Are you newly retired and considering a move? Want to age in place but in a different home in a new city?
Whether you’re drawn by better weather, lower costs, or proximity to kids and grandkids, plenty of your fellow Americans traditionally use their retirement as the perfect reason to pull up stakes and try something different in a brand-new location. Back in 2022, The U.S. Census Bureau pegged the number of people 65 and older who move each year at about 3 million – more than six percent of all seniors. We predict that today’s baby boomers will cause that number to rise.
We’re sure that each one of those “senior movers” had a specific set of criteria they used to evaluate whether to move, and to where. We’ve featured plenty of articles on the topic here on the Blog, including this 2024 example from NerdWallet, written by a reporter whose work we admire, Kate Ashford. In her analysis, she goes beyond some of the usual “do we or don’t we” questions and lists five points to ponder before you decide to relocate.
(Note: although the original article came from NerdWallet, we found it at the Nasdaq website.)
Ashford’s points aren’t designed as a simple “pro” and “con” list so much as key factors to provide you with important food for thought as you contemplate a big decision. Let’s dive in.
Senior Housing Trends: Relocating in Retirement vs. Staying Put
If you’re considering a move in your retirement years, one thing is for sure: you’re not alone. Ashford tells us that more than 338,000 Americans moved specifically for retirement in 2023, according to a study from moving-services marketplace HireAHelper. Not only that, but a quarter of that overall number moved from one state to another.
“Relocating in retirement isn’t simple,” Ashford writes. “There are things to ponder, like whether you need new health insurance, how your new state taxes your income, whether a city has good health care and whether the culture is a match.”
Financial Risks of Moving in Retirement: Avoiding Unpredictable Expenses
Ashford consulted multiple experts for her article, including Florida-based financial planner Kyle Newell. He told Ashford about a client of his who moved from Tampa up to Martha’s Vineyard, lived there for six months, and then decided to move to Minnesota to be closer to family.
Newell says it was fortunate that this particular client made money on all the buying and selling, but that outcome is never a given. Too often, an unwise or premature housing purchase followed by a hasty sale ends up triggering a major financial loss.
Newell told NerdWallet that he always encourages clients to spend time where they plan to move, to make sure that they love the reality of the place and not just the romantic idea of it. That said, here are some things Ashford suggests you think about if you’re also planning to move in retirement.
Evaluating State Income Tax and the Hidden Costs of Senior Relocation
David Berman, a certified financial planner near Baltimore, is often asked by retiree clients about moving somewhere “cheaper.”
“It usually starts off very benignly: ‘Oh, you know, Florida doesn’t have an income tax and Maryland’s is eight and a half,’” Berman says.
When clients do the math, taking into account things like property taxes, cost of living, and even estate taxes, Berman notes that the cost difference often isn’t as significant as they initially thought.
Managing State Tax Rules and Second Home Residency Audits
Berman advises talking to a professional before moving between states, especially if part of your plan involves another major transaction (such as selling a business). He says, “Some states are more aggressive than others about chasing after their residents who are establishing residency elsewhere.”
He warns that this also applies to people buying a second home and hoping to declare residency in that new location. If you live in a state like New York or New Jersey and try to establish residency at a second home in Florida, expect an audit. “They are definitely looking for people who are fudging it,” Berman says.
Understanding Medicare Service Areas and Supplemental Coverage Options
Depending on your insurance situation, a Medicare do-over can be an unexpected advantage in moving.
Ashford writes, “If you have Medicare Advantage and you move out of your plan’s service area, you get a chance to reset your Medicare coverage. You can choose another Medicare Advantage plan or return to Original Medicare and — here’s the kicker — get another shot to sign up for Medigap.”
Typically, you have to sign up for a Medigap plan during the six-month guaranteed-issue window after you’re 65 and have Medicare Part B. After that, Medigap can be tougher to buy if you have health issues, Ashford notes, because insurers are allowed to charge you more or decline coverage based on preexisting conditions.
(Edit0r’s note: we covered this topic here on the Blog last week.)
How Moving Triggers a New Medigap Guaranteed-Issue Period
But if you move, you’ll likely get another chance. Melinda Caughill, co-founder and CEO of 65 Incorporated, which offers Medicare guidance, says, “We call this the nuclear option because this is one of the few ways to get out of a Medicare Advantage plan later in life if a Medicare Advantage plan is no longer working for you. You will have a guaranteed issue right to get a Medigap policy.”
Ashford clarifies that this means that, if you move, companies must offer you a Medigap plan at the same pricing as everyone else, regardless of any health issues.
She writes, “If you have Original Medicare with a Medigap plan, in most cases, that Medigap policy will follow you and take on the policy pricing of your new area. If you have a Medicare Part D prescription drug plan, you will need to choose a new plan if you’ve left the service area. And don’t forget to notify all the companies involved in your health care and/or dental coverage, as well as the Social Security Administration, about your move.”
Renting vs. Buying in Retirement: Avoiding Capital Gains Penalties
Unless you are very familiar with a particular place – “in all seasons,” Ashford adds, not just summer sun – take your time with the idea of buying a home right away.
Berman says, “We try like crazy to talk our clients into renting for a year.” The logic is simple, he says: if you buy a house, and then have to sell it a year and a half later because you realize you made the wrong decision, the costs will be significantly higher. You’ll also owe capital gains taxes on any profit on the home sale if you’ve lived there for less than two years.
Thomas Cook, a CFP in Knoxville, regularly speaks with clients who moved to Tennessee but are considering leaving. “They ultimately decided that Tennessee was not the right fit for them,” he says. But, he adds, since they bought their home and prices have increased since their initial purchase, they face paying capital gains taxes if they sell too soon.
Senior Healthcare Access and Medical Specialist Availability Across Regions
“Access to health care should be a variable on your list,” Ashford writes. If you relocate to a place where specialized care is inconvenient or unavailable, you’ll be in a very tough situation.
Crystal McKeon agrees. A CFP in Houston, McKeon has a retired client who moved abroad, and then, was diagnosed with cancer six months later. In her case, the country in question is equipped to handle such a diagnosis, but “it could’ve been very bad,” McKeon says.
It’s vital to consider what healthcare will look like for you, not just your primary care doctor but also the quality of general medical care, specialty care, and emergency services, too. “Otherwise, you could end up traveling pretty far to get good health care,” McKeon says.
Community Culture, Social Life, and Retiring in the Right Environment
Ashford reminds us that happiness in retirement often comes down to “the intangibles.” She writes, “Retirees who consider themselves happy spend significant time on interactive and social activities, according to a March report from life insurance company MassMutual. What’s the culture like? Will you be around people you enjoy?”
Berman told Ashford about a client who moved from Maryland to Arizona about five years ago and is now moving back due to weather and social climate. “One of the things to consider is the political dynamic, because it’s so contentious in today’s world,” he says.
One tool at our disposal to help with this is social media. Cook says, “It could be helpful to join a Facebook group ahead of time to get a feel for the culture.”
Berman concludes, “What makes life enjoyable? The people around you, and the environment, and feeling good and safe. It’s definitely an issue.”
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