“There are a number of reasons why people approaching retirement might want to relocate. Chief among them is the need to stretch their savings and their Social Security checks.”
New Mexico, “The Land of Enchantment” state, is seeing an influx of retirees, which is the same reason people are moving to Florida and Arizona. They’re fleeing New Jersey, Maine, and Connecticut, according to a survey from the moving company United Van Lines. The company asked 26,998 of its customers who moved from Jan. 1, 2018 to Nov. 30, 2018 why they were moving and where.
According to CNBC’s article “Retirees are flocking to these 3 states—and fleeing these 3 states in droves,” four out of 10 people who moved to New Mexico said it was for retirement.
New Mexico seems to be taking over the lead from Florida, when it comes to retirement. Florida was second, followed by Arizona, and the cost of living is a key factor. After examining the cost of housing, medical expenses and income taxes, retirees or soon-to-be retirees are making their plans.
Another important factor is how states treat Social Security income. There are still states that tax Social Security, which is a big turn off for retirees. Those states are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, and Vermont.
New Jersey is experiencing a big outflow of residents. It has the highest effective property tax in the country: 2.13%, according to the Tax Foundation. It also has a top individual income tax rate of 10.75%, applicable to income exceeding $5 million.
Affordability is a significant factor in retirement relocation, but there are other factors to consider, including:
Family and friends. If you can afford to stay where all your family and friends are, isn’t that worth a “friends and family” tax? Who will be on your emergency contact list in a new home town? Will you make a new network of friends to serve as your retirement family?
Know before you go. Get to know the area before buying anything. If you can, rent for a six-month or one-year period. You should also go off-season, if retirement has you considering an area with a high number of tourists. A busy beach community that becomes a deserted island may not be as much fun as when the crowds all leave — or it may be better. Live there before committing permanently.
Call your financial advisor. Don’t go anywhere, until doing a comprehensive analysis of the costs of the move and the new location’s cost of living. What does an active lifestyle cost in a new town? Just as important, what would it cost if you or a spouse become seriously ill in the new home? Is there quality health care nearby, or would you have to return home for any kind of serious medical care?
Call your estate planning attorney. If your plans include moving to a state far from family and friends, you’ll need to be sure that all estate planning documents are up to date. You’ll also need to have your current estate plan reviewed to make sure it will be valid in your new home state.
Reference: CNBC (April 17, 2019) “Retirees are flocking to these 3 states—and fleeing these 3 states in droves”