When you think about retiring, you may imagine yourself lounging on a beach of sparkling sand with a fruity drink in your hand and a wide variety of amenities available to you. Or you might picture moving near where your grandchildren live so you can spend plenty of time going to their sports games, musical concerts, and more.
Or, as another option, you might envision moving to where the cost of living is low, so your money can go towards traveling the world. You might dream of upsizing to the home you’ve always wanted, or perhaps you’re thinking about simplifying during your retirement years. You might want to buy an RV and spend this time of your life on the road!
Where to live in retirement depends largely upon your goals, and what’s perfect for you might not interest someone else at all. In this post, we’ll share information about what to consider in a retirement spot and what some of the most popular retirement spots are, and offer a blueprint to help you create your own unique plan.
We’ll also talk about the linchpin of whatever retirement plan you’re creating: the ability to fund it.
Factors to Consider
First, here is a “where to retire quiz” to help you to create your plans.
Next, here are four factors to keep in mind while choosing where to live in retirement years.
Climate and Topography
When you picture yourself in your ideal location, what is the weather like? Is it warm all year round? Is it where you can enjoy the full spectrum of the seasons? Or do you like the idea of moderate weather, neither too hot nor too cold? If you close your eyes and envision the spot, are you near water? In the mountains?
Here’s a website that shares links to climate reports for each of the states in the United States. Which sounds most appealing to you? And, here’s a site that allows you to explore rivers in a state, its elevation, physical layout. and more.
Friends and Family
Your dream may be to live where your children do, or your grandchildren. If that sounds like you, consider whether these family members are rooted in their communities or if they frequently move.
If the first is true, then the situation is probably simpler than if there’s a good chance that your family would move, leaving you in a community that you chose because they were living there.
Do you have close friends that have decided where they want to retire? If so, would having the continuity of their friendship add quality to your own life and help you transition?
Peace and Quiet? Or Action?
You might love the peace and quiet of small towns, rural areas, and the like, where you can fish, stroll through the woods, and otherwise appreciate the beauty of nature. Or you may want to retire right where the most action is, living in a big city with bright lights, near airports, concerts, sporting events, and so forth.
Or you might prefer a suburb located next to a big city, one that offers some of the peacefulness of smaller communities. How do you feel about living in a 55+ community with ongoing planned activities? Does that sound appealing?
When you retire, do you envision a permanent goodbye to the workplace, or do you plan to keep working—perhaps part-time or as a consultant—through your 60s and 70s, and maybe beyond? Or, maybe you’re looking forward to having an encore career in a field of great interest.
You may have pursued your original career because you needed to earn a certain income, but now you can work in an area that brings you joy, perhaps in animal rescue. Or maybe you want to volunteer for an organization you feel passionate about. What location is best for your dreams?
Great Places to Retire
USNews.com provides in-depth information about the best places to retire in 2020. U.S. News & World Report surveys people in pre-retirement and those of retirement age to determine what’s most important to them, and then they use the following formulas to come up with their conclusions:
• Happiness Index – 22.44 percent
• Housing Affordability Index – 20.53 percent
• Healthcare Quality Index – 18.79 percent
• Retiree Taxes Index – 14.82 percent
• Desirability Index – 13.00 percent
• Job Market Index – 10.42 percent
Here are the top five results:
• Fort Myers, Florida
• Sarasota, Florida
• Lancaster, Pennsylvania
• Asheville, North Carolina
• Port St. Lucie, Florida
What’s best for you, of course, depends upon what’s most important to you, so it makes sense to visit places of interest, ideally for enough time that you get a sense of what it would be like to live there, rather than just visit.
You might consider https://www.sofi.com/learn/content/should-you-buy-or-rent-a-home-quiz/ in a place of interest, whether that’s for six months or a year, to see what you really think of the climate, activities in the area, cost of living, and so forth.
And, at least in some cases, after people getting ready to retire visit locations that once seemed like the ideal place to live, they find that they’re really happier right where they are! If that’s the case, good for you.
You’ll be retiring in a place you already know well, able to maintain your circle of friends.
Where to Retire might answer many of the questions you have, and you can request a sample issue to find out what you think before committing to a subscription. AARP magazine is also full of information about retirement locations.
If cost of living is important to you, you can also find plenty of information about states with the lowest.
According to World Population Review , the five most affordable states in 2020 are:
• New Mexico
And, no matter where you want to live, funding your retirement in the style you want is crucial.
Fortunately, SoFi has plenty of resources to help you do just that. For example, if you’re just starting to plan for your retirement, we’ve got an article that shares how to start a retirement savings plan.
Questions you might be considering at this point can include things like:
• What is your target retirement date?
• Do you plan to stop working at age 65, or will you continue working full time or part time?
• Based on current life expectancy, how many years do you plan to spend in retirement?
• What kind of lifestyle would you like in retirement?
• Do you expect your expenses to be higher or lower than today?
When to Start Saving
As far as when to start saving for retirement, just about any Financial Planner will tell you now. Which retirement plan is right for you? SoFi offers helpful information on:
• 401(k) retirement plans: These are employer-sponsored plans and can be a convenient way to start saving for retirement.
• IRAs (individual retirement accounts): Whether or not your employer offers a retirement plan, you can open this type of retirement account yourself. There are two types—traditional and Roth—which are treated differently, tax-wise.
• Self-employment retirement plans: Contribution limits are higher, because you’re both the employer and the employee. There are several types, the most common being SEP IRAs, Simple IRAs and a Solo 401(k).
• Pension plans: If you work for the government or military (or possibly for a large company), you may also benefit from a pension plan. These are less common than they used to be, but still exist.
And, besides asking yourself “Where should I retire?”, you’re probably also wondering when you can retire. We encourage you to read the entire post; but, in short: If you’re looking to live on $40,000 a year in your retirement, you need to save $1 million.
Double that if you’re hoping to live on $80,000. Here’s how to tell if you’re on track for retirement.
What If I Want to Retire Early?
First consider the Rule of 25, which says that someone should save 25 times their annual expenses to retire—not annual earnings, but annual expenses. As described in our guide on how to retire early, annual expenses of $75,000 means that someone would need to save $1,875,000 to retire (at a minimum).
And, this figure can’t include Social Security benefits because those aren’t available until the designated time (meaning, not during early retirement).
It can also make sense to spend less and save more now, to maximize what you’ll have saved for retirement. This can have a doubly good impact. First, spending less can lower the amount needed to save for early retirement, because you’ll have fewer expenses, and the money not being spent today can be invested.
Here’s another way to calculate what may be needed. Take a look at the current budget, cut out what you can reasonably do, and then figure out how this budget may change in retirement years. What may require more funds? Less?
Did the results of the “how to decide where to retire quiz” have an impact on budgeting, either up or down? Once that is calculated, multiply that by 12, which would provide an estimate of a yearly retirement budget.
Open a Retirement Account With SoFi
When you open a retirement account at SoFi, we can help put your money to work. We first provide you with the educational tools to help you with goal planning, with a focus on mapping out a plan to help you achieve your goals more quickly, and to also help you stick with that plan.
We can help diversify your portfolio, aiming to reduce some of your risk. In fact, we invest in hundreds of assets. To give you the best of both worlds, we actively manage passive assets, and we also automatically rebalance your investments as needed.
You pay zero in SoFi management funds and you get unlimited access to financial advisors on the house. We offer personalized insights tailored to your unique financial situation and retirement goals, and all you need to do is make an appointment or call to meet with an advisor.
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