LOST IN TRANSITION
When it comes to retirement, minimizing living expenses is a key part of making a nest egg last for as long as possible. Quite often, that effort involves relocating to a cheaper part of the country (or the world), where everything from taxes to housing costs and even food may be less expensive. But moving somewhere new for retirement comes with expenses and logistical considerations of its own. Here are some of the factors to keep in mind if a move will be part of your golden years, gathered from personal finance, real estate, and retirement experts from across the country.
If you currently own your home and will be selling it in order to move, don’t forget to factor in all the costs associated with that process. These include a real estate agent’s commission, closing costs or other credits to the buyer, transfer taxes, home warranties for the buyer, and capital gains taxes. There are also costs associated with preparing your home to be sold such as painting, replacing windows, staging your home and landscaping.
RELOCATING BELONGINGS OR BUYING NEW FURNISHINGS
Sure, you may be able to afford a beachfront home in Mexico for far less than what one might cost in the United States, but be sure to consider all of the expenses associated with such a decision, says Will Smayda, Consumer Banking & Merrill Edge Central Division Executive, Bank of America. “For example, relocation costs, whether moving your belongings or furnishing a home from scratch, may be higher than if you moved somewhere domestically,” Smayda says.
BUYING A NEW HOME
Just like selling your current home, the purchase of a new property comes with a variety of expenses. “These include the appraisal fee, attorney fees, inspection fees, loan origination fees, credit report fees, recording fees, underwriting fees, and lender's title insurance,” says Daniela Andreevska of Mashvisor, a real estate data analytics company. “These can add up to between 2 percent to 5 percent of the sale price,” Andreevska noted. Costs will vary based on where you choose to live, the property you buy, and the type of loan you select. And don’t forget that you will need to put money down on the new property.
REMODELING AND REPAIRS
If you’re not buying a brand-new property, you can expect that there will be some basic fixes and repairs, Andreevska says. “Make sure to get both an appraisal and an inspection even though they cost money, as this will give you a good estimate of how much you will need to spend to fix up your next home,” she says.
RENTING OUT YOUR OLD HOME
If you plan to keep your current home as an investment property, remember to factor in the costs and labor associated with such a decision, says Kalen Omo of Kalen Omo Financial Coaching. “You must consider whether you want to be a long-distance landlord or not,” Omo noted. “Being one may involve you making visits to your rental property to address problems, so determine whether you want to manage the hassle of such an investment.” What’s more, those who don’t want to handle maintenance and repairs themselves, may have to pay a property manager.
OVERALL COST-OF-LIVING CHANGES
Not everyone wants to deal with the hassle of owning a home during their golden years. Those who plan to rent should keep in mind that they’ll likely have to pay a deposit once they sign a lease, says Andreevska of Mashvisor. “While this money is refundable, you will have to factor it in your initial expenses when moving to a retirement destination.”
UTILITIES AND OTHER MISCELLANEOUS COSTS
Will using public transportation be part of your new life? Make sure you know what the options are in your future city or town and what the associated costs are, says Carlson of Financial Freedom Wealth Management. If you have a disability or limited mobility, you’ll also want to consider cities that offer wheelchair-friendly transit.