If you missed it, Kiplinger posted an intriguing article this week discussing the trend of retirees to “stay put” rather than pack their bags and beat snowbird out of town. After all, retirement means an opportunity to start your life anew, whether in Sarasota or San Diego. However, as Kiplinger’s Chris Farrell noted, not relocating is becoming the norm.
Farrell began his article by saying, “Americans of all ages – including the elderly – are relocating less following the steep decline in home values after the housing bubble burst in 2006.” Only 11.6% of U.S. residents picked up and moved between 2010 and 2011, which is apparently the lowest level in more than 60 years. Think about that. Let it sink in for a second.
If it’s nearly impossible to sell your home for what you might perceive to be a fair deal – after all, it is a buyer’s market right now – then what’s your motivation to leave? Or better yet, what’s your financial motivation to move? Are the warm beaches of Tampa really that much of an allure? Not if you can’t afford to carry two houses.
Farrell added, “The number of older Americans continues to grow, but they are increasingly ‘aging in place.’ For instance, Georgia’s senior population – those age 65 and older – will swell by 40% between 2010 and 2020.” That’s pretty incredible if you think about it. Whether Georgia’s population is indicative of the rest of the United States remains to be seen, but the aforementioned trend is pretty mind-blowing.
Moving for retirement might also require a detachment from work. “You may be ready to say goodbye to full-time employment,” Farrell wrote. “But keeping a part-time job or a less stressful full-time position would allow you to delay tapping your retirement savings and harness the power of compound interest for a few more years. More important, you could wait to file for Social Security.” Kiplinger added that Social Security benefits actually jump by 8% between ages 66 and 70.
Some Retirement Plans to Think About
Over that four-year period, it may be to your economic benefit to stay put rather than move and risk not finding work. Remember, as Farrell writes, it’s much easier to find work in your hometown rather than venturing elsewhere. We’ve all heard horror stories of married couples forced to move so one partner can work. However, when they reach a new city, the other partner has trouble finding employment and a downward spiral ensues. Imagine that nightmare with a potential 8% gain at stake.
The article bluntly states, “It’s always possible to create new networks, but that takes time – a scarce commodity among the aged. From a ‘work longer’ perspective, it often pays to stay put and tap your resources.” Maybe you wait until you’re 68 to tap into Social Security, but every extra year you delay doing so seems to result in major rewards.
One poster in the comments section of the article cautioned readers to take Kiplinger’s advice with a grain of salt. After all, with each state having vastly different tax structures, it may make sense financially to relocate: “The tax and other financial penalties of retired living in NJ are overwhelming… Take a hit on the selling price of your NJ home and you are likely to make all or part of it up on the savings on your FL, AZ, or NV home.”
Remember, Las Vegas has one of the most depressed housing markets in the United States, meaning that anyone who relocates to the Nevada desert could turn a profit on real estate should the market right itself (key word: should).
Other posters reminded readers that life is short. Therefore, you should spend your limited time on Earth doing what you enjoy most: “I’m 55 and I say retire as soon as you can, you never know what your health will be in 5 or 10 years. I say move to somewhere else, experience a new adventure. Move to Arizona or Ecuador and take a chance of a new adventure. Take Social Security as soon as you can.”
So does it pay to relocate when you retire? The debate rages on.