Cost of Living, Retirement, and Smart Planning
Geography is often considered a factor in shaping destiny, and when it comes to your finances, where you live can have a significant impact. Your location can influence your cost of living, career opportunities, social life, and long-term financial outlook. Whether you're moving for a new job, retirement, or just a change of scenery, it's crucial to weigh the financial trade-offs.
The Cost of Living Factor
Living expenses vary widely across the U.S. According to the Council for Community and Economic Research (CCER). The cost of living in big cities like Manhattan and San Francisco is much higher than the national average. In contrast, smaller cities like Muskogee, Oklahoma, and Decatur, Illinois, have a much lower cost of living. These differences impact everything from housing and healthcare to taxes and everyday expenses.
Relocating for Retirement
A change in location can dramatically affect your retirement savings and financial security. Consider a scenario where a couple, Henry and Linda, live in San Francisco and are debating a move to Kalamazoo, Michigan, where the cost of living is lower. Working with a financial advisor, they evaluate the impact of this decision on their long-term financial outlook.
Key Considerations:
Current Financial Standing – Their annual income, savings, and expenses before retirement.
Housing & Mortgage – Selling a high-value home in an expensive city to buy a home outright in a lower-cost area.
Expense Adjustments – Reduced housing costs and taxes but potential increases in travel or leisure spending.
Market Scenarios – Financial projections based on different economic conditions.
By modeling different scenarios, their advisor shows them that moving could boost their financial security. It could also help increase the legacy they leave for their family.
The Power of Planning
Choosing where to live in retirement is not only about cost. It also involves lifestyle, community, and long-term financial stability. Financial planning, whether with a professional or online tools, can show the trade-offs. It can also give you confidence in your choices. Before making a move, it's wise to assess how location will affect your budget, taxes, and investment portfolio over time.
Where you live matters—make sure it aligns with both your financial and personal goals.
Sources:
https://www.fidelity.com/learning-center/personal-finance/retirement/where-to-retire
Disclosure:
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.
