Sun, fun—and no taxes? Set your goals before retirement

When we ask our clients where they wish to retire, 9 times out of 10 their response is "someplace warm." Why do we ask this question?

During our wealth-planning process, it is important to understand each client's financial goals during retirement so that we can develop a personalized plan designed to meet his or her long-term goals and objectives, both financial and non-financial. We call this "true wealth" or "all that money can't buy and death can't take away."


Seniors retirement couple golf
Douglas Waters | Getty Images

Money is simply a vehicle to get what you want out of life, and we want to help our clients enjoy their retirement years.

So what other factors do retirees on the move consider?

In addition to seeking destinations with warmer climates, many retired individuals look to relocate to destinations with a more laid-back lifestyle. Some retirees seek to spend their retirement relaxing by the beach after many years of hard work and are attracted to destinations that offer a more leisurely lifestyle.

More fun, fewer costs

On the flip side, these retirees also consider cities that have more activities. After all, now they have more time to finally work on their golf swing, attend the ballet and go to the beach.

Retirees on the move often hope to travel during retirement, and so they look to move to cities that offer more nonstop flights to make traveling more convenient.

And, of course, many retirees wish to relocate to locations in which they are closer to their families.

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But what about retirees on the move who are seeking lower expenses? Cost is a huge consideration for those who are looking to relocate during their retirement years.

There are seven states that don't have state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Additionally, New Hampshire and Tennessee have very low income taxes.

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We have had several clients who have established residency in these states, especially South Dakota and Wyoming, which both sit on the border of Nebraska, where our Carson Wealth home office is located. There are strict rules that must be considered when filing as a non-resident or part-year resident.

In Nebraska, those who own a home and spend more than 50 percent of their time in the state are considered residents. For those who own two homes—one being in a non-income-tax state—it is important to understand the threshold defining residency in each state.

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Aside from eliminating state income tax, many people look to relocate in order to lower their overall cost-of-living expenses. Many times, retirees choose to move from major cities to more rural areas, where costs tend to be lower.

Midwest-based individuals who have considered relocating to Arizona, for example, may end up residing in smaller Tucson rather than state capital Phoenix due to the former's lower cost of living. Retirees seeking lower expenses must consider factors such as property taxes, travel costs, health care and living expenses.

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By lowering overall expenses, retirees can reallocate expenditure on social activities, hobbies and travel. Travel may include extended stays in warmer climates, especially during the winter months for "snowbirds."

This incorporates a whole new list of considerations, such as the decision to rent seasonal condos or homes instead of buying property.

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Timeshares are also a consideration for short-term visits. The decision becomes one of recurring visits to the same locale or the ability to change destinations and experience different lifestyles.

Of course, retirees must consider identifying alternate health-care providers and medical professionals at travel destinations should an emergency occur.


Considering health care

Speaking of health care, many retirees on the move seek to relocate due to health-care reasons, more from a quality standpoint than an overall cost perspective. As people transition into retirement, the cost of health care becomes a bigger overall expenditure, and it is important to have medical centers that are easily accessible and reputable.

Retirees on the move should be sure to investigate nearby medical centers and seek destinations with reputable clinics.

For instance, Houston is a popular destination for retirees, because it has a major medical center with eight hospitals and 50,000 employees, all within a 12-block radius. And those who relocate to Phoenix seeking warmer weather also have access to great medical care.

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"By factoring their dreams into their overall plan, retirees will be on the way to achieving true wealth."

Before making a big move, it is important to consider factors such as cost-of-living adjustments, the quality of health care, moving expenses, taxes and proximity to loved ones.

Whether retirees are looking to relocate for lifestyle or financial reasons, it is important that they incorporate these major life goals into their financial plans. By factoring their dreams into their overall plan, retirees will be on the way to achieving true wealth.

Remember that, whether that means working on a golf swing in Arizona or spending quality time with grandchildren, consult with a financial advisor to discuss retirement goals.

—By Ron Carson, founder and CEO of Carson Wealth Management Group.