Where you choose to live in retirement plays a significant role in shaping your finances, lifestyle, and overall well-being.
Relocating can offer opportunities for lower costs, new experiences, or a better quality of life. However, it’s essential to evaluate the financial and lifestyle trade-offs carefully before making such a significant decision.
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Whether you’re considering a move for affordability, better amenities, or proximity to family, understanding how geography impacts your finances will help you make an informed choice.
Understanding the Financial Impact of Location
Even within the same state, the cost of living can vary significantly between cities, influencing your financial situation and lifestyle in retirement. For example, let’s take a closer look at two cities in the Dallas-Fort Worth metro area: Plano and Garland.
Plano, TX offers excellent amenities, high household incomes, and a bustling suburban lifestyle. But it comes with a higher cost of living, which grew faster than anywhere else in the country in 2023.
- 17% higher than the national average and 26% higher than the Texas state average.
- Median home prices are about $550,000, and average monthly rent is about $1,750 (1) — roughly 33% above the national average. (2)
- Monthly energy bills are about $250, 15% above the national average. (3)
- While food is slightly cheaper, other goods and services are about 20% higher than the national average.
With a median household income of just under $100,000, significantly above the state average, Plano appeals to those who can afford a more upscale lifestyle. However, its higher costs may stretch a retirement budget, leaving less room for discretionary spending or savings growth.
Just 25 minutes away, Garland offers a more affordable option while maintaining access to many of the same regional amenities:
- Median home prices are just over $300,000, and average monthly rent is about $1,200 — substantially lower than Plano. (4)
- Garland’s overall expenses, including utilities and daily living costs, are much more budget-friendly.
- Known for its parks, community events, and affordability, Garland provides a high quality of life without the premium price tag.
The Takeaway?
These two cities illustrate the substantial differences in cost of living that can exist even within the same metro area. Choosing a location like Garland over Plano could significantly reduce housing and utility expenses, freeing up funds for travel, hobbies, or healthcare.
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Whether you’re looking to maximize your retirement income or simply live more comfortably within your means, understanding these local cost variations is essential to making an informed decision.
The Trade-Offs of Staying vs. Moving
If you’re deciding whether to stay in your current location or relocate, you’ll need to weigh both financial and lifestyle implications. Each choice has its own advantages and challenges.
Staying in a High-Cost Area
Staying in a high-cost area means your overall expenses, including housing and taxes, are likely to remain high, which can limit your ability to grow your savings. On the positive side, staying offers continuity in your lifestyle, proximity to your social circle, and the comfort of familiar amenities. However, the higher cost of living could reduce your ability to leave a substantial financial legacy for your loved ones.
Relocating to a Lower-Cost Area
- Relocation can lower housing, property taxes, and everyday costs, freeing up funds for travel, hobbies, or unexpected medical bills.
- Selling a home in a high-cost area could allow you to purchase a new home outright in a lower-cost region.
- Lower expenses mean more money can remain invested, growing over time and improving your ability to leave a legacy.
Moving to a lower-cost area can stretch your retirement budget significantly, but it’s important to ensure the new location meets your social and personal needs as well.
Key Considerations Before You Decide
When evaluating whether to move, take a comprehensive approach that considers both the financial and lifestyle factors of relocation:
1. Cost of Living
Research how living expenses differ in potential destinations, including housing, groceries, healthcare, and utilities.
2. Healthcare Accessibility
As you age, healthcare becomes increasingly important. Assess the availability and quality of local healthcare providers, hospitals, and specialists. Make sure your insurance or Medicare will be accepted in your chosen location.
3. Taxes
Taxes can vary significantly by state and affect your overall budget. Key taxes to consider include:
- Some states, like Florida, have no income tax, while others may tax Social Security or pensions.
- Evaluate the property tax rates and exemptions for retirees in your target area.
- High sales taxes can add up quickly on everyday purchases.
Understanding the tax landscape is crucial for protecting your retirement income.
4. Lifestyle and Community
Relocation isn’t just about cost—it’s about finding a place that aligns with your retirement goals. Consider factors such as:
- Proximity to family and friends.
- Opportunities for social engagement, like clubs or volunteer work.
- Recreational activities, such as golf courses, parks, or hiking trails.
Does the new location support the lifestyle you want to maintain?
5. Housing Needs
When deciding on housing in retirement, consider whether buying or renting aligns better with your budget and long-term plans.
Downsizing to a smaller, more manageable home can help reduce costs and simplify maintenance. Moving into a retirement community might provide valuable amenities and easy access to healthcare. Alternatively, renting offers flexibility, especially if you’re not ready to commit to a permanent location.
The Benefits of Scenario Planning
Scenario planning can help you visualize how your decisions will play out over the long term.
For example:
- Staying in a high-cost area might require you to adjust your spending or lifestyle during challenging market conditions.
- Moving to a lower-cost area could improve your chances of maintaining your lifestyle and increasing your financial legacy, even in less favorable markets.
Working with a financial professional can provide deeper insights into these trade-offs, ensuring your plan aligns with your goals.
Whether you choose to stay or move, the right decision starts with understanding your financial situation, researching your options, and planning accordingly.
