Where should you move to retire?

If you seek an ideal place to move for your retirement years, there are conflicting views on how to choose and where to go. Some rankings highlight weather, while others place greater emphasis on a favorable tax environment, quality and availability of health care, cost of living, or some other measure. However, according to a recent report by financing consultant Bankrate, none of those factors are as important as love. The results of their current research indicate that the quality of your spousal relationship plays a more prominent role in retirement satisfaction than location or how much money you have available to spend.

How to decide where to retire depends on your priorities.

Moving at or after retirement is often a financial or health decision. For homeowners, the use of home equity to supplement retirement savings or income may be essential. A study by the Center for Retirement Research divides retirees into four groups:

• Never Movers (53 %) retirees who stay in the home they had in their early fifties until they die.
• Stable Movers (17%) retirees who move around the time of retirement and stay in that new home for the rest of their lifetime.
• Late Movers (16%) retirees who remain in their original home until their 80s and then move into a rental or assisted living, often because of health issues.
• Frequent Movers (14%) retirees who move often after retirement, usually prompted by financial difficulty

USA Today suggests that you consider moving if you live in a state that taxes Social /security benefits. There are currently thirteen states with some level of taxation on retirement benefits, although some have exemptions of various amounts:

• Colorado
• Connecticut
• Kansas
• Minnesota
• Missouri
• Montana
• Nebraska
• New Mexico
• North Dakota
• Rhode Island
• Utah
• Vermont
• West Virginia

Another reason to consider moving is if you live in a high cost-of-living state. Massachusetts, Hawaii, New York, and California are all high cost, along with Maryland, Alaska, Oregon, and the District of Columbia. States with lower living costs include Mississippi, Arkansas, West Virginia, Tennessee, South Dakota, Alabama, and Kentucky. If you have a home to sell in a high-cost state, you may be able to carry significant equity to the lower-cost state. If you are a renter, the decrease in monthly housing prices will likely make a noticeable difference in your budget.

What do the “Top Retirement Destinations” consider in their rankings?

As noted earlier, everyone has their own idea of what makes an ideal retirement destination. One person might think Sarasota, Florida is perfect (number one on the U.S. News ranking), while Florida might be the last place a different person would choose to go. The U.S. News survey included the following factors in their research:

• Happiness Index—how contented are the residents
• Housing Affordability—looking at both cost of buying and renting
• Health Care Quality—availability of top-quality health care
• Retiree Taxes—sales and income tax score
• Desirability—how interested are mature Americans in retiring in a location
• Job Market—unemployment rate and earnings level

Based on those criteria, U.S. News compiled the following top 10:

• Sarasota, FL
• Fort Myers, FL
• Port St. Lucie, FL
• Naples, FL
• Lancaster, PA
• Ocala, FL
• Ann Arbor, MI
• Asheville, NC
• Miami, FL
• Melbourne, FL

Interestingly, U.S. News offers a Best Places to Live list and uses different criteria for that. For example, Lancaster, PA, is 5th on the list of Best Places to Retire but falls to 67th on the ranking of Best Places to Live. Similarly, the retirement champion-- Sarasota, Florida-- is 16th on the Best Places to Live list.

The U.S. News ranking for retirement cities goes all the way to 59 before you find an Arizona location, which is a bit surprising given the state's reputation as a haven for the demographic. Arizona is mostly tax-friendly for retirees, with below-average property taxes, no taxes on Social Security income, and public pensions' deductibility. The cost of living is reasonable across the state, particularly outside of Phoenix. Sun City, just outside of Phoenix to the northwest, was the first active adult community in the U.S., and now over 17% of Arizona residents are 65 or older.

What if I want to move abroad to retire?

A growing number of Americans are deciding to move internationally and retire to another country. They find that their income stretches further, and they can live better and healthier lives. Some of the most popular destinations for retirement age expatriates are Portugal, Panama, and Costa Rica, based on their respective reputations as among the least expensive and safest places to live. The U.S. Social Security Administration sends over 700,000 checks every month to foreign destinations, but many thousands more may be living in another country and having their retirement benefits deposited into a financial institution in the United States.

If you are considering an international destination for your retirement, start planning early. The U.S. State Department website has helpful information on retiring abroad, such as how to pay taxes and vote while you are overseas, how to get a visa, and what to do about health care. Each country has specific requirements for residency that you will need to fulfill. You will need to be able to demonstrate reliable income in most places.

Experts recommend taking an extended visit to your intended home before you commit. Moving to a remote area sounds romantic, but reality may be different than your expectations. Americans who have made a move recommend that you put the destination country's political stability at the top of your list of decision-making criteria, along with taxes and availability of healthcare.

Keeping in mind that one of the goals that many people have in retirement is to spend more time with family, deciding to move across the world or even the country may not be the best way to accomplish that. If you are going to regret missing out on the birth of grandchildren or other family milestones, moving far away might not be for you. But if you are an adventurer, retirement may be your opportunity to strike out and indulge your wanderlust. If you choose a country or a region that is easy to visit, you may have the family coming as often as you hoped, or even more.