Retiring? Don’t use a ‘best places to retire’ list to pick your new home
4 things to consider when choosing your next home
Americans love lists. We rank the most popular baby names, the top colleges and the best places to retire.
Lists are fun to read and could possibly come in handy. Maybe we’ll steer clear of popular names to give our child a unique moniker, or nudge him to top colleges for parental bragging rights.
But when it comes to something as individual as retirement, city and state rankings are a starting point at best, experts say. “If you move to a nice location but don’t know anyone, it can get lonely pretty quickly,” said Chris Chaney, a financial adviser at Fort Pitt Capital Group in Pittsburgh.
The truth is, most Americans stay put in retirement. Some 6% of those ages 55 to 59 moved between 2014 and 2015, according to U.S. Census Survey data, and of these movers just 5% relocated to a different region of the country; most remained in the same county. Among 65 to 69 year olds, just 4.5% moved during that year and of them, 10% moved to a different region.
“Obviously, a lot of people aren’t going to move in retirement at all,” said Claes Bell, senior analyst at Bankrate.com, which released a list of best states for retirement this week. Wyoming topped the list, while New York came in last. For those whose retirement dreams do cross state lines, these lists reinforce practical considerations amid what is often an emotional decision, Bell said.
If you’ve got wanderlust, here are some considerations to weigh.
No best-places list knows where your family lives. Yet the desire to be closer to relatives often drives the decision to relocate in retirement, financial advisers say. “Family considerations are very important,” Chaney said.
And that’s a perfectly healthy rationale, experts say. One of the biggest regrets that people often have at the end of life is they wished they had spent more time with family, said Steve Cole, professor of medicine at UCLA School of Medicine who has researched how loneliness can lead to illness. “In the grand scheme of things when you’re on your death bed, you’re not going to think, ‘I wish I didn’t pay New York so much in taxes,’” Cole said. (The Empire State often ranks low on best-places-to-retire lists because of its high tax burden and cost of living.)
While taxes often factor prominently into the methodology of best-places lists, they generally shouldn’t drive the decision of where to live in retirement, financial planners agree.
That said, would-be movers should at least consider the tax profile of states they’re considering. Some, such as Florida, have no state income tax; others like Pennsylvania exempt certain retirement income from their state income tax calculations. Some states have a state estate tax with a lower threshold than the federal level, while many states have no estate tax at all. Property taxes vary from region to region and don’t tell the whole story — for example, some coastal places in Florida might have relatively low property taxes but sky-high homeowner’s insurance costs.
Bankrate used data from the Tax Foundation on states’ overall tax burdens. While this is a helpful general gauge, experts say people’s individual taxes are highly dependent on their particular situation.
To the extent that people move for taxes, they’re often a deterrent rather than an attraction, planners say. Parents might have accepted high property taxes if that meant sending their children to excellent public schools, yet once the children are gone they’re eager to lower that bill by moving away.
Crime rates matter to most people, retirees included, but they’re highly localized. Some best-places lists use the FBI’s state-by-state data on crimes per 100,000 residents, but this isn’t a useful metric, experts say. “The use of crime as a state-wide criteria is wrong,” said Bert Sperling, president of Sperling’s BestPlaces, a compiler of rankings, including best cities for a healthy and more affordable retirement (Seattle topped the Aug. 2015 list). “In reality, the U.S. is a very safe place to live.”
Of course, many cities have dangerous neighborhoods to avoid. These are generally not areas that retirees with the means to move would even consider. Those interested in researching crime statistics in a particular neighborhood can ignore the statewide stats and contact the local police precinct for information.
Those truly concerned with crime could also consider a gated community, said Kenn Tacchino, a professor of taxation and financial planning at Widener University in Chester, Penn. and a MarketWatch RetireMentor columnist. “If crime is really an issue for you, there are workarounds,” he said.
Access to quality medical care is an important factor for most retirees, and here best-of lists can help direct people to relevant data. Some use the Agency for Healthcare Research and Quality’s state rankings on a host of health measures for all ages, from vaccination rates in young children and adults over 65 to the timeliness of hospice referrals to the number of long-stay nursing home residents with a urinary tract infection.
Wyoming, which took top honors in Bankrate’s retirement list, scored only average marks on the agency’s health measures on a scale from “very weak” to “very strong.” The beautiful state boasts a low cost of living, but it’s sparsely populated. If you have poorly controlled Type 2 diabetes and the nearest endocrinologist is a long drive away, that’s going to be a drag.
On a more local level, the Milken Institute publishes a ranking of best cities for successful aging that includes criteria such as average wait times in emergency rooms and sufficient access to hospice, geriatric care and rehab facilities at hospitals.
Sometimes health needs drive people from their retirement destination back to where they came from. “It’s the broken-hip syndrome,” said Ron Weiner, president of RDM Financial Group, which has offices in Westport, Conn. and Boca Raton, Fla. Among Weiner’s clients, there have been a number of cases where an older adult in Florida has a health crisis and moves abruptly back north to be closer to family.
This kind of move can be costly, both emotionally and financially, Weiner said. Often times, families will give away most of their loved one’s belongings and, if the residence is owned, sell it on the cheap. It can be disorienting for the older person, too, to have an adult child pack up all her belongings and uproot her from her home.
While the possibility of a rough reverse migration shouldn’t deter people from moving to their dream destination in the first place, Weiner said, folks should at least look beyond their active years and consider what might happen when they become more frail and in need of more assistance.