Friday, September 7, 2018

Where You Retire Greatly Impacts Your Retirement!

A popular topic on retirement boards is where to retire to in order to get the most bang for your buck.  Occasionally a random person will ask "how do I retire well in (one of the most expensive cities in the nation)?"  In that case, you don't.  Not really anyway.  Somewhere between people wanting to retire in Palo Alto and those who can only afford to retire in some remote ultra cheap place is the rest of us who want to balance a nice retirement with stretching our limited income as far as it will go.  Here are some things to consider when you are picking a retirement location:

  • The cost and type of housing.  We have always bought houses both for the investment potential but also because when you rent there is no cap on how high rent can go (unless you are in a rent-controlled property which is a whole other discussion).  Some people want to live in senior-only communities and some people need subsidized senior housing or assisted living facilities kind of depends on your own personal circumstances.
  • Cost of maintaining your house.  This gets more expensive and more difficult as we age because it is often harder physically to do the work yourself plus the things that break can be very expensive (like replacing the heating or AC system...eeekkk).  A smaller house and property is generally cheaper to maintain than a larger house and property.
  • Location of your house.  Some areas of the country have sky-high housing costs and some have dirt cheap housing costs.  We were fortunate to buy at the bottom of the market here in Las Vegas.  If we wanted to buy here now the cost of our home would have been more than double what we paid!  
  • Property tax (house).  The difference between the property tax on our house in Las Vegas (a state with low property tax) and a similar house in New England (a very high property tax area) is about $8000 per year.  Needless to say, if you live on a fixed income this has a significant impact on your budget.  A note on property tax, some places have rebates or caps on property tax for various groups of people (seniors, veterans, disabled, etc.) which can help out a bit when it comes to paying property tax).
  • Car ownership costs.  Some places have cheap car registration and cheap car insurance.  In Las Vegas we have expensive car registration and expensive car insurance.  Our public transit system here isn't that great either otherwise we would just ditch the cars and take public transit and save a boatload of money.  Ideally I would love to live in an area where I didn't need a car at all!
  • Other taxes.  Some other tax-related things to consider when deciding where to live is all of the other taxes that will be imposed on you.  State income tax (some states tax pensions and social security, some don't), sales tax (can range from high to non-existent), and estate taxes can also impact you, depending on the state.
  • Other insurance.  I mentioned car insurance above but where you live can impact the cost of all other types of insurance as well: life insurance, property insurance, health insurance, long-term care insurance...actuaries live by their tables and part of their tables are location-based formulas.
  • Weather.  There is a reason seniors flock to the south for both vacations and retirement--the great weather!  No shoveling snow!  No ice to slip on and break a hip!  I love having four seasons but I have to admit that never needing cold weather clothes again/no shoveling snow/no being rained on for days at a time is a nice part of retiring to the desert southwest.
  • Cost of utilities.  In some areas of the country, people pay a ridiculously high amount of money for utilities (again, I'm looking at your New England).  I still can't figure out why my water bill is so low here in the desert yet it was so high in Seattle where there is water everywhere.  If you have a house with a well and septic, of course your utilities will cost less but repair costs could be more if either of these break.
  • Crime.  The older people get, the more vulnerable they get so crime becomes a bigger concern as we age.  Unfortunately Vegas is a hot bed of crime of all kinds (one of the main reasons I want out of here).  Taking precautions goes a long way towards preventing opportunistic crime but random crime can still be quite unsettling.
  • Proximity to family/friends or a major airport.  There are so many retirees here in Vegas that they kind of form their own families.  We watch out for our retiree friends, help out when we can, and check on people who have been "missing" for a while.  It is great to have family near by but many retirees here settle for having a major airport nearby which can bring in family on a regular basis.
  • Free or cheap entertainment.  When you are retired you have A LOT of hours to fill each day.  We are lucky to have so many free and cheap entertainment options here.  Other friends have retired to rural areas and are perfectly happy with their gardening, animals, and other hobbies which keep them busy.  On a side note, some areas are flush with senior discounts and some aren't.  We love that there are so many places that offer senior discounts on everything from movies and restaurants to grocery stores and other entertainment here.
  • Cost and availability of medical care.  When you get old you also become more reliant on medical care.  It becomes pretty important to have medical services close by as well as medical insurance that covers your needs.  While Medicare takes care of much of your medical costs, elderly people can get slammed with high prescription as well as gap coverage costs.  Some states offer more in the way of healthcare (access, quality of care, comprehensiveness of care, expanded insurance coverage) than others.
  • The cost and availability of food is also important.  Some places have cheap food all over the place (Las Vegas is a good example of this) whereas in other places, nutritious food is both expensive and hard to find (I know some towns that are a good hour and a half drive from a grocery store!).
  • Availability of jobs is a minor concern for most retirees but it is nice to have the opportunity to work if you want it and some towns just don't have jobs of any kind, for anyone.
  • Availability of needed services is also something to consider.  A good veterinarian is a requirement for some people so towns without this service would be off their list quickly, pharmacies, coffee shops...some people want specific services available nearby so this is something to consider.
  • Natural disasters are a thing nearly everywhere in our country but choosing the kinds of natural disasters you are willing to put up with may fall on your list of things to consider before you move.  Massive winter storms, hurricanes, and tornadoes are on our "don't like" list.  Earthquakes and high heat don't both us as much.
  • I never thought that the education of a population would be important but when you move from a highly educated area to an area with the worst school district in the nation (Las Vegas) the shortcomings of having a dumb population are legion.  Voting rates are dismal, crime is high, parents don't care about their kid's education...and just don't care about their kids in general (we have really high youth homeless rates here; two little kids were murdered by their parents just last week in two separate incidents...ayayay).  When you live in a highly educated area people are going places, when you live in a poorly educated area people are going nowhere and it is sad and it impacts the entire community.
  • Other things.  Specific on our list of important things to consider are things that impact us personally.  We like living near a military base for all of the services it offers retirees, I like good gun laws since I own guns, I also like lots of outdoor recreation opportunities which some people require and some could care less about.
The decision of where to retire is really important when it comes to your quality (and sometimes even quantity!) of life!