Retirement: Moving to a lower cost area

One Secret to Clocking Out May Be a Moving Van

Excerpt:

But for those who long to retire sooner rather than later, there is a way out of workaday life that can be leveraged to great advantage — moving to a lower-cost area.

This route to an earlier retirement is not for everyone, and it favors people who live in high-cost areas and have considerable equity in their homes to tap.

Beyond that, deciding to sell a longtime home filled with memories can be emotionally wrenching. Leaving an area with a strong network of friends, neighbors, family and service providers is not easy. The sheer difficulty of selling a house, buying a new one and moving can be stressful — and may not even be possible in this market.

But when the stars align, moving as part of a retirement plan can be an adventure that results in a richer life, both emotionally and financially.

Planning ahead is crucial to this strategy, and right now it also allows time for the housing market to improve. “Two years is not too long to be thinking about where you want to go,” said Bert Sperling, founder and president of the Sperling’s BestPlaces Web site.

Differences between high-cost and low-cost (but still attractive) areas can be steep. According to Bankrate.com, which offers a free cost-of-living calculator, the average price of a home in the San Francisco area is $813,000; in Boston it is $419,000; and in Chicago it is $361,000. Compare these prices with Asheville, N.C., at $284,000; Lexington, Ky., at $259,000; and Boise, Idaho, at $254,000. Move to a smaller home in one of these areas and the price difference is even more substantial.

Most retirement research is tedious, but researching where you may want to live next can actually be fun. Narrow your search to several locations, and go on vacation to those spots to see if you like them, Mr. Sperling advised. Talk to the locals to find out what life is like there and which neighborhoods would suit you. When you get back, check out the local papers online and make sure that the area is not dealing with severe budget cutbacks or a high crime rate, he said.

Keep in mind that you can rent in a new area — and perhaps rent out the house you now own — before you commit, Mr. Sperling said.

Most people who move to a smaller town want to make sure they are close to a major airport, said Fred Brock, author of “Retire on Less Than You Think” (and a former editor at The New York Times). Given the increasing likelihood of health problems, they also want to be near high-quality medical care. “You don’t want to move to a place that is beautiful and cheap but the nearest hospital is 100 miles away,” he said

Mr. Brock, by the way, is retired at 66 and lives in Green Valley, Ariz., near Tucson, where housing, property taxes and car insurance are all much less expensive than when he lived in Montclair, N.J., seven years ago.

Look at the property taxes, sales tax and income tax in your prospective new area, and be aware that some states tax pension withdrawals while others don’t. The Web site retirementliving.com is useful for making tax comparisons.

Comment: We are still almost 5 years out (to "re-wirement" (as we call it)). This is our basic strategy. We hope to: Move warmer; downsize; live in a state with lower taxes (perhaps Tennessee); and build a home that is handicap accessible.