Retirement is an adventure, and it may be the perfect time to start afresh with a fresh beginning.
For some people it may mean spending their golden years in another city. Moving under retirement is a big decision that should not be taken lightly, and it is not always the right decision for everyone. Some retirees may not be able to bear the thought of moving away from friends, family and their communities, and it can also be a great risk to leave everything behind and start over.
That said, there are also a few good reasons to consider moving into retirement. Not only can it be a fun adventure, but it can also help you save money and afford a more enjoyable retirement.
1. You can extend your savings
If you are currently living in a city with a higher cost of living than average, moving to a less expensive area can help you save a lot of money on everything from housing to transportation to healthcare and more.
This can be a particularly smart move if your savings are less than amazing, because you will be able to afford a more comfortable lifestyle even without a robust retirement fund. And if you are also willing to reduce the size of a smaller home in your new city, it can help you save even more.
Depending on where you choose to relocate, you may even be able to manage social security benefits. Although you are not typically recommended to rely on monthly checks as your primary source of income in retirement, you may have no choice if you are approaching retirement age. But if you move to a city that is much more affordable than the one you currently call home, you may be able to reduce your overall cost of living enough to survive on Social Security.
2. You Can Save Money on Taxes
Each state and city has slightly different rules regarding taxes, but some are more tax-friendly than others.
For example, Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not have a state income tax, which can potentially help you save thousands of dollars a year. This is especially advantageous if most of your retirement income comes from tax-deferred accounts such as 401 (k) s or traditional IRAs, because with these account types you are usually responsible for paying income tax on the money you withdraw into retirement.
You may also be able to save money on Social Security taxes, depending on where you live. There are 37 states that do not tax social security benefits, and moving to one of these can result in more money in your pocket. Keep in mind that you will probably still have to pay federal taxes on some of your benefits, but avoiding the state tax will help you save money.
Before you consider moving, however, make sure you look at the big picture. For example, if you move to a city where you can avoid paying taxes on income and social security benefits, but you pay sky-high real estate and VAT, that may not be the best decision. Or if you save on taxes, but the total cost of living is much higher, you may not be able to make a financial profit. So before you make any big decisions, make sure you have done your homework and understand if you really want to save money by moving.
3. You Can Find More Job Opportunities
Many Americans want to continue working for 60s, 70s, or later, but not everyone is capable of doing so. Although 80% of employees say they expect to continue to perform at least some payroll during their retirement years, only 28% actually do, according to a report from the Research Institute of Employees. Part of the reason why it may be difficult to continue working at an older age is because in many cities there may be fewer opportunities out there for retirees who want to work part-time.
If you are determined to continue working part-time in retirement – whether it is to increase your income or just satisfy a career change you have wanted for many years – moving to a city that has more job opportunities can be a smart decision. Especially if you currently live in a smaller city with few jobs in your field, you may have more luck moving somewhere with more opportunities to continue working part-time after retiring from work full-time. Just remember that if you are planning to relocate to a major city, you are likely to see your overall cost of living increase. So be sure to weigh the pros and cons of moving before you decide it is the right choice for you.
Moving to a new city in retirement can be an exciting new adventure, but make sure it makes sense for your situation. If you are committed to changing the landscape and a new beginning – and you have done your homework to make it the right decision financially – it may be one of the best choices you will ever make.