7 Reasons Not to Move in Retirement

Retired Couple in the Kitchen
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By Emily Brandon

It might seem fun to move to a new place in retirement that has nice weather, more leisure activities or a significantly lower cost of living. But there are also many drawbacks of moving away from your friends, family and support system. Most people don't relocate in retirement, and those who do tend to move only very short distances. Just 6 percent of those age 60 and older changed residences between 2008 and 2012, and more than half of the people who traded places stayed within the same county, according to Census Bureau data. Here's why you may not be better off if you move to a new place in retirement:

Save money. Moving is expensive. Selling a home and buying a new one comes with a variety of transaction costs in addition to the move itself. Remaining in a home in which you have paid off the mortgage eliminates one of your biggest monthly bills. While you still have to pay taxes and maintenance costs for the home, those expenses are likely to be a fraction of your former mortgage payments. Eliminating your mortgage before retirement and then living mortgage-free can significantly improve your retirement finances.

Services you like. If you have been living in a community for many years, you probably have a doctor you are comfortable with, an auto mechanic you trust and someone who cuts your hair just the way you like it. %VIRTUAL-article-sponsoredlinks%You may also know the quickest route to the hospital, the best way to get to the airport and which routes to avoid during rush hour. If you start over in a new place, you will have to invest the time to find each of these services and perhaps test out many options to find one that meets your preferences. "When you keep people in their familiar environments, they know the neighborhood and they might still have some friends nearby," says Debra Drelich, a geriatric care manager and founder of New York Elder Care Consultants. "People want to stay at home."

A social network. Having a lot of friends nearby can certainly enrich your retirement years socially. "One of the comforts of staying in the home is the familiarity of knowing a neighbor for 40 years who is right next door," says Joan Roover, founder of A Thoughtful Move, a service that helps senior citizens relocate. "People often go where there is a sense of community and social support." A community of friends and acquaintances becomes particularly important when you retire because you have more time to spend with friends, and it's easy to become isolated once you no longer go to work every day. Your social network also helps you solve problems by offering advice about who they hired to fix the roof or help shovel snow. And if you plan to work in retirement, previous work contacts can help you find a retirement job. Aging can be much more difficult if you don't have a group of people to help with the challenges.

Proximity to family. If you currently live near your children and grandchildren, you'll get to experience the joy of watching your grandchildren grow up. Adult children and older grandchildren may also be able to help you when you need it. It will also save you money if you don't have to pay for small chores family members can easily help with, including changing a light bulb or a ride to the doctor. "Being surrounded by people who care about you is literally good for you," says Robert Bornstein, a psychology professor at Adelphi University and author of "How to Age in Place: Planning for a Happy, Independent, and Financially Secure Retirement." "Research shows that older people who have a lot of social contact are healthier, live longer and they have fewer illnesses and fewer hospitalizations."

Memories. Your family home and the community your children grew up in likely contains memories in every corner. This may be the place your children took first steps, lost a first tooth or where you shared many other special moments, which can be difficult to leave behind. "While some may find [a move] invigorating, others may be unprepared for the transfer trauma of leaving behind a longtime family home," says Andrew Carle, founding director of George Mason University's Senior Housing Administration.

An advance plan for your later years. You may need to bring additional services into the home or make changes to the layout to prepare for the limitations of aging. "If physical and/or cognitive needs increase significantly within three to five years, you may want to ensure next-level services are available, or at least proximate," Carle says. It can be easier to locate and test these types of services in your own community before you need them than to try to find them from afar. You can also retrofit a home to make aging easier in advance of when you need those features. "Some people might want to modify that home so that the master bedroom is on the first floor, and since going up and down the stairs makes carrying laundry difficult, people often relocate the laundry room to the first floor so that it is more physically convenient," Roover says. "They may adapt the shower and tub so that they don't risk falling."

You like it. You likely chose your current home because you liked many aspects of the house or community. That doesn't necessarily change when you leave your job. Over the years you've probably made improvements that suit your needs and tastes. If your current community continues to meet your needs as a retiree, there's no reason to pick up and move to another one.

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7 Reasons Not to Move in Retirement
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Next: States With No Income Tax
Don't assume that a state with no income tax qualifies as a tax haven. High sales and property taxes can more than offset the absence of an income tax.

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South Dakota
(N.H. and Tenn. tax only dividend & interest income that exceeds certain limits.)
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Only three states exempt virtually all retirement income (including public and private pension benefits, 401(k) and other retirement-plan distributions, and IRA withdrawals) from state income taxes.

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Five states are particularly tough on retirees. Not only do they fully tax most pensions and other retirement income, but most of them also have fairly high top tax brackets.

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36 states and the District of Columbia don't tax Social Security.

36 States That Are Heaven
Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin and Wyoming
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The remaining 14 states tax Social Security benefits to some extent.

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Colorado, Connecticut, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia. (Iowa will gradually phase out its Social Security tax by 2014, starting in 2008)

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These five states have no state sales taxes.

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These five states each have a state sales tax of 7%, the highest in the nation.

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