Where you plan to live when you retire impacts a lot more than just the view you have beyond your kicked-up feet when relaxing. If you haven’t given some serious thought to this topic, we’re here to say: you should. Where you intend to live after you retire can significantly impact your finances if you do not plan accordingly. It is a common mistake to think it’s ‘too early’ to begin thinking in these terms, but it absolutely should be factored into financial planning from the earliest stages. Since the cost of living in some locations is higher than others, you may end up eating away your savings faster if your location changes to a more expensive city.
When you begin your financial planning, think about how you want to live. Many people say that they want to live comfortably. But what does that mean for you specifically? Living comfortably is too broad. You need to establish clear lines when you define your retirement location vision. These lines include the location, type of house or apartment, hobbies and recreation, and travel. If you set specific expectations, you can plan for them.
Creating your retirement goals comes from developing a bigger picture of how you see yourself living during your retirement years. It would be best if you asked yourself questions like:
- Do I want to stay in my current house?
- Do I want to move to a new city?
- Do I want to relocate closer to the ocean?
- What about the mountains?
- Am I looking for a retirement community?
- What amenities are important to me?
- Do I need a smaller house?
- Can I live in an apartment?
- Will I still want to take care of a home and the maintenance?
- Do I want to stay near family?
- Will I need transportation?
Once you have done some digging on how you see yourself and the way you want to live during retirement, you can begin to plan appropriately.
Location does matter when it comes to living. Some areas are quite a bit more expensive than others, and you need to be prepared to handle the additional costs. As you go through the process of determining where you will live in retirement, you also need to ask yourself when you plan on moving. If you think you may move at a certain age, you should estimate the number of years you will live in the new city. So for example, you are planning on moving to San Francisco because you love the bay area and you want to move there around age 67. If you estimate the average age to around 87, you will live in the San Francisco area for 20 years or more.
The next question you need to ask yourself is, will my retirement savings be able to handle living in a more expensive city for those 20 years? You might be able to support yourself with your current savings plan, but then again, you might not. But by understanding the cost of where you want to go and approximating how long you may live there; you can adjust your financial savings plan earlier to account for your retirement goal.
Ten Most Expensive Cities for Retirees
According to MarketWatch, the most expensive city for a retiree to live in is San Francisco. The annual cost for you to live in San Francisco is over $151,000. The other cities in the top ten are no surprise. The other most expensive cities, in no particular order, include:
- New York City, New York
- Honolulu, Hawaii
- San Jose, California
- Boston, Massachusetts
- Seattle, Washington
- Washington, DC
- Oakland, California
- Long Beach, California
- Los Angeles, California
Many of these cities are located near the ocean or other bodies of water. This makes the location more desirable not only for your residence but also for tourism.
Ten Cities Retirees Can Afford
MarketWatch also created a listing for the most affordable cities for retirees. These cities have a lower median cost for a home than the other cities at around $100,000. The fact that the houses are so affordable makes economic sense when you are living on a budget. The top affordable city on the list is Cleveland, Ohio, with annual spending of just over $38,000. The other cities that made the list include:
- Toledo, Ohio
- Buffalo, New York
- Fort Wayne, Indiana
- Memphis, Tennessee
- Lubbock, Texas
- Wichita, Kansas
- El Paso, Texas
- Winston-Salem, North Carolina
- Indianapolis, Indiana
Financial Planning in Reverse
Knowing how and where you want to live during retirement can help you today. Understanding potential costs will allow you to adjust your financial plans to make sure you can do everything that you want during your retirement years – and in the exact place you’d like to be.
For more information on financial planning for retirement, visit Signature Wealth. A financial planner can get you on the right path to make all your goals and dreams come true.