Decide Where to Retire

Many people fantasize about the day they retire and can lead a carefree lifestyle without work. Retirement should be a comfortable part of any person’s life, but the decision to retire is not as simple as hitting a specific birthday. Instead, different factors such as finances, health, and how you envision spending your time can affect your retirement. You can decide when to retire by determining your location options, considering your lifestyle preferences, and assessing your finances.

Steps

Determining Your Location Options

1. Think about where you see yourself. Have you ever pictured yourself retiring to the white sand beaches of Mexico? You may have also thought of a nice college town or even just staying where you are to enjoy grandchildren. Consider a variety of options for where you want to retire from dream locations to maintaining your current situation.
   • Compose a list of places you’re considering retiring. Make a tiered list that includes dream locations, easily attainable or alternative “dream” places, and staying in your current or a similar area. For example, “Dream locations: Paris, Bora Bora, Santa Barbara. Alternative and less expensive dream places: Berlin, Thailand, San Diego. Less desirable: staying here at a retirement community, moving to Florida near grandkids, spending part of the year here and part in San Diego.”
2. Ensure your safety. As you get older, safety concerns can become a higher priority. Look at things such as crime statistics, economic data, and the political situation for any area you might want to retire. This can help you determine if your chosen locations will be an enjoyable and safe environment.
   • Contact local authorities to get more specific information. If you are considering an international locale, your country’s local embassy or consulate can give you information on safety concerns, including political stability.
3. Figure out proximity to health care. No matter how healthy and active you are when you retire, you may encounter unexpected medical conditions. You may even need maintenance medicine for seasonal allergies. Having medical facilities close to you can ensure that you get prompt care or treatment for any conditions that may come your way.
   • Check out not only local doctors and hospitals, but also things such as retirement homes and senior services. This can prevent you from having to make another big move from your chosen destination to get medical care.
4. Explore the financials. Many seniors consider moving to different areas and countries to save money. Thinking about the various financial aspects of each area, such as taxes and cost of living, can also help you to decide which places may be right for your retirement.
   • Take cost of living into consideration. Your decisions about factors such as whether to rent or buy, own a car or take public transportation, and the locality’s average cost of living can help you decide if your choice is right for you.
   • Recognize that taxes can vary significantly from place to place. In addition, if you decide to leave your home country for another, you will have to continue paying taxes where you are a citizen. You may also need to pay taxes in the new country.
5. Study the environment. From climate and weather to people and cultural amenities, the environment in which you live can have a considerable impact on your lifestyle. Getting a sense of the environment at the place you’re considering retiring can help you decide if it’s right for you.
   • Think about the climate and whether at your potential retirement locations. For example, wintry conditions may present a great challenge to you as you age.
   • Consider the other type of climate: the cultural one. Are you looking for an area with a great deal of diversity and cultural amenities such as the performing arts? Are you willing to embrace new cultures?

Considering Additional Factors

1. Figure out what lifestyle you want. The goal of retirement is to fill your days with things you want to do. These take the place of your work. Maybe you want to move to a warmer climate, travel, or enjoy time with family. Thinking about what type of lifestyle you want to have can help you better decide if the time is right for you to retire.
   • Plot what you want to do on a daily, monthly, and yearly basis. This can help you get an overall picture of your wishes as well as how much money you may need to retire the way you want. If it feels like a bit too much to make this kind of plan, you may not be ready to retire.
   • Think about if you want to live a bit more frugally or maybe use your time to explore the world around you or even new hobbies. Factors such as your where you want to live—in your current locality or home—can also impact your overall lifestyle.
2. Discuss plans with your significant other. It’s not uncommon for couples or families to discuss retirement only when they’re older. Having an open and honest conversation with your spouse, significant other, or family members about your retirement plans can help you decide when the right time to retire is. It can also help you plan so that you can enter and enjoy retirement as a team. Ask each other questions such as:
   • When would you like to retire?
   • What would you like to do during retirement?
   • Where do you want to live?
   • How frugally do you want to live?
3. Take an honest look at your health. As people age, their health can decline, making it less possible to retire in a way they may have wanted. Making an honest assessment of your health, and that of family members, can help you figure out if it is a good idea to retire soon or keep working for a little longer. It can also factor into your decision of where to retire, especially if you need specialized medical care.
   • Think about factors such as your current health and longevity in your family. If you an in excellent health and your family members live longer, continue to work. This can ensure you get full retirement benefits and won’t likely affect the lifestyle you want to have.
   • Consider retiring a bit earlier if you or a loved one is in poor health. This could allow you to do things you’d planned, such as traveling or enjoying family members including grandchildren.
4. Look into part-time work opportunities. Many people enjoy the routine of working or even their jobs after they retire. You may even want some extra income to help you further enjoy retirement. Look into your ability to work part time during retirement, including at a potential destinations. This may influence your decision on where to retire.
   • Consider part-time jobs that allow you flexibility and time to enjoy yourself. Some examples include: office work, handyperson, bookkeeper, and library aide.
   • Make sure your retirement plan allows you to continue to collect retirement benefits and work part time. Recognize that your social security payments may also decrease if you work part time.
5. Keep your family and friends in mind. Once you retire, you don’t have something tying you to one place. But over the course of their careers, many retirees have a large circle of close family and friends. How close you want to be to these people can influence your decision of where to retire.
   • Think about your ability to make new friends and maintain currents ones if you move to a new location.
   • Consider how close you want to be to your children, grandchildren or other family members. For example, moving to a peaceful and remote farm or another country may make it more difficult to see you loved ones often.

Assessing Your Finances

1. Review your bank account. Many people consider retiring at a specific age, such as on their 65th birthday. When you retire, your bank account becomes your employer. What you’ve saved and invested is your bi-weekly or monthly paycheck. Making sure that you have enough money in your checking, savings, and retirement portfolios can ensure that you are able to retire in a way that you wish.
   • Recognize that a good rule of thumb for retirement savings is about 25 times larger than your annual withdrawal. Thus, if you want to withdraw $10,000 per year, you’d need at least $250,000 in savings to retire.
   • Continue to work either full or part-time if you haven’t quite reached your savings goal. You can also make cuts to your anticipated retirement budget.
2. Take stock of investments. In general, people also fund their retirements with investments in the stock markets. Deciding to retire in a bad, or bear, market can affect how much money you have at and during retirement. Taking stock of your personal investments and the market in general can help you figure out if it’s time to retire or stay in the game until the market is stronger, also known as a bull market.
   • Consider retiring and beginning to take withdrawals from your investments if you are on the cusp of a bull market. This means that your portfolio can likely get through future market downturns.
   • Try working a bit longer if your investment portfolio has had significant losses in the years before your retirement or if it is a bear market. Early losses in a bear market could increase your risk of running out of money.
   • Manage your investment risks more closely as you get closer to retirement. Investing in less risky portfolio can ensure that you get enough in returns to fund the retirement you want.
3. Figure out social security benefits. Many retirees use social welfare programs as a primary source of income. Your benefits will vary depending on where you live, but in the US, for example, the maximum amount at full retirement age is $2,639/month. Knowing what your benefits are can help you figure out if you’re ready to retire or should work a bit longer to gain full retirement benefits.
   • Make sure to calculate your social security benefits with your investments and savings to get a complete picture of how much money you will have every month.
   • Wait until at least full retirement age to get your benefits. This is usually between the ages of 66 and 70. If you can hang on a bit longer, this may also benefit you. For example, collecting social security benefits in the US at age 70 instead of 67 will give you almost $1000 more every month than if you retired at 66.
   • Recognize that retiring before full retirement age can reduce your benefits by almost 30 percent.
4. Calculate your expenses. Retiring doesn’t mean your expenses go away. You’ll also need to figure out how much you’ll need to cover things such as living and healthcare expenses every month. Having an idea of what your expenses are versus your income sources can help you decide if the time is right to retire.
   • Put together an overall picture of your monthly expenses. If your retirement income sources can easily cover this with some funds remaining, you can probably retire with confidence.
   • Consider new expenses such as nursing homes or assisted living facilities, taxes, or inheritances for your children. Using an online retirement worksheet can help you figure out what your monthly expenses may be.
   • Recognize that you may also have unexpected expenses, such as healthcare or other emergencies, that you want to have enough income to cover.
5. Look at your debt. You’ll also need to continue paying down any debt you have after you retire. Deciding to retire when you still have considerable debt could leave you with less money to pay for other expenses or things you want to do.
   • Pay off as much high-interest debt, such as credit cards, as quickly as you can. Paying off your monthly mortgage can also eliminate a considerable expense and ensure you have more money to retire.
6. Meet with a financial planner. Deciding to retire is not a simple process. It can be even harder if you don’t have a good idea of what you need or already have. Meeting with a financial advisor or planner can help you make more informed decisions about factors such as when to retire, how to get the most money during retirement, and dealing with emergencies.
   • Choose a financial planner who specializes in retirement. Ask your bank, a friend, or family member if they have any recommendations. Organizations such as the National Associations of Personal Financial Advisors offer free online location services. A financial planner will have the best idea of what a person typically needs to retire. They can also help you make the decision if and where you should retire.
   • Provide the financial planner all of the relevant information on things such as your sources of income, debt, taxes, as well as how you wish to retire.

Tips

• Recognize that your plans or circumstances may change during retirement. Staying flexible and having a contingency plan can help you deal with change more easily.

Warnings

• Be aware of scams that target retired persons. These include bogus timeshares, counterfeit prescription drugs, homeowner and reverse mortgage scams, internet fraud, health insurance fraud.

References

See also

• Make a Retirement Gift Basket
• Know How Much to Give for a Retirement Gift
• Make a Retirement Scrapbook
• Use Life Insurance in Your Retirement Planning
• Transfer Retirement Funds to a Roth Ira
• Start a Retirement Home in Ontario
• Retire from a Job You Love
• Prepare for Early Retirement
• Prepare for Retirement in Your 20s
• Plan for Long Term Care

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