By Christine de Moriarty, next avenue
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When it comes to retiring, people often get caught up in illusion rather than reality. Before making the commitment to move, understand that this change is a good mix of dreams, practicalities, and your vision.
When you consider all the factors beyond weather, amenities, and proximity to friends, you can find your perfect mix.
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With an ocean of options, how do you decide? Consider Yours sight and Yours wants and needs, because any “best places to retireLists can consider your personal likes and dislikes. Also, there are practical and financial considerations to recognize.
Here are three dreams that frustrate many newly minted retirees:
1. Be close to your kids
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you finally have Time for family time. You want to be available to your kids and more involved in their lives. Best of all, if you’re lucky enough to have grandchildren, you aspire to get to know them better, even teaching them the things your grandparents taught you.
Before you put up a “for sale” sign and look for a place nearby, there are some valuable conversations you need to have with your kids. Since your kids are dealing with a full schedule, plan time for serious conversations. This important conversation is so you can understand their life a little more and learn what works for them.
There are some conversation starters: How do your child and his family fit you into his life? Do they want you more often? Are they worried about the time and energy they have to be with you? Or finally taking care of you? You may be healthy now, but they may have this kind of problem in their mind.
Then, ask yourself whether you like the area so much that you would move there if your child weren’t there. Is Community a Good Fit? Season? Available Activities?
If you move, remember that your adult children had routines and schedules before you got there. When you arrive, make life without them as much as with them. Retirees who want to retire and focus only on family often feel lost 10 years down the road when the little grandchildren they saw everyday turn into teenagers who choose to be with friends. If they eventually move away for college, you’ll see them even less.
Be prepared to change, just in case. A job transfer, career change, corporate merger or any number of other life-disrupting events could prompt your child’s family to relocate in the years to come. Do you feel you had no choice but to follow them again? Or can you stay because you’ve built a community that will let you confidently live on your own?
A couple bought a condominium in Arizona one year into anticipation of their retirement and enjoyed vacation time spent with their children and grandchildren before they retired. Three months after he retired and relocated, his son-in-law’s company transferred him to California. The couple was left alone and contemplating the possible need for another move.
2. Go to a Favorite Vacation Area
Holidays are freedom from everyday life. It’s easy to dream of retiring in your favorite vacation spot. Before visiting a place, stay longer than usual. Rent a home for a month, a season or a year. Explore the area as a local.
Don’t forget the seasons. Spend a winter by the lake or a summer at a ski resort before you commit to buying.
Just because you love to vacation somewhere, doesn’t mean it’s the ideal retirement home location. Many people walk by twice because they thought they knew what they needed. And moving is expensive. The average moving company bill for a 1,200-mile move is $4,000.
A couple made a quick decision to sell their house without thinking twice. As sales went through, they moved to Florida and bought a condominium in an area where they spent their annual vacations.
They found that they bought in a rental area rather than a residential area, so it was difficult to make friends and some services were limited. A year later, they moved to another area, with moving costs and realtor fees rising again.
Emotional and personal reasons for moving are important, but costs such as taxes are also important. If you change residence to a new state, consider the cost of new car registration and legal fees for an updated estate plan. Find out the real costs in the area you want to move to so you can avoid surprises.
3. Go to the border and leave the country
The grass always looks greener… and that applies whether you’re looking to Canada, Mexico, Europe or beyond. In the excitement of retiring, many people only consider the big picture of looking good rather than the practicality of an international move.
If you’re moving for cultural immersion, understand that there are many places that appeal to you and other Americans as well. Good news: You can connect with people who share your experiences. But living together, you’re less likely to be considered a local than an assimilated foreigner.
There is the legal side of residence. Understanding how long you can stay in a country is essential, so check out the visa process. A country may or may not make it easy for US citizens to immigrate. For example, Canada recently prohibited foreign nationals from buying property for two years.
Cost of living is a fair draw to living outside the United States, yet there are other financial considerations. “Retirement income will be 100% taxable by the US and probably also in any country you move to,” says Malissa Marshall, a certified financial planner in Bristol, Vermont.
“The tax position may be higher than anticipated, offsetting the lower cost of living,” she stresses.
You may want to hire a tax professional in the country you are considering and in the US before finalizing any plans. An international expert can explain the reality in less time.
Consider health care abroad
Then, there’s the issue of health care and insurance, especially if you don’t pay Medicare premiums while living abroad. If you ever return to the US, your Medicare insurance premiums will permanently high, Medicare charges a premium penalty for the months you didn’t pay but were eligible, even if you were covered abroad.
Finally, due to the reality of living through a pandemic, we are all beginning to understand living outside the country in a whole new way. Would it be okay for you if you couldn’t cross the border to go home to be with loved ones, or vice versa?
If you keep the above in mind, the facts and fiction of retirement space will become clear. Be prepared to adjust dreams and make compromises as you consider each possibility. Knowing the true cost of your options will make your retirement more like the fairy tale you want.