When you've reached the point where you've started counting down the years left until you can retire, it might dawn on you that such freedom means you possibly could live anywhere you want. So where will you spend your golden years?
Most people end up staying put. But for those who want to relocate, deciding where to live should involve a thoughtful process instead of picking a beloved vacation spot or your childhood hometown, say financial advisors.
"The thing I see most often is that people will hone in on one reason for choosing a place," said certified financial planner Patrick Beagle, owner and president of WealthCrest Financial Services. "But there shouldn't be [only] one thing that makes a place the right one for you."
Beagle and other advisors say there are financial considerations, logistical aspects and quality-of-life factors to weigh. And then all of those variables must coalesce.
A survey by Bankrate shows that half of people ages 50 to 64 would consider a move when they retire. (That drops to about 20 percent for people age 65 or older, which reflects Americans' propensity to age in place.)
If you are among those people eyeing a retirement spot that involves resettling, the first order of business is to familiarize yourself with the tax situation in that state (or country, for those who are considering moving abroad).
"In general, look at what the state's income tax, sales tax and death tax are," said Brian Power, a CFP and principal and wealth management advisor at Gateway Advisory. "You could move across the border to another state and pay less in taxes."
In other words, some states are more retirement-friendly than others. For instance, Georgia not only exempts Social Security benefits from its income tax, it also gives a pass to most other forms of retirement income, up to certain limits.
That compares to, say, Vermont, which offers no break on any retirement income. As one of the 13 states that tax Social Security benefits to varying degrees, Vermont's tax on that income mirrors Uncle Sam's (up to 85 percent of benefits).
Meanwhile, some states eschew estate taxes and/or inheritance taxes, and still others have low property taxes, no sales tax or other lures, like senior-specific tax breaks.
Generally speaking, though, states that don't hit citizens with one typical tax are generating revenue through some other ways, which could be a fee or tax that matters to retirees.
Oregon, for example, has no sales tax. But its estate tax affects estates worth as low as $1 million, compared to Uncle Sam's exemption on the first $5.43 million.
But advisors say to avoid focusing solely on taxes. As Beagle pointed out, "If this decision [retirement relocating] should be based purely on taxes, everyone would go to Alaska."
Indeed, The Last Frontier imposes no income tax or sales tax on its residents. The state also gives all residents who have lived there through at least a full calendar year a dividend check from its Permanent Fund Reserve, which is funded partly by oil royalties. In recent years, that amount has averaged around $1,500, although the amount varies from year to year.
Despite those enticements, the overall cost of living in Alaska remains higher than the national average, due largely to more expensive housing, groceries, health care and utilities.
This illustrates the importance of taking stock of other costs associated with a different spot's local economy. And think about potential expenses you could actually create by relocating.
"Some [people] will only look at the cost of living, such as the price of a home, utilities and state income taxes," said Allan Katz, a CFP and president of Comprehensive Wealth Management Group. "But they forget to look at the cost of travel to see family or to get medical attention, which can be costly."
Health care, for many reasons, should be a top consideration for people who want to move in retirement.
For starters, the cost of health insurance — whether through a private insurer or Medicare — varies from state to state. Advisors also point out that as retirees age and develop more health issues, access to quality health care becomes crucial.
If you want to retire abroad, be aware that Medicare will not be an option as long as you remain beyond U.S. borders. If you want health-care coverage, you'll have to either buy into the other country's insurance plan if allowed or purchase a private policy.
In addition to analyzing all the financial aspects of retirement relocation, advisors say people need to think about everything that has nothing to do with money.
"When you make a decision to move, you're making a decision to abandon your support network," said Beagle of WealthCrest Financial Services.
It shouldn't be just a financial decision. That's just one piece of a much bigger pie.Patrick Beagleowner and president of WealthCrest Financial Services
That fact likely ends up contributing to why people stay put. And as retirees age, being in a familiar place with friends and family can become more important.
Another non-financial consideration of your potential new home is the weather. That is, the weather year-round.
Beagle had clients — a married couple — who, after visiting Florida one time, decided to retire there. But because they had vacationed there in February, when temperatures are generally mild, they — as mid-Atlantic natives — were not prepared to cope with the reality of Florida's blistering summer heat, or the strange creatures that arrive with it.
"They lasted one summer," Beagle said. "They [dealt with] mosquitoes the size of turkey buzzards and humidity the same as the temperature."
Needless to say, they moved back to a mid-Atlantic state.
Beagle recommends visiting your chosen retirement spot in all seasons. He also stresses the importance of looking beyond all the money matters to things that are important to you, whether that's access to cultural events, volunteer or part-time work opportunities, or proximity to family or friends.
"It shouldn't be just a financial decision," Beagle said. "That's just one piece of a much bigger pie."
— By Sarah O'Brien, special to CNBC.com
