Housing • May 22nd, 2020

How to choose the best place to live in retirement

Michael Schultheiss

Key Takeaways
  • Consider retiring locally if you enjoy your neighborhood and can afford to live there.
  • Assess cost of living in retirement, including the cost of housing.
  • Research different states, including natural and cultural features, and consider traveling to a few different states before you decide where to retire.

Where do you want to retire? When you’re thinking about the best places to live in retirement, there are a number of factors to consider.

To begin with, ask yourself if you really want to move, or if a local retirement might be the key to retirement and good living. If you do decide to move, it’s a good idea to thoroughly research the states you’re considering.

Your choice of where to retire will probably be guided by a mixture of factors. It’s a good idea to consider money, including cost of living, housing, and taxes. You’ll also want to think about the climate, opportunities for outdoor recreation, safety and crime rates, culture and downtown life, and healthcare.

As you approach retirement, you might find it beneficial to take a few vacation trips to locations you are considering for retirement. Spending some time at each location is a great way to get a sense of the local culture and local attractions, and figure out which locations might be the right fit for you before you commit to anything.

Talking to a Certified Financial Planner® is also a good way to prepare for your search, since you will have a clear picture of your finances and will be able to plan accordingly.

Consider retiring locally

The question of where to retire is one that every retiree has to answer for themselves. That said, if you’re wondering where is the best place to retire, it might be a good idea to start by considering a local retirement.

It’s probably safe to say that you know your current home town well, and you’re familiar with the pros and cons of the climate, the culture, and your overall comfort level. A new location may or may not be an improvement.

If you generally enjoy where you live, consider that it might already be the perfect place to retire. This may be especially true if you have beloved friends and family in the area. If you can afford to live there in retirement, that might be an additional factor to encourage you to stay.

For some people, including some retirees, a new location can offer new opportunities, new adventures, and a new lease on life. That said, the converse is also true: if you make the wrong move, you may end up regretting lost opportunities, lost adventures, and a lost way of life.

One option you might consider to give yourself a foot in either camp, so to speak, would be to divide your time between your current location and another location nearby. In particular, people trying this option often have one residence in the country and another in the city.

You might also consider a short-term rental in another locale. This is a good way to experience living in a different place, with all that it has to offer, without the financial commitment of living there full-time.

Whatever you end up deciding, it is important to approach the decision about where to retire with your eyes open. If you find yourself wondering “Where should I retire?” consider the possibility that you’re already living there.

Assess the cost of living

Here is a pair of important numbers: 55 and 80.

Why are those numbers important?

Ask yourself this: do you know how much of your current income you will spend in retirement? When you are thinking about the best retirement locations, assess the cost of living and try to get a sense of how affordable your first, second, third, and so on choices are.

By the way, those numbers describe a percentile range: 55% to 80%. On average, that’s the amount of your pre-retirement income you’ll need to spend in retirement: 55% of it to 80% of it.

With this in mind, some states have relatively low costs of living. If affordability is your key criterion for retirement locations, consider Mississippi, Oklahoma, Arkansas, Missouri, and Tennessee – the states with the lowest cost of living. These might also be some of the best states to retire early, since their costs of living are so low.

On the other hand, if you can afford it, there are states with higher costs of living that may offer a variety of benefits in terms of environment, culture, etc. The states of Hawaii, California, New York, Massachusetts, and Oregon are the most expensive, but all offer some combination of natural beauty and cultural riches.

What about housing prices? It’s a good idea to consider housing costs and how much housing you need in retirement. The states of West Virginia, Mississippi, Arkansas, Oklahoma, and Indiana have the lowest average property prices. On the other hand, Hawaii, California, Massachusetts, and New York have the highest property prices.

Know your taxes in retirement

In addition to cost of living and cost of housing, you’ll want to consider the cost of state taxes.

If low state taxation is an important consideration for you, consider retiring in a state with no income tax. There are seven such states: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

Taxes on retirement income are a more complex story. There are four states that exempt all or most retirement income from taxation: Hawaii, Illinois, Mississippi, and Pennsylvania. Another three provide a tax credit: Ohio, Oregon, and Utah. Another 27 states tax only some, not all, retirement and pension income. Finally, two states tax only dividend and interest income: New Hampshire and Tennessee.

It’s worth bearing in mind that a state with low taxes isn’t necessarily cheap to live in. This may or may not be true, and you may also find significant variation in cost of living within such a state.

Talking to a Certified Financial Planner® about your finances can help you to get an idea about how your tax situation might change if you move to another state.

Evaulate amenities for retirees

Generally speaking, the best places for seniors to retire will have good natural and cultural amenities. A few you might want to consider include an active economy, so you can find work if you need it; a climate that you find enjoyable; safe neighborhoods with low crime; cultural attractions and a lively downtown, and opportunities for recreation outdoors.

You might also want to consider finding a state with good assisted living facilities. It’s important to make plans for your long-term care, and states with good assisted living facilities may be a better option long-term. While we all want to remain in our own homes for as long as possible, having the option to fall back on can be helpful, particularly if your situation changes.

Clearly, your own personal ideas, values, and preferences will substantially influence your conclusion regarding the best place to live after retirement. It’s important to understand that there really is no one-size-fits-all answer here.

With that said, it’s probably a good idea to think about the key factors we’ve mentioned. For a lot of people, these factors will determine much of their thinking about the kinds of places they find desirable and not desirable to retire in.

This is where talking to a Certified Financial Planner® can prove particularly valuable. They’ll listen to your needs and wants for retirement and help you evaluate your finances so you can have more confidence in your ability to travel, relocate, or stay put.

While money is important, it’s not everything. The secret to a happy retirement has a lot to do with your quality of living and especially the people you’re sharing it with.

Take a trip to find the best place to retire

If you’re trying to figure out the best place to retire, there’s no substitute for direct experience.

It’s a good idea to visit the place or places you’re considering for retirement before you retire. A state and a city might sound like one of the best places to retire, but until you actually go there it can be very difficult to know for sure.

One approach you might take would be to find the top three states you want to consider retiring in, and then plan an extended trip making time for each of them.

It’s a good idea to spend more than a couple of days in each location: if you can, try to spend a week or more there. If you end up retiring in one of these locations, you’ll be spending a lot of time there.

Spending at least one week at each place in advance is probably a safe investment. If you do this, it will give you time to figure out whether or not you really enjoy the location. You’ll get something of a sense for the people, the neighborhoods, and the overall look and feel of your surroundings.

Try to get out beyond wherever you’re staying – a hotel, motel, or Airbnb – and see more of the neighborhood and the land. You’ll get a more authentic experience that way.

Research the best places to retire

By now it’s probably clear that it’s important to research the best places to retire. This will help you eliminate the ones that are obvious dealbreakers, and zero in on the ones that seem more promising. Here are a few things to consider:

Climate: What are the winters like? The summers? Is it humid, dry, or a mix? If you have strong climate preferences, you’ll be able to rule out many possibilities and zero in on a few.

Outdoor recreation: Are there opportunities for walking, biking, golfing, boating, and other forms of outdoor exercise and recreation? Again, it’s a good idea to consider climate. If you don’t enjoy cold winters, you won’t want to participate in outdoor recreation during the winter in places like Michigan or Colorado.

Safety: What’s the crime rate like in the areas you’re considering? Are you looking at safe neighborhoods?

Cost of living and housing prices: How expensive is it to live there? What about housing?

Culture: Is there a vibrant downtown? What are the restaurants like? Is there live music? How about the arts?

Healthcare: Are there good hospitals and assisted living facilities? Will you be able to get the care you need?

If you research the places that strike your interest before you go there, you’ll be in that much better of a position to winnow them down to a few particularly promising options.

Bottom line

Choosing where to retire is an important decision that you’ll want to make with reference to several different factors. It’s a good idea to consider money, including cost of living, cost of housing, and what your taxes will be like in retirement. You’ll also want to think about healthcare and assisted living. And if you have children and grandchildren, you may want to try to live near them.

It’s also a good idea to think about natural and cultural features. For some people, warm weather is a must. Others love rugged natural beauty and don’t mind cold winters. Many people enjoy vibrant, bustling downtowns.

Before you retire, you’ll want to make sure your finances can support your retirement plans. This is why it’s a good idea to consult a Certified Financial Planner® to help you examine your financial situation and consider your options. Knowing what your options are can help you to make the best plans for your retirement.

Author

Michael Schultheiss

Michael Schultheiss is a freelance copywriter of long-form content and other marketing communications (B2B and B2C) in the financial services and FinTech niches. In copywriting, he looks for hungry crowds. Other interests include health, fitness, and reading and writing fiction.