GLOBAL ECONOMY

Planning to relocate after retirement? Here are 5 things to consider

LLANDUDNO, WALES - SEPTEMBER 08:  Senior citizens walk along Llandudno Pier on September 8, 2014 in Llandudno, Wales. Britain is facing multiple problems stemming from an increase in the elderly proportion of its population, including increasing health care costs, strains on its social security system, a shortage of senior care workers and challenges to the employment market.  (Photo by Christopher Furlong/Getty Images)

LLANDUDNO, WALES - SEPTEMBER 08: Senior citizens walk along Llandudno Pier on September 8, 2014 in Llandudno, Wales. Britain is facing multiple problems stemming from an increase in the elderly proportion of its population, including increasing health care costs, strains on its social security system, a shortage of senior care workers and challenges to the employment market. (Photo by Christopher Furlong/Getty Images)  (2014 Getty Images)

That dream of basking in sunshine every day by the pool when you retire doesn’t have to be a mere fantasy in the dead of winter — you can choose to relocate.

Changing your locale upon retirement creates the opportunity for numerous social, health and yes, weather-related, benefits. But, it also can be a smart financial decision for those who choose wisely.

“A relocation can be an excellent way to free up extra funds, both from the savings you'll receive from taxes and a downgrade in living costs,” says Elle Kaplan, CEO of LexION Capital Management, a fiduciary wealth management firm.

It may be tempting to pick up and leave for a new town, but here are a few factors to consider before hitting the road:

1. Cost of Living. If you have a particular destination in mind, you’ll need to figure out how your retirement income measures up to the actual costs of living there. Americans 65 years or older had an average of $45,157 per year in income before taxes in 2013 with an average annual expenditures of $41,403, according to The Bureau of Labor Statistics. Because your expenses will change when relocating, you’ll first need to calculate your projected income including savings, Social Security and possible investments, and then factor in daily living expenses, bills, debt and possible health care costs.

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From there you can figure out how much it would cost to relocate to a new area as well as new mortgage or rental costs, property taxes, pension taxes, income taxes and other fees. Estimate how much you’ll need to live in different areas using a cost of living calculator.

“Once you're no longer constrained by work, then you have the freedom to move to an area with lower tax rates, such as Texas or Florida,” says Kaplan, who advises retirees to financially plan like they’ll live to 100. “It's an instant way to give yourself a raise without doing anything more than changing your scenery.”

2. Weather. If you’re dreaming of year-round blue skies, warm temperatures and sunny skies, you could be among the droves of retirees who settle into towns and cities in the Southwest, Southeast and more tropical locales. The most popular retirement destinations include Florida, California, Hawaii, Texas, Puerto Rico, Mexico, Costa Rica, Portugal and the Caribbean.

On the other hand, if you fantasize about hitting the slopes and curling up in a mountain cabin in a winter wonderland, you’ll probably want to look for a mountain town. You can find scenic views, hiking trails and ski resorts throughout Colorado, Vermont, Oregon, Montana and Utah.  

3. Social. If you’re looking for a retiree social scene to go along with your views of the golf course, you may want to look for areas with higher concentrations of the 55 or older set. However, if you want to live in an area with a mix of all ages, make sure there’s still a lively community for whatever you’re into. Finding an area with a community calendar of social clubs and activities is great way to meet like-minded people.

Relocating may also mean moving closer to family. Author Deborah Chamberlain says, “My first consideration is being close enough to be involved in my daughter's life without being too close for her sense of independence, or my independence.”

On the flip side, if you’re moving away from family, make sure you factor in distance and travel for holidays or life events. Marketing consultant Linda Carlson says finding an area with access to a decent airport is especially important, “so I can get out occasionally and the kids can come visit,” she said.

4. Cultural Amenities. Whether you choose a city, the country or somewhere in between, relocating creates opportunities to learn new things, explore new place and do what you enjoy. Find places with plenty of cultural amenities that appeal to you. This may include golf courses, tennis courts, lakes for kayaking, theater, museums, libraries or other local attractions. Nearby colleges may have free or low-cost classes for retirees.

Finally, if you’re planning to leave the expense of a car behind in a city, make sure there are plenty of walking opportunities, bicycle paths and great public transportation so you can get around easily.

5. Access to great health care. It’s no secret retirees have higher health costs, so you’ll want to find an area with affordable, top-notch health care. Look for towns with multiple hospitals within 30 miles as well as highly rated doctors and specialists. In case you or your spouse need to find a retirement community at a later date, check out what’s available in the area.

When you’re choosing a place to live after you retire, consider finding a short-term rental in an area you’re interested in to get an idea of what it would be like to live there full time.

Relocating can be an exciting fresh start for retirees looking for a new adventure.  Just make sure you find the best location for your wallet too.  

Divya Raghavan is the chief economic analyst for NerdWallet Cities, where she writes about cost of living and city trends.

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