"Retire and Relocate" - A Growing Strategy for Stretching Retirement Dollars
James Zahansky, AWMA®
Principal/Managing Partner, Investment Advisor & Chief Goals Strategist
Are you approaching retirement and wondering how to stretch your savings further? A growing trend among retirees that can help to meet this goal is the "retire and relocate" strategy. This approach allows you to leverage your home's equity, potentially transforming your retirement prospects and lifestyle. But it’s not for everyone. Here’s what to know and consider about the retire and relocate strategy, so you can plan your retirement with confidence.
The Power of Home Equity in Retirement Planning
A 2023 Vanguard study found that among retirees who relocate, 60% sell their homes in more expensive markets and move to areas with lower housing costs. This strategic move typically allows these retirees to cash out approximately $100,000 in home equity to supplement their retirement income.
These figures become even more compelling when we consider that, according to The Federal Reserve, the median retirement account savings for those ages 55 to 64 is only about $185,000. For many, this amount may fall short of funding a retirement that could span several decades.
Even if your retirement savings strategy has netted you larger retirement savings, if you’re thinking about experiencing a new place in retirement choosing one that will also allow you to stretch those savings even further could be an attractive option.
By tapping into home equity through relocation, retirees can not only boost their retirement funds but also potentially reduce their overall living expenses.
Understanding the "Retire and Relocate" Strategy
At its core, the "retire and relocate" strategy involves selling your current home and moving to an area with lower housing costs. This move allows you to unlock a significant portion of your home equity, which can then be used to fund your retirement goals and desired lifestyle.
The benefits of this approach can be substantial:
- Increased retirement savings
- Lower ongoing living expenses
- Potential for a fresh start in a new community
- Opportunity to downsize and simplify your life
However, it's crucial to recognize that this strategy isn't a one-size-fits-all solution. Various factors come into play, including future home price appreciation, taxes, insurance costs, and proximity to family and friends.
Maximizing the Benefits of Relocating
For those who are well-positioned to benefit from relocating, it's important to determine how to maximize the value unlocked from their current home. Things to consider include:
- Identifying low-cost areas that can reduce expenses
- Ensuring amenities and communities align with desired retirement lifestyles
- Analyzing potential tax implications of the move
- Considering long-term factors such as healthcare accessibility and cost of living trends
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Is "Retire and Relocate" Right for You?
While the financial benefits of relocating can be significant, it's essential to consider the emotional and lifestyle factors as well. Some questions to ponder include:
- How important is it to stay close to family and friends?
- Are you open to building a new social network in a different area?
- What amenities or climate conditions are most important to you in retirement?
- How might relocating impact your hobbies, interests, or volunteer activities?
Making an Informed Decision: The Importance of Professional Guidance
Given the complexities involved in such a significant life change, seeking professional advice is paramount.
At WHZ Strategic Wealth Advisors, we understand what a life-changing event retirement truly is. Our goal is to help make this transition as seamless as possible, empowering our clients to focus on embracing their next adventure with absolute confidence that the road ahead is a solid one.
If you're intrigued by the "retire and relocate" trend but unsure if it's the right move for your situation, we invite you to schedule a complimentary consultation on our website at whzwealth.com or by calling us at (860) 928-2341. Together, we can create a strategic path to empowering the retirement you've envisioned and deserve.
Presented by Principal/Managing Partner & Chief Goal Strategist James Zahansky, AWMA®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084, 860.928.2341. http://www.whzwealth.com These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.
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