Places to Retire: 6 Money-Saving Strategies

cheerful senior couple standing ...

By Joe Udo

Housing is typically the biggest expense in a household budget. It would be nice to reduce that major expense when you're retired. Once you are near retirement, you might want to consider downsizing or relocating to somewhere more affordable. There are many choices because you won't be tied down to a location near your (former) employer.

Downsize. For most retirees, the easiest way to reduce housing costs is to downsize to a smaller home. This way, you won't be far from your local friends and family members. Retirement is already a big adjustment, and it will be easier with your support network close by. With the kids gone, most retirees won't need as much space anymore. A smaller home will also help you save money on utilities, maintenance and even vacuuming time.

Relocate to a cheaper town. Many of us choose to live in a location that has good schools, is close to work or has conveniences like shopping. There is likely to be a more affordable option within a 30 minute drive from where you currently live. The area might be less desirable for families with kids or a little further out from an employment center. However, this type of location is a good option if you want to be near your friends and save on housing costs, too.

Move to a more tax-friendly state. Some places are more affordable for retirees than others. Some states have high state income tax, sales tax and property tax, and low inheritance tax thresholds. If you're not tied down to a state, then you should take a look at state tax rates for retirees. Moving to a lower tax state could help increase your spending power by quite a bit.

Move to a more affordable country. Who doesn't dream of traveling more when working in a stuffy office all day? Once you are retired, relocating to a warmer and more affordable country becomes a real possibility for adventurous retirees. You can live a more comfortable lifestyle on a similar budget in countries like Ecuador and Nicaragua. A dollar goes much further there than in the U.S. Also, retiring in another country doesn't have to be permanent. You can always come back to the U.S. after a few years or just move on to a different country. Why not see the world a little while you can?

Become a nomad with a recreational vehicle. If you don't mind living in a smaller space, then a recreational vehicle retirement might be a good fit. You can travel at your own pace and even pick up some part-time work. Many RV parks hire RVers to handle reservations and other tasks. You can also volunteer to be a park host and enjoy a free site and utilities in exchange for a few hours of work. One side benefit of being a nomad is the ability to choose any home state. This is an easy way to avoid states with high taxes on retirees.

Retire part time in several places. One attractive choice is to live part time overseas and part time in the U.S. Living overseas for six months and then renting or RVing for six months is a great way to see the world. You can see your family and friends at the best time of the year and enjoy your travels when it's snowing in your home town.

Once you retire, you can decide whether or not you will continue to live where you currently are. Retirement opens up possibilities, especially if you wish to relocate. With careful planning, you can stretch your income further during your retirement years while reducing your housing expenses.

Joe Udo blogs at Retire By 40 where he writes about passive income, frugal living, retirement investing and the challenges of early retirement. He recently left his corporate job to be a stay-at-home dad and blogger and is having the time of his life.

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Places to Retire: 6 Money-Saving Strategies

With a low personal income tax rate that tops out at 4.54 percent, and exempt Social Security benefits, Arizona is a great place to retire, according to Kiplinger's.

Homeowners age 70 and up can apply to defer their property taxes if they meet certain residency requirements. That's extra money that can go toward hiking equipment.

This two-bedroom end unit townhome on a corner lot in Prescott features a great room with fireplace, a kitchen with pass-thru to the dining area. There is two car garage and a bonus side-entry golf-cart garage. It's priced at $249.900.

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With no state or local sales tax, Delaware can be a haven for retirees. Taxpayers age 60 and older can exclude $12,500 of investment and qualified pension income from state income taxes, reports Kiplinger. Whereas older homeowners may qualify for a property tax credit, up to $500.

Located close to the beach, this 1,350-square-foot condo with garage is in a gated community in Rehoboth Beach. The home, listed at $334,900, has access to a bike path into town for dining and shopping and the boardwalk. The community features a pool with wading area and a hot tub.

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There's no inheritance tax or state tax in Florida and retirement income is not taxed. Some 65 and older long-time residents of certain Florida cities and counties can receive an extra homestead exemption up to $50,000 and/or an exemption equal to the assessed value of the property, as long as the real estate has a fair market value of less than $250,000, reports Kiplinger's.

Walton Beach is a perfect place to retire. This luxury Gulfside condo with two bedrooms plus a bunk room comes furnished and is listed at $335,000. The Destin West community has a heated swimming pool, a "lazy river" pool, and large heated hot tub. There is also an elevator assisted sky bridge. The listing boasts that it is "seaside luxury with a toes in the sand location."

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Up to $35,000 of most types of retirement income, as well as social security income, are exempt from taxes in Georgia, unless you're older than 65, in which case the 2013 exemption is $65,000 per taxpayer, reports Kiplinger's.

This rustic lodge-style townhome in Peachtree City, priced at $169,900 boasts a "panaromic view of the lake and babbling creek." The master bedroom has sliding door access to a private deck, where you can get one of the best views of the fireworks in Peachtree City.

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Social Security, military, civil-service, and state and local government pensions are exempt from Louisiana's state income taxes. People 65 or older may exclude up to $6,000 of annual retirement income from their taxable income, reports Kiplinger's. Homeowners who are 65 or older with an adjusted gross income of less than $65,891 in 2013 can benefit from freezing the assessed value of their homestead for as long as the applicant owns and resides in the home.  

This three-bedroom townhome in Shreveport sits right on the lake. Built in 1987, it has floor-to-ceilings windows with amazing views. Jessica Simpson, Nicholas Cage, and Ed Harris are just some of the celebrities who reportedly have stayed in this lakefront home, listed at $369,000.

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Mississippi is home to some of the lowest property taxes in the nation, according to Kiplinger's. Residential property is taxed at 10 percent of its assessed value, and seniors qualify for a homestead exemption on the first $75,000 of value. Also, prescription drugs, residential utilities, motor fuel, and health care services are tax-exempt. In addition, qualified retirement income is exempt from state income tax.

This two-bedroom, two-bath home listed at $135,000 sits on its own 4.9-acre retreat in the town of Picayune, which is one of 20 "Certified Retirement Cities." To qualify, the town had to pass through a three-month screening process.

Picayune is surrounded by lakes, ponds, rivers and woodlands. New Orleans is just 40 miles away and saltwater fishing in the Gulf of Mexico is less than an hour's drive.

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Although there are no property tax breaks for seniors in Nevada, the good news is that there's no state income tax, no inheritance tax and no estate tax.

With a master suite on the main level, a walk-in closet, and vaulted ceilings, this 1,278-square-foot townhome -- priced at $125,000 -- in Carson City also has a laundry area and office space inside the garage. 

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For homeowners 65 and older who were legal residents for at least a full 12 months of the tax year, South Carolina's homestead exemption allows the first $50,000 of a property's fair market value to be exempt from local property taxes, reports Kiplinger. Senior homeowners are also exempt from school taxes on their properties.

This 2002-built condo on Golfview Lane in Summerville is on the 10th Fairway of the Legend Golf Course. With a screened porch and crown molding, the listing says this unit has only been occupied about six months of the year since it was purchased by the last owners. It's listed at $139,000.

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Wyoming, one of the least populous states, has no state income tax. Prescription medications are also not taxed, nor is retirement income and social security benefits, according to Kiplinger's

With fewer than 600,000 residents, Wyoming is perfect for the active adults over age 55 who love the outdoors. There's skiing, hiking, river sports and, of course, Yellowstone. And when you feel the urge to be a part of a larger metro-area, Denver is only 100 miles away from Cheyenne.

This 2013-built twin home in Cheyenne has a main floor master bed room with walk-in shower and walk-in closet. There's an upstairs loft and the dining area and open-concept kitchen is large enough for entertaining. It's listed at $235,000.

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