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Moving in Retirement: 4 Reasons to Do It and One Reason Not To

October 25, 2019

When you find yourself on the cusp of retirement, you have a lot of decisions to make. From which retirement funds to tap first and when to take Social Security to how not to drive your spouse crazy there are a lot of things to think about.

Then there is the other piece of the puzzle: should you move when you retire or stay where you are? Should you set sail for a new location or look for a smaller home in the same town? The results of these decisions could have long-lasting consequences, and you do not want to get it wrong. 

There are many good reasons to move in retirement, but there are also arguments for staying put. Here are four reasons moving makes sense, and one reason you might want to stay where you are.

#1 You Could Minimize Your Property Taxes

When you live in a municipality with high property taxes, you never truly own your home. Even once the mortgage has been paid, you pay a yearly stipend to the government, and if you fail to do so your house goes on the auction block.

The size of these property tax bills varies widely, from several hundred dollars on average to more than ten thousand. If you are stuck in a high property tax location, picking up and moving could save you a ton of money over a thirty or forty-year retirement.

#2 Moving to a Low or No Tax State Could Preserve Your Retirement Funds

Taxes can really eat into your retirement, especially if you live in a state that taxes the proceeds of IRAs, 401(k)s and other retirement funds. If you find yourself spending thousands of dollars a year in state and local taxes, the money you saved so diligently throughout your working years may not last as long as you hoped.

 Moving to a low tax state, or better yet a state that does not tax retirement proceeds at all, you could save a lot of money. Those savings could really add up over a thirty-year retirement, preserving your capital and reducing the odds of running out of cash down the road.

#3 You Will Spend Less Time Cleaning and More Time Having Fun

No one retires to spend more time cleaning the house, yet that is the reality for many retirees. If you would rather spend your time traveling and having a good time than scrubbing the toilet and vacuuming the floors, it may be time to head for a smaller home.

Moving to a smaller and more manageable home will give you more time for the better things in life, and that alone can be a reason to relocate. If you hate cleaning, moving to a smaller home in retirement could be a real no brainer.

#4 You May Not Need All That Space

When you were working and raising a family, trading a higher mortgage payment for more space made sense. But now that the kids are grown and gone and your regular paycheck is a thing of the past, that tradeoff is probably looking less attractive.

Now that you are retired, you may no longer need all that space, so trading down could give you additional flexibility and freedom. If you sell your home and buy a smaller and less expensive one, you can use the extra cash to bulk up your retirement funds or treat yourself to a nice vacation.

So Why Stay?

As you can see, there are many reasons to downsize your property and move during retirement. Even so, the decision is far from a no brainer. Before you put your current home on the market and start looking for a smaller one in a lower tax state, you need to think carefully.

One of the biggest drawbacks of moving in retirement is the loss of your support structure. Over the years, you have built up a network of friends and neighbors you can rely on for everything from house sitting to small home repairs. If you move, you will not have that support structure, and it could take months or years to rebuild such a network.

If you want to travel and see the world, finding someone you trust to watch the home and take care of your pets could be a challenge. So before you move, you need to weigh those pros and cons carefully. Moving in retirement can make financial and emotional sense, but only if you are prepared for the trade-off.

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