VOL. 127 | NO. 135 | Thursday, July 12, 2012
Rays of Wisdom
Dana and Ray Brandon
Where Do Retirement Dollars Go Further?
By Ray and Dana Brandon
Ray’s Take There are many things to consider when selecting a place to spend your retirement years, or as I prefer to call them, your financial independence years. Not the least is selecting a place where your financial resources have the best odds of achieving your goals. State policies on property, income, sales, and estate taxes have a large bearing on this. However, the right combination for each retiree is different.
For example, a high sales tax adds to your cost of living, while no state estate taxes – like Tennessee now – means more of your estate could reach your heirs. Tennessee does tax dividends and capital gains, which matters if the bulk of your assets are in non-qualified investments. If you plan to rent your retirement home, higher property taxes may be less of an issue than if you intend to buy that dream home. If your earned income will be modest, state income taxes might not matter as much.
It’s also important to consider overall cost of living and quality of life. As a rule, rural areas are less expensive than cities, however, they usually offer fewer cultural amenities and health care services. Sometimes an area about an hour away from a large urban community provides both lower living costs as well as access to city conveniences. College towns are sometimes more stimulating, but often more expensive.
Crime, transportation climate, and the local economy (in case you hope to still work) are also important. They all affect your budget as well as your lifestyle. For example, if you intend to travel the world, access to an international airport with competitive fares matters. Conversely, if you hope to abandon car costs, good public transportation is a must.
No one place will offer everything, so it’s important to prioritize what is best for you and your budget. Finally, take your time and closely check out places you are considering. The biggest budget buster of all is making that big move and then realizing it was a big mistake.
Dana’s Take One factor people often fail to consider when deciding on a place to retire is the potential for loneliness. If you move away from all that is familiar, you may find it hard to re-create a strong social circle. If that move is made with a spouse, losing the spouse could be even more difficult.
Some retirees move to be closer to their children. However, with today’s highly mobile families, the family you moved closer to could be moving, themselves, before you know it.
Before investing in any new retirement arrangement, consider renting for a year and keeping your existing home. If you love it, make the move, if not, home sweet home is still an option. Try it before you buy it.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.