Relocation in retirement takes careful financial, logistical planning

Employee Benefit News

By Wayne Hanson, SPHR, CEPF

May 24, 2010

For employers that offer retirement planning advice, an important topic for advisers to raise with employees is the possibility of relocating after they retire.

A recent Del Webb survey shows that 42% of today's 50-year-olds plan to relocate, compared to 36% of 50-year-olds in 1996. Further, about 50% of those considering relocation plan to move to a different state, while 25% plan to move to a different city within the same state.

Employees need to concretely plan - not just carelessly ponder - for a relocation following retirement, and shouldn't pack the moving van without considering a number of key factors, including the cost of living and health care.

A 2009 Fidelity Investments survey of 502 married couples found that only 38% report making decisions about their retirement finances together. Moreover, many couples don't agree on such basics as what type of lifestyle they expect to have in retirement.

Different retirement phases

Future retirees also must understand that their retirement needs may differ from one phase of retirement to another. At first, many retirees will be eager to travel, pursue hobbies or volunteer without restriction. In a recent article at CNNMoney.com, this was called the "go-go stage," …

However, retirees inevitably move from the "go-go stage" to the "slow-go stage" - still on the go, but not as often, the site reported.

The third stage, the "no-go stage," is the point at which physical/mental limitations prevent retirees from sustaining the active pace of the previous stages.

The different stages of retirement will impact where a retiree spends their money and how much they spend. Keeping the different stages of retirement in mind will be beneficial to current employees in retirement planning, whether the focus is finances, lifestyle or where to live.

Outside of the obvious considerations such as cost of living and health care, there are many other important considerations, including family. The serious health condition of a family member may be reason not to relocate or at least to postpone a scheduled relocation.

Social supports

One of the biggest fears with relocating is not being able to develop friendships in a new place. …

Other important considerations for employees nearing retirement who are considering relocation include:

* Can you afford the occasional trip back to your old hometown for significant events such as family reunions, funerals, weddings or the birth of grandchildren?

* If you need part-time work while in retirement, what are the employment prospects in your new city?

* Does the increased probability of natural disasters, such as hurricanes or earthquakes, in the new location cause concern? Have you actually experienced the off-season weather?

* Are amenities such as grocery stores, shopping areas, airports and public transportation convenient in the new location?

* Have you looked at your tax strategy? …

* What are the crime statistics in the new location?

* Have you spent ample time in the new location to ensure it really is a good fit? …

* What is the economic, employment, social-service, and health care spending climate?

Just as marriage should not be entered into lightly, neither should relocation occur without a thorough analysis of all important factors. …

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Contributing Editor Wayne Hanson, SPHR, CEPF, is an HR consultant with a special interest in financial literacy. He has provided support to the private sector in a number of different capacities.