Moving in retirement -or even right before you retire - can bring its own set of surprises… and some may not be so pleasant. Here are five things you may not know that you don’t know that could end up biting you:
#5…Financing…Lending has changed significantly in the past decade plus. Former Fed Chair Ben Bernanke retired in 2014 and tried to buy a house. He couldn’t get a loan! The head of the Federal Reserve couldn’t get a loan. If your intention is to finance your move, you may want to make sure you will be able to get what you need at the time and at the rate you need it.
#4…Taxes,Maintenance and Fees…Just because it has always been that way, doesn’t mean it will be. A new place to live may require fees and maintenance beyond what you are currently accustomed to. What are the property taxes, state income taxes, and sales tax? Are there association fees? Are there zoning requirements that will incur additional costs? What will the yard maintenance look like? What will your utilities be? Will you need to remodel or change something? A new air conditioner? This is all money you may not have put into your retirement plan, but it is still money.
#3… How Far Will Your Dollar Go?...We may have the same currency across the U.S.A., but that doesn’t mean it will buy the same thing everywhere. The Bureau of Economic Analysis (BEA) just released a report showing the purchasing power in each state. There is a 35 percent swing in how far each dollar will go among the states. And even if you aren’t moving outside the state you live in, you still need to assess the situation. The Texas swing is crazy – from Ft. Worth to Dallas alone, the cost of living varies an average of 13%, from FW to Abilene it varies 28.2%. You need to adjust your budget accordingly and make sure your retirement can support it.
#2…Survive and Thrive…Too often we see people make a big move soon after retirement only to learn that they have made a mistake. Their feelings of regret might come from financial pressures incurred from one of the above unknowns. But it also might come from another place. What about your circle of friends? What about your family? What about the activities you have made part of your life? How will a move impact these areas? Where or how will you find a sense of purpose for this next part of life? Does your move embrace this or does it stand alone? How will you thrive in your new location? Then, how will you survive? Who will be there if you get ill—aside from your spouse? You might both become ill. Will it be safe as you age? I know we don’t want to think about that, but it is unwise if you don’t. What is your plan to survive and thrive? (Check out our article: Retirement Happiness)
#1…Healthcare…This may not matter today, but it will matter sooner or later. Healthcare costs in the U.S. have grown at unprecedented rates over the last couple of decades and there is no end in sight. Couple that with the fact that people are living longer and not necessarily healthier and you could say, “Houston, we have problem.” You may think Medicare and your long-term care insurance have you covered, but you better make sure. Not every Medicare plan is zero out-of-pocket, which means a new location may bring nasty surprises. And for long-term care, not every plan covers everything and/or every amount. You might have a plan that covers up to 150 dollars per day and move to a location where services are 300 dollars per day. Your healthcare is likely to be your single largest expense in in retirement. I suggest you make sure you plan covers you for all of the “what-ifs.”
Don’t move without knowing what you don’t know so that no matter your decision, you will be able to take actions to avoid what may be a regret too big to undo.