5 Reasons to Relocate in Retirement

Russell says it’s a good deal, even if the house you’re selling is paid off. 

“While a lot of my clients do not carry a mortgage anymore, the high costs of property taxes, utilities and upkeep are factors for relocation,” she says. “The vast majority of people looking to retire have most of their net worth tied into two places, the equity in their home and their qualified [retirement] plans. A relocation is a great opportunity to liquidate equity in a sale of a home in order to prepare for the financial goals that retirement presents.” 

Of course, relocating costs money, especially if you’re buying a new home. But most people recoup outlays like moving expenses and closing costs in a year or two, says Matthew Essmann, a managing partner at Cornerstone Financial Services in Troy, Michigan. 

2. A tax cut

Another way to save money is to move somewhere where you won’t have to pay as much in taxes on your retirement income. 

For example, there’s no state income tax in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming, which means no tax on retirement income such as pensions, Social Security, and IRA and 401(k) withdrawals. (New Hampshire does tax dividends and interest, upon which many retirees rely.)

While they do tax income generally, Illinois, Mississippi and Pennsylvania exempt retirement income. Other states offer specific tax breaks for older residents. Coloradans ages 65 and over, for example, can deduct up to $24,000 in federally taxable pension or annuity income from their state income taxes, and South Carolina exempts up to $15,000 in taxable income for that age group. Some retirement destinations may have lower property taxes as well, although rates can vary widely within states.

All that can add up to significant savings, particularly for affluent retirees, according to O’Neill. “If you’ve got a higher income in later life, you want to pay less taxes, so you may decide to move for that reason,” she says.

3. Getting close to family

According to a June 2022 report from the Transamerica Center for Retirement Studies, 53 percent of workers view spending more time with family and friends is a major retirement goal.

For many, that means moving to where their loved ones are. In the Nationwide survey, more than one in five investors planning to relocate in retirement listed being closer to family among their top three reasons.

“Most of my clients have family spread around the country, and with new time and freedom [they] are excited about getting more involved in everyday life events their careers pulled them from before retirement,” Russell says.  

Being able to help out with the grandkids is a particularly compelling motivation. A recent study by University of Wisconsin researchers found that newly retired grandparents are twice as likely to move to be close to a grandchild as those who are not yet retired.

4. Better weather

If you’ve been shoveling snow for decades, it’s tempting to opt for a warm, sunny retirement home with milder winters. Not surprisingly, a new analysis of U.S. Census data by personal finance website SmartAsset found that five Sun Belt states — in order, Florida, Arizona, South Carolina, North Carolina and Tennessee — had the biggest influx of people 60 and older. 

But Richard Haiduck, who interviewed relocated retirees for his 2020 book Shifting Gears: 50 Baby Boomers Share Their Meaningful Journeys in Retirement, cautions that sunshine shouldn’t be the only factor in a move.

“Vacation spots fell off the list once people realized that they might be far from family, might be in a tourist location rather than a hometown and might not have access to those activities of greatest interest,” he says. “So, the appeal of a climate became just one of the final criteria.”

5. A lifestyle reboot

Starting fresh in a new locale can help you reevaluate your life and make changes, or simply jettison parts of your existence that you don’t really need and keep what makes you happy. 

In Smith’s case, he can still write books and magazine essays, without the expense of an office-suitable wardrobe. And instead of battling traffic, he’s able to spend summer mornings sipping coffee and watching the resident geese on his pond shepherd their goslings to keep them safe from the neighborhood fox.

There’s also the opportunity to experience life in a small town where a friendly manner is more important than expressing views on social media — stuff that, in his new life, just doesn’t matter. “We’re immersed in everyday life here, seeing people at the grocery store, or helping build their houses,” he says. “And it’s far less stressful.”