Baby boomers who have been very proactive in their planning for their retirement years often find themselves debating the pros and cons of making a move, usually to warmer places such as Arizona and California, while others choose states that have milder climates but lower taxes, such as Texas or Florida. Relocation makes sense for a lot of people, but it is crucial to make intelligent choices prior to uprooting your whole life.
There are a number of reasons why people choose to move after they retire, many of which are related to finances or to be nearer to family or to be somewhere warmer. Retirees can also move somewhere where they avoid problems such as yard care, having to climb up and down stairs, and snow removal. Retirees can also often increase their amount of disposable income by relocating to a state that has a lower personal income tax rate. Taxes are a crucial variable that need to be addressed. Certain states will only tax a portion of retirement benefits, while others do not take from retirement income at all.
Inheritance tax also varies from state to state, so retirees with large estates need to be aware of the possible ‘death tax’ state burden. Another factor that should be considered when making a move to another state – and not just by retirees – is the crime rate there. Access to medical care is also a very important consideration, given that as we get older our need for such care tends to increase.