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How to Decide Where to Retire
Deciding where to retire is one of the most important decisions a person can make.
According to this article, not all retirement destinations are created equal.
In some states such as Hawaii, New York, and California saving $1M won’t even last you two full decades. In others it will last almost three decades.
So, what can you do to ensure your money lasts you your entire retirement?
- Pick a cheaper place to retire
- Revamp your savings plan
- Rethink your retirement date
- Pick-up part-time work or odd jobs
Pick a Cheaper Place to Retire
Location, location, location.
This is the number one determining factor to decide how long your retirement nest egg will last.
Retiring in a state like Hawaii you would need to save an additional $600,000 to have your money last as long as it would in Mississippi.
I get it, Hawaii is much nicer than Mississippi. I understand why you would want to live there. But unless you are able to save significantly more stick to visiting yearly instead of moving there.
Statistically big cities and coastal communities are some of the most expensive places to live.
Let’s say you are someone who wants to retire near water because you love water activities.
Retiring to the Great Lakes region will be much more affordable than retiring in Santa Monica.
Understand what your interests are in retirement and then pick places that align with those interests.
Then settle on the place that you believe is the best combination of affordability and livability.
Revamp Your Savings Plan
Saving more is always a good idea. Especially if you are planning to retire in a more expensive area.
Putting away more money each year helps with two things.
The first is obviously you save more in the long run. But second, and maybe more importantly, is you spend less. Higher savings and less spending are the keys to success for any investor.
By saving more of your income each year you are avoiding things like lifestyle creep and overextending yourself and will have more later on.
The younger you are the more powerful this is. But do not discount how saving extra money in your 50s and 60s will help too.
Rethink Your Retirement Date
Maybe you have always dreamed of retiring at a specific age. Then you will move to your dream location and live out your days in a tropical paradise.
Working a few extra years can extend your retirement nest egg by a decade. This is because instead of spending your assets you are likely living off your income and even saving more.
If you have a job that you enjoy it may make sense to keep it a little while longer to ensure your perfect retirement.
Also, with ore companies shifting to remote work perhaps you could move to your dream location and continue working for some time. That way you have the best of both worlds – income and live in a beautiful place.
This will also let you test out where you want to live. Maybe you move there and it’s not all it’s cracked up to be.
This gives you the opportunity to move again while working and having cash flow to help fund that move.
Part-Time Work
Last but not least is picking up part-time work.
Working something less stressful than your current job in retirement does a few things for you other than provide you with extra income.
First, it keeps your brain working and helps you socialize. People are social by nature and for most being with others has a positive effect on their mental health.
It also helps you retain critical thinking skills. These things in addition to your extra income will help stretch your money further.
You also will be less likely to spend your money on things you don’t need if you are too busy working.
The other nice thing about part-time work or odd jobs is that it is not permanent.
If you want to take a little break, take it. Tell your boss what days you can’t work and more often than not you can take it.
If they give you a hard time, you could leave that job and find one that is more flexible.
These are luxuries you likely did not have throughout your main working career. You have them now so use it to your advantage.
What Should You Do
Just like there is no perfect time to retire, there is also no perfect place to retire.
Making sure you are a diligent saver and don’t overspend will go a long way. But also picking somewhere to retire you are happy and that is affordable to you will help too.
Where is your dream retirement destination?