Watch This Before You Move States in Retirement (2022)

In this video, Anthony & Alex discuss important factors retirees should consider before they move states in retirement.

Move States in Retirement

move states in retirement

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Full transcript:


Alex Okugawa & Anthony Saffer

Alex Okugawa 0:00
Are you considering moving out of state for retirement? Today we are discussing the best states to retire and what to consider before you make the move. Stay tuned.

Hey there, it’s Alex and Anthony from One Degree Advisors. If you’re new here, we are certified financial planners that help folks with all things tax, retirement, and investment related. Today, we’re talking about moving out of state in retirement. So let’s first go over I mean, why people move out of state in retirement, one of the first reasons they do that is the cost of living right to reduce expenses.

Anthony Saffer 0:39
And if you look at the world population survey that came out for 2022, best states to retire, South Dakota is number one, and it talks about the cost of living is 4% below the national average, comfortable retirement expenses, about 61,000, so about $5,000 a month. And then it’s really the third most tax-friendly state, there’s a lot of things that line up from a cost perspective.

Alex Okugawa 1:01
Now we work with clients all across the US, we’re based here in Southern California. But we do have a lot of clients who once they reach retirement, do decide to move out of state, they make that choice because they do want that lower standard of living, and it can help their plan and we show them looking at retirement plans, say here, here’s what it looks like, if you do move to let’s say, a state where there’s no income tax, but there are things to watch out for when you’re considering moving out of state just purely for the cost of living.

Anthony Saffer 1:32
We’re and we’re here based in California, the second highest cost state. So a lot of people do move out of state for retirement. But you got to watch no one, when they move out of state goes, oh, you know, I save $24 in taxes today. It really comes down to the quality of life and other things that bring connection within that other state.

Alex Okugawa 1:52
So the other thing to consider here, you kind of mentioned that there is the people side of this, right, there’s the money side, but there’s also the people side being closer to maybe family and friends.

Anthony Saffer 2:03
That’s a highly personal, personable factor that determines I mean, a lot of people move and they’ll go with where their kids may be moved to, but or, you know, maybe they have friends or family in a different state. But there are other things to watch for, you know, young families that maybe move and people follow their kids in retirement, young families then move. So we’ve had people where they, they’re sort of you know, quote, unquote, chasing their kids, and then their kids leave, and now they’re in a state where maybe they don’t want to live.

Alex Okugawa 2:30
This is something where again, after coaching, like hundreds of families through this retirement process, we kind of have a good idea of things to watch out for, right when a client comes to us and is like, Hey, I’m thinking about moving to this state. It’s like, yeah, the cost of living might look pretty good for you. But like, what are you going to do out there? Like, where are your family and friends? A lot of people just don’t think about that too much like, oh, well, I’ll fly out. And I’ll see everyone, it just gets really hard. Because once you retire, you have a lot of free time. What are you going to do to fill that time? And for many people, many, not all, many people fill that time with family and friends.

Anthony Saffer 3:05
What’s interesting is oftentimes, when I do talk with clients shortly after they move out of state, the thing they talk about is who have they connected with. Have they found a church? Have they found a community something to rally around in terms of common interest? What is the people aspect? Yeah, that is what they talk about.

Alex Okugawa 3:22
The third thing here is politics. So we find a lot of people or many people may move out of state in retirement, because honestly, they’re just fed up with the current politics in their states, and they want to move to a state where their values are more aligned with that state’s values.

Anthony Saffer 3:40
That comes with also connecting with people that are more like-minded. So yeah, people do get fed up with, you know, a particular state, you know, like here in California, just as an example, it’s definitely more liberal. So people will look at the problems that maybe we have within our state and say, you know, it’s got to be better somewhere else. And the thing is, it’s not the grass is not always greener. And so, and then political landscapes do shift, you know, states go from blue to red or red to blue. And you know, then you’re maybe in that state, where maybe you didn’t want to be.

Alex Okugawa 4:09
you moved there. And all of a sudden, a couple of years later, maybe five, seven years later all of sudden, it’s no different. I know a lot some people that have moved out to Texas, they’re feeling that way, right? They moved out to Texas for some more conservative values, yet a lot more people move out. They’re like, Oh, things are different. Now. It doesn’t look the same. And so you know, yeah, making that decision based on politics can be not a great idea.

Anthony Saffer 4:31
Yeah, a state may have a certain political tilt, but you have to look at the County, the City, even the neighborhood and then even if you take that idea beyond politics, to like down to a certain neighborhood. We’ll often recommend to people when they move to a different state is rent maybe for six months to a yes it out. Yeah. And it goes beyond just politics. But you know, who are the people that are around? What are the traffic patterns? Where have I built community before you really plant roots?

Alex Okugawa 4:59
The other thing here, and this is important in retirement is just the weather, are you going from something that’s going to be worse or to something that’s going to be better than what you’re used to?

Anthony Saffer 5:08
So oftentimes people travel to a different state, maybe they went on their vacation, and they say, Oh, this is great. I want to live here. But have they lived there during the winter? Get around or during even the summer? So like Hawaii, or Florida might sound great. But can you deal with the humidity? You know, during the more extreme seasons?

Alex Okugawa 5:29
Well, and again, if you’re like moving out of California, yeah, California is expensive. A lot of people call that the sunshine tax, right? So you pay a premium to have some awesome weather year-round. And you don’t have to deal with the really harsh winters, which can get more difficult. As you get older, right? You don’t want to be maybe shoveling out your driveway, as you continue to older, that gets a lot more difficult.

Anthony Saffer 5:47
So try to visit in such a way that it goes beyond a visit where you experience a little bit of daily life and do it in the more extreme weather seasons.

Alex Okugawa 5:53
So as we look at all these things, again, cost of living, you know, just those expenses, the people side of it, the politics, the weather, it really this all gets tied back to the financial plan. And that’s why we were talking about earlier, using our experience working with folks, we can often bring an expertise to the table to say here maybe some things you haven’t thought of yet, or have you considered this or maybe you should try that that usually sets people up for success because moving to a different state of retirement at a time where you’re already making a big change like retirement and then you add a move on top of that. It can be a lot for a lot of people. And now let us know what you think. Where are you thinking about moving to retirement? And why? Let us know your thoughts in the comments down below. And if you enjoyed today’s video, please like and subscribe for more. Thanks for watching.

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