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How to Avoid the Key Retirement Housing Mistakes

Last update on: Oct 17 2017
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Retirement patterns in the U.S. are changing. That’s because many are finding that the traditional move to warmer climes isn’t for them. The “boomerang” or the “bounce-back” is becoming common for those who move to Florida or Arizona.

Retirees have many more location options than they used to. Retiree-oriented developments are being built all over, not just in Florida and Arizona. You can spend your retirement years in the place that is right for you. More importantly, avoid an expensive and inconvenient move to a place that doesn’t work out, only to have to move again.

Moving to the wrong retirement location can cost a lot, both financially and emotionally. Here’s my guide to avoiding retirement housing mistakes.

Don’t let others overly influence your choice. You can get the book, Retirement Places Rated by David Savageau, which annually rates about 200 retirement locations. Or you can read the magazine, Where To Retire, published in Houston five times annually. But a retirement location might not be best for you, even if it tops the rankings of an exhaustive survey. (You ought to be suspicious of these surveys, because the top places usually change every year.)

Use these sources to learn the characteristics of an area. But don’t be influenced too much by the actual rankings. It could be that the best place for you, for example, is the one nearest your grandchildren, and that doesn’t show up in any rankings.

Friends and associates also can unduly influence a location decision. It is good to have a network of friends or relatives in a place. But don’t let that override factors such as weather, cost, taxes, and available activities.

Don’t make a judgment after a short-term stay. Many of the boomerang retirees made their initial retirement location decision after a vacation or a short visit with friends. They had a great time and fell in love with the place. But a short stay, especially a vacation, is nothing like living in a place year round.

A few years ago I was golfing in South Carolina. A gentleman at the course had retired there from New Jersey. In between swats at mosquitoes he said that if he had known about the mosquitoes and the humidity in the summers he would have stayed in New Jersey.

Ideally, you should visit a place several different times of the year before retiring there. Even better would be to rent for an extended period before buying a place and moving your belongings. Get to know an area before making it your home.

Make sure low costs are real. It is easy to look at the cost of real estate and conclude that the cost of living in an area is lower. But the routine daily costs might be higher. Sometimes people who rely on warehouse shopping in a major suburban area find that the superstores aren’t available in a less populated area. Health care might be more expensive. So might basic utilities, services, and recreation. Before moving to an area, get a handle on all the costs you’ll incur there.

Don’t be fooled by “low tax” states. I covered this in detail in last month’s visit. The bottom line is that a state with no income tax might more than make up for it with other taxes. Before moving to an area, take the time to learn about the taxes at all levels of government. Estimate how much you’ll pay based on your anticipated expenses, income, and lifestyle.

Be sure you fully understand the climate. Some folks move to Florida for the mild winters. Then they learn that they cannot stand the hot, humid summers or they miss the change of seasons. Others find that the climate isn’t good for their health. They might be allergic to something in the new climate. I’ve seen studies estimating between 5% and 30% of Florida retirees eventually leave the state, and weather is a primary reason for moving.

Know you and your lifestyle. You’ll have a lot of time in retirement. You need a good idea of how you’ll spend that time. If you want a lot of activities to choose from, you won’t want to move into an area that is primarily about golf, even if you like golf. If your grandkids are important to you, don’t move away from them just because you like the weather elsewhere or have always looked forward to retiring somewhere else.

Make a careful assessment of both how you want to spend your time and who you want to spend it with. I’ve talked to people who moved to Florida retirement communities and found that the average age in the communities was much older than they were comfortable with. Some people make new friends easily. Others prefer their old network of friends.

Don’t commit too soon by purchasing a new home or condo. Ideally you spend a year or two researching an area and getting to know it before making a long-term commitment. Rent a place before buying. Get involved in the community.

Even if you are right about the general area you like, it might take a while to find the subdivision or community within the area that is right for you. You also might need some time to discover the right size house for you. Some people decide they want a much smaller place in retirement. After a while they realize they need a place a bit larger than they suspected.

Don’t’ feel you have to move somewhere in retirement, and don’t make an expensive mistake. Only about 40% of Americans move at all after retirement. Fewer than 5% of older Americans move out of state. It could be the best place for you to retire is somewhere near where you are now.

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