The Retire and Relocate Strategy

It's a growing trend for retirees looking to stretch their savings. Could it be a good option for you? Find out what to consider on the latest You And Your Money podcast with Jim Zahansky, AWMA®.

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Transcript

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so this is one of those things, right? I mean, if you're someone who's listening this morning, who is thinking about, well, I'm about to retire, what am I going to do? Do I have enough resources? Do I have enough money? Retirement locates is a simple strategy that sort of says, hey, I am Going to you know, if I live in Connecticut as an example, because most of the listeners are probably there, I'm going to retire. Im going to leverage the equity I might have in my house. And, you know, if you live in Connecticut, it's a fairly expensive area to live in the US, and I might leverage all that equity I have in my house and what I've built here, and I might relocate to a lower cost area and leverage that sort of buildup of wealth in my home and property and buy something a little bit less expensive and live in an area that's a little less expensive. And it's a way to sort of it's a strategy that allows you to use that equity to live, live somewhere else at a lower price. I knew a couple of years ago they both retired. They were teachers, they were educators. They had their pensions and they're retired. They worked hard to get to that point, and they ended up moving to Florida. And they said, hey, we did the numbers. We got a $15,000 a year raise by moving from Connecticut to Florida. Right. Because, and that's a perfect example. Right. You're sort of getting away from the state income tax in that scenario, and you're going to a place that doesn't have one. And that's the premise. I mean, and a key to the financial component of this, which is, you know, you have to obviously evaluate, Gary, the current living situation, your current expense base and your future income when you do that, and then evaluate an area that A, you'd want to be in, but B, it has to be less expensive for this retire and relocate strategy to really work for you. All right, so again, we've heard of these examples. This kind of, this obviously makes some sense, financial sense, not that hard to figure out. But again, drill down more. How significant can the financial impact of this strategy be? I just gave you a personal example here. But what I think if you use the averages in this scenario which we've sort of looked at using retirement data and what the Federal Reserve publishes, et cetera, it can be, depending on where you live, I mean, I think you'd want to. It could be as high as, on average of about $100,000 difference. Wow. And so, you know, if you, and let's just say you had a house in Connecticut, you, you know, you've got a $300,000 home, you know, you have no mortgage going into retirement. You sell that and you buy something for 250 or 200,000, you can automatically see the difference in how much you'd sort of put into your retirement nest egg using this strategy right there. Let's continue to drill down on the main benefits of retire and relocate. The main benefits of that approach. Yeah, I mean, the first piece obviously, and just spoke of it is it does increase the amount of nest egg or savings you have to, you know, leverage and live. Because we know when you retire there's an emotional component from people that says, hey, I don't have to work anymore. And then there's sort of a reality too, which is I also now have to think about income differently. All the money I've saved, no matter how you've done it, plus Social Security, plus whatever else, if you have a pension, that becomes my income. I'm no longer working for that income. And that has to last you for as long as you live. This sort of approach, the retire and relocate builds the nest egg, builds the savings, and then you're leveraging that. So there could be a financial benefit. That's really, really important to think about here. How about downside? Do you see any downsides? I mean, this is something you have to think about emotionally as well. So financially might be a reason to do it. And then secondly, you have to say, well, okay, am I okay with if I'll use our example earlier if I move from Connecticut to Florida, yes, there might be a financial benefit. I could sell my property here, buy something a little less, put some money into my retirement savings and live a little longer. But am I okay with being away from family? Do I have grandkids? Do I have elderly parents that I need to be be near? Those are all. Real considerations. The other things to think about. Whats the lifestyle implication of where you're moving to? Right. Its proven that people live longer if that's one of your goals, if you can exercise and exercise your mind, you know, am I moving to an area where I can do that? You know, is there fitness, is there good healthcare? Do I have access to that sort of thing? And so those are considerations that could either be pros or cons, depending on what you want to achieve. And that's why, to your point, you probably want to think about this from a financial point of view, but also lifestyle and emotion. So there are obviously a lot to unpack, a lot to think about here. Sounds like a good opportunity for a sit down with you guys, right? Yeah. I mean, this is always a consideration that you want to think about financially and emotionally and you want to consider all of the implications of it. So getting, you know, crunching the numbers on this, to your point of, hey, I could get a $15,000 raise if I move from Connecticut to Florida, well, what are the numbers behind that? You know, you know, obviously you have to think of the tax implications. You have to think about selling the property. Are there any tax implications on that? So crunching those numbers takes some work. And that's something we obviously model for our clients. Quite often we have a lot of clients who look to move. They may retire and relocate or they may add a second home or they may rent in retirement. But in either case it takes some work and see the implication on your retirement income plan. That was a very good topic. Thank you for all those insights, Jim. We appreciate that. Yeah, you're welcome. For more information regarding wealth management and customized financial planning with Weiss, Hale & Zahansky Strategic Wealth Advisors, please visit whzwealth.com Weiss, Hale & Zahansky Strategic Wealth Advisors offer securities and advisory services through Commonwealth Financial network member FINRA SIPC, a Registered investment advisor, fixed insurance products and services offered through CES Insurance agency. They practice at 697 Pomfret Street Pomfret Center, Connecticut 06259 392-A Merrow Road, Tallinn, Connecticut 06084 They can be reached at 860-928-2341 Weiss, Hale & Zahansky Strategic Wealth Advisors do not provide legal or tax advice. 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