What’s your dream retirement destination? Whether you envision staying close to family and friends, downsizing to a condo in the city or perhaps even retiring abroad, you need to think about what you can do today to help you get to your ideal retirement destination. A big part of the decision will involve your budget, but that’s not the only factor. When deciding where to live you have to consider what is important to you as well as how you can get the most out of your retirement dollars.
Generally, there are three big issues most people need to consider before choosing a place to retire.
Proximity to Family and Friends:
Where do your children, grandchildren, other relatives and friends live? Decide how important it is for you to be near or far from them. If you will have plenty of money for traveling in retirement, this may not be as big of a factor. If not, it might be important to consider living near your loved ones. You may also want to consider future care giving needs (both for you and for your loved ones). Living far from friends and family means having to turn to others when either you or they need care giving.
Climate:
What is your ideal climate? As we age, we may find it harder to shovel snow in the winter or battle the blazing heat of August. Consider where you’ll be most comfortable. Don’t forget to take lifestyle into account as well. If you enjoy outdoor activities, climate may be a bigger factor than if you prefer to spend your time attending arts and cultural events, for example.
Your Budget:
Your budget is the biggest factor in deciding where to retire. As a retiree, you’ll be living on a fixed income. Unfortunately, you may not be able to afford your dream home in your ideal location. As you look at different retirement destinations, don’t forget to think about insurance and taxes, two very important factors to consider in determining where you can afford to live.
You’ll need to look carefully at what your expenses will be in retirement. Keep in mind how much you will be paying for fixed expenses (like utilities, food and healthcare) as well as discretionary expenses (like entertainment and travel). Use your current budget to help you determine where your money goes. Finding a place where the cost of living is in line with your income is always a wise choice.
Plan Ahead to Make the Most of Your Retirement
You have a lot to think about before choosing a place to retire. Above all, you need to make the decision that is right for you and your family. Consider all the relevant personal and monetary factors to determine the best place for you to live when you retire. An experienced financial planner can walk you through this process and work with you to create a retirement plan that helps you get to where you want to be.
By Chris Cooper, CFP®
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