic situation and the quality of life. But just as life is complicated, so are the many factors involved in choosing a state to retire. Before you make a big move, look carefully at issues like the ones discussed here, and make sure all signs point to success.

For further reading:
Most Welcoming States for Retirement

Don’t Forget These 5 Things When Choosing a Place to Retire

Posted by Admin on November 23rd, 2022

6 Comments »

  1. This article is a good checklist of things to consider. A few more include: cost of gasoline, electricity, availability of natural gas, automobile insurance, any personal property tax, car registration fees and any reduction of property taxes for senior or disabled residents.

    by LS — November 24, 2022

  2. Thanks LS. Those are good additions, as some of these items can can vary widely from state to state (even within a state). By themselves, perhaps not enough to base a move on, but in aggregate, definitely.

    by John Brady — November 25, 2022

  3. Folks as we age the need for robust medical facilities is a real factor to consider when relocating!
    Proximity to thise medical resources should play into your relocation planning also!
    Ron

    by Ron — November 26, 2022

  4. Ron –
    Excellent point! So many places I would like to live but when I check out medical facilities, good (excellent) hospitals are over an hour or more away with only tiny, regional hospitals nearby. There’s a website (don’t have the link right now) that grades hospitals and indicates their specialties and that drives much of my research and decision making.

    by JoannC — November 27, 2022

  5. It’s important to look at all factors because some carry more weight than others. I have no rent or mortgage payments. I live in the middle of fantastic, reasonable health care, but the 10% sales tax is on everything, including food, which impacts my purchasing power. I am not taxed by the state on my Social Security, and I avoid all income taxes through careful financial management. Public transportation is weak, but I live within a mile of many public services and shops, so I can walk or bike easily. Cost of living is 22% below the national average, the state university is 4 miles from me, and the arts, culture, and educational offerings are supported by an extremely wealthy benefactor and affordable for me to participate. But, my personal politics are in a small minority, so I don’t feel heard by my local and state governments. I live near extended family and have finally made a few friends, but all my close friends are faraway (thank goodness for zoom). There are 4 seasons here, but climate change is a player in the weather. I made the best decision for me, but it took several years to decide and several years to adjust and make friends.

    by Elaine C. — November 30, 2022

  6. Elaine,
    thank you for the comments, but you did not mention which state and or city you live in. I would be interested. Sounds like a good deal.

    by John — December 1, 2022

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