Relocating in retirement? Experts say look before leaping

If you plan to relocate when you retire, don't wait until the last minute to hash out the specifics. You may need a decade or more to do it right.

A new address, whether out of state or close to home, can have major implications on your standard of living, target retirement date and potentially even the health of your marriage, said Craig Brimhall, vice president of wealth strategies for Ameriprise Financial.

Brimhall prompts his own clients to envision their future with a "dream book."

"It's good to have that conversation about where you plan to retire 10 to 15 years out, because it needs to be given a fair amount of thought," he said. "The earlier you plan, the better."

Before deciding where they'd like to live, for example, Brimhall encourages retirement planners to first determine what they hope to gain.

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"There are a lot of different reasons why people want to relocate, and answering the 'why' component is most important because it determines the next questions and what homework you need to do," he said.

For many, proximity to grandchildren is paramount, but that often translates into a higher cost of living.

Others live modestly during their working years but desire a more luxurious lifestyle after they stop punching the clock—which requires a more aggressive savings and investment strategy during their peak earning years.

And still others seek warmer weather or lower taxes, but many of the most popular states with coveted zero-income-tax status—such as Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming—aren't as retiree-friendly as they first appear.

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"It's worth unwrapping that piece a little more and taking a more granular look," said Neil Krishnaswamy, a certified financial planner with Exencial Wealth Advisors. "Some states that don't have an income tax may make up for it with higher sales or property taxes, so you want to look at the whole picture to determine true cost of living."

Remember, too, that if you live half the year or less in an income tax–free state—like many 'snowbirds,' who flee to warmer climes during the winter months—you may still owe tax on retirement income earned in your home state.

Another consideration: If you plan to work even after you retire, out of necessity or by choice, you will want to consider employment opportunities when selecting a new locale.

The Center for a Secure Retirement reports that 28 percent of baby boomers who retired from their full-time career are either currently employed or have worked during retirement.

AARP's livability index scores neighborhoods and communities nationwide for the services and amenities that impact seniors most, including housing costs, social outlets, entertainment, work opportunities and access to medical care.

Seniors who are still in early retirement—when relocation decisions are usually made—often fail to consider the importance of public transportation, explains Rodney Harrell, director of Livable Communities for the AARP Public Policy Institute.

"A lot of people don't think about transportation, but when you can no longer drive, you need to have community amenities available, like alternative methods of transportation," to reach retailers, grocery stores and health-care providers, he said.

As you define your relocation goals with a financial advisor, said Krishnaswamy at Exencial Wealth Advisors, it's equally important to communicate with your spouse.

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Married couples may agree on a destination but differ on the size of the home they feel they need—a one-bedroom condominium on the beach, a single-family home with grandkid-friendly guest rooms or a 55-plus community that will enable them to age in place.

Such decisions not only impact the couple's quality of life but their available cash flow, as well. And disagreement inevitably creates tension.

Relocation at any life stage is a major stressor, said Krishnaswamy, but the newly retired face the added pressure of leaving their professional careers behind, spending more time at home with their spouse and learning to live off their limited savings.

"Having the right expectations and conversations about what lifestyle you both envision can help prevent arguments and disagreements down the road," he added.

Krishnaswamy suggests that, before selling their home and leaving their social network behind, retirees who intend to relocate—especially to a city where they've only ever vacationed—might first consider testing the waters.

Try renting for part of the year to be sure the culture, climate and cost of living are a fit.

Indeed, the road to Florida is littered with so-called halfbacks—retirees who realized the Sunshine State wasn't for them and relocated a second time (and at no small expense) to a more active senior community in Georgia or the Carolinas.

Relocation during retirement does not necessarily solve any problems, and it can create new ones.

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The most successful stories start with a solid plan and a heavy dose of due diligence.

"The best time to make these decisions is before you are in the moment or facing a new challenge," said Harrell at AARP. "Many people wait, which adds to stress."

—By Shelly Schwartz, special to CNBC.com