"Get Your Finances Ready for Retirement"-Relocating in Retirement
Monday, June 09, 2008SUSIE GHARIB: One of the first decisions facing new retirees is often about where to live. A recent survey shows about half of all baby boomers expect to move to another state at retirement. While making a move is never an easy decision, for retirees, it can be complicated by fixed incomes and family dynamics. As we continue our series "Get Your Finances Ready for Retirement," Joe Collum looks at the pluses and minuses of relocating.
JOE COLLUM, NIGHTLY BUSINESS REPORT CORRESPONDENT: Dr. Robert Levin moved from Pennsylvania to Florida last year because he wanted to play golf year-round, but the retired dentist also discovered the move was a financial hole-in-one. In the sunshine state, Levin no longer has to pay several thousand dollars every winter for heating oil and because Florida has no state income tax, he will save another $1200 a year.
DR. ROBERT LEVIN, RETIREE: So financially, it's been a good move. Good move as far as that goes.
COLLUM: And downsizing to a smaller home also had its benefits. He and his wife Brenda sold their five-bedroom house outside Philadelphia for $750,000. They then bought a two-bedroom condominium in Boynton Beach for $310,000, which included a membership in a private country club.
LEVIN: So I had several hundred thousand dollars which I used to invest and I'm just investing it right now and I'm getting a nice percentage. So that's going to be a nice income coming in.
COLLUM: And in terms of their quality of life, Brenda Levin has no complaints.
BRENDA LEVIN, RETIREE: We love it here. We don't like it here; we love it.
COLLUM: Relocating from a cold climate to a tropical paradise may seem irresistible and may even appear to make good financial sense. But like many retirees, you could find that cutting personal and family ties to your home town is not easy. Stan and Sara Hinden planned to move from Maryland to Florida after he retired as a business columnist at the "Washington Post." But after reading letters from others who made the move and regretted it, they soon changed their plans.
SARA HINDEN, RETIREE: People would be saying things like, I don't see my children anymore. My parents don't have anything to do with their own grandchildren because of the distance.
COLLUM: And Sharon Cofar, who owns a company that helps senior citizens relocate, says she is seeing more and more retirees going back to their original hometowns.
SHARON COFAR, A MOVE MADE EASY: Reverse migration is very common now because their money is running out and their health is running out and they want to be in the final stages of life near their families.
COLLUM: So if you're thinking about relocating when you retire, it's important to weigh the financial pluses and minuses before you actually make the move. On the plus side, if you're in one of the 43 states or Washington, D.C. that currently tax personal income, moving to any of the seven states that have no personal income tax could save you money. Or, if you'd rather live elsewhere, you could move to one of the 28 states or the District of Columbia that exempt all or part of Social Security payments from their income taxes. Still, "U.S. News & World Report" retirement correspondent Kerry Hannon says it's important to keep the tax benefits in perspective. She says many people often ignore other tax bills in looking at states with low or no income taxes.
KERRY HANNON, RETIREMENT CORRESPONDENT, U.S. NEWS & WORLD REPORT: Sounds great. But if you look at the whole picture, your entire tax picture, those states often make up for not having income taxes by having higher property taxes or higher sales taxes.
COLLUM: Also on the minus side, the cost of medical care and other necessities can vary greatly around the country, so don't assume that their prices will be the same as you're used to paying. For example, in Florida, Robert Levin was surprised to find that the cost of auto insurance was substantially higher than he expected. The bottom line, don't just look at the financial sunny sides of the places you may live in retirement; consider their downsides, as well. Joe Collum, NIGHTLY BUSINESS REPORT, Boynton Beach, Florida.
GHARIB: The web is a big part of our efforts to help you get ready for retirement. On our web site, nightlybusinessreport@pbs.org, you'll find an extensive array of resources, information and tools you can use, including podcasts of our stories. So check out the "Get Your Finances Ready for Retirement" section of NIGHTLY BUSINESS REPORT at pbs.org.
