The Bakersfield Californian
July 23, 2014
Summer vacations can give people itchy feet. That’s what happened to my clients, who I will call Pete and Carol.
High school sweethearts, the couple enjoyed long, successful careers – Pete as a teacher; Carol as a registered nurse. They raised four kids, who now are grown and raising families of their own. With their savings and home value slammed by the Great Recession of 2008-09, the couple needed to work until they were 65 to recover losses. They retired this summer.
Pete and Carol recently visited Pete’s former colleague, who moved to Arkansas to be closer to his daughter and grandchildren. The colleague and his wife are having a ball settling into and exploring their new community, and enjoying their family. Pete and Carol want to experience this dream.
Their big southwest Bakersfield home is now an empty nest. Their adult children are scattered about the country – two daughters married men in the oil industry and live in Houston; another daughter is a nurse in Florida; and a son lives in New York, where he works in the financial industry.
Pete and Carol have lived their entire lives in California. While they shun winter-frigid New York, they want to live in a warm community centrally located to all of their children and grandchildren.
They admit they will miss the friends they have made over a lifetime and the ease of living in a familiar community. But they are excited about moving and beginning a new chapter in their lives.
Pete and Carol are not alone in this dream. A Pew/Stateline analysis of U.S. Census Bureau numbers showed Florida, for example, recently has experienced a 138 percent growth in the migration of people 55 years of age and older to the state.
During the Great Recession, when home sales and savings plunged, migration to “snow bird” states slowed to a trickle. Today, homes are selling and the stock market is setting records. Retirement moves are making a comeback.
My advice to Pete and Carol:
Take your time. Do your homework. There is a lot of information online about moving in retirement. Not every state or community is created equal when it comes to amenities for retirees.
Test drive a community. Before you sell your present home and buy another, spend time in the new community. Rent an apartment for a few months to see how you will fit in, where you want to live and if the community meets your needs. Be practical about your present and future needs, including healthcare needs.
Taxes are not everything. In California, where personal income tax rates are high, a state that does not impose an income tax looks appealing. However, the difference may be made up in sales taxes and other fees. Public services you require may be lacking because taxes are not collected to pay for them.
Last year, Kiplinger listed the 10 most tax-friendly states for retirees. They were Alaska, Nevada, Arizona, Wyoming, Louisiana, Mississippi, Georgia, Florida, Delaware and South Carolina. The 10 most “un-friendly states” were California, Oregon, Montana, Minnesota, Nebraska, New York, New Jersey, Rhode Island, Vermont and Connecticut. There are a lot of states that are “in between.” Carefully check out a state’s tax laws and how they will apply to your financial situation.
Evaluate the costs of moving. These costs are associated with selling your current home, moving household goods, buying a new home, reestablishing a household, paying for utilities, etc. There are several online programs that calculate one-time and ongoing costs.
Pete and Carol are driven by the most common reason to move: to be closer to family. If they take their time and do their research, their move can satisfy their emotional and financial needs.