When (and if!) you retire, do you want to move back to your hometown? Or live in your favorite vacation spot? Or move where the taxes are cheapest? Or stay put?
Some factors to consider now:
Taxes. You won't pay individual income tax in Alaska, Wyoming, Washington, Texas, Nevada, South Dakota, or Florida. Illinois recently increased its rate from 3 to 5 percent. Check out the local rules on how states treat income from retirement plans, such as 401k's, too. To easily find out the tax burden in your dream place, just print out the state's 1040 form, says Jared Hollands, senior pension consultant with the Benefits Consulting Group in Chicago. Don't fixate on the state rate, though. "It's something I would put as a piece of the puzzle," says Hollands. Remember that you pay far more in taxes to the federal government than to the state government.
Scenery. My friend Kelly Zehfuss dreams about moving to Aspen – "except the average home price is now over $10 million!" she says. "It's outdoor paradise." She also likes New Zealand. "'Lord of the Rings' is what every place looks like," she says. Retirement is a long way off, but she knows a gorgeous, outdoorsy spot is a priority.
Friends and family. Many people want to live near friends or family (which can include siblings, not just offspring). And that can be good. "You don't want to position yourself to become isolated," says Beverly Hills psychotherapist Fran Walfish, author of The Self-Aware Parent. You may also want to think about relocating near whichever one of your kids would be most likely to pitch in if you needed help, says Walfish. "You decide, God forbid if anything bad were to happen, some medical issue, who would be the child to most likely step up and chip in and care for you. Who is the one who perhaps doesn't have an ambition-driven career, who maybe has time and a lifestyle to take you to doctors appointments?" Be practical. "It has to be not just who you want but who you think will want to help you," she says. Don't assume your kids want you living near or with them.
Time frame. My friend Natalie Stacker says she doesn't think her husband wants to retire until he is 99! So she doesn't plan to put up a "for sale" sign any time soon. (But when and if he ever does stop working, she would like to live near an airport in a perfect-weather place like California – but without such high taxes.)
Status quo. Women often worry that moving, especially to a smaller place, will lessen the odds that their children, grandchildren, and future grandchildren will visit them, says Nashua, N.H., psychologist Carl Hindy, co-author of If This Is Love, Why Do I Feel So Insecure? "I've heard many times the fear of selling the house that they're in – that somehow that's a magnet for the kids to come home." Husbands often think more along the lines of, "Do we really need all this room?" he says. Some couples do realize that their existing house is the perfect retirement home.
Hopes and dreams. Talk to your partner about both of your visions for the future, says Hindy. "I'm worried about couples that don't. Are they afraid that the other person is going to disapprove of the dream?" Remember that indulging in it connects the two of you. "It pulls you more happily to the future and helps you get through the stresses you're dealing with right now," says Hindy. "You see the light at the end of the tunnel, and it's a pleasant one. You need to enjoy the dream." His theme: "The process is at least as important as the destination."
Travel and visit. Whether you're single or married, see different places and compare them. Couples should go together. "You're enjoying the trips, you're spending the time together, you're learning about what's important to you and what isn't," says Hindy. "It's a sharing thing." My friend Susan Eichner and her husband ruled out places with natural disasters and too much congestion. They focused on beautiful places with well-educated populations and a nearby airport. They're not retiring any time soon, but they did pick their dream spot: Jackson Hole.
As for me, I'd ideally like to live happily ever after with my husband in a place near a Dairy Queen, a bike path, water, and an airport. And I'd like New York Times home delivery. Hmm. Sounds like my current town.
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