Listener Questions: Clearing Up Confusing Retirement Topics, Ep #166

People often ask me where they should retire. Should they relocate to a new city or state? Most people assume when they retire that they need to move to make the most of their income. 

But the answer isn’t clear-cut. Everyone has different preferences. In this episode of Retirement Made Easy, I’ll dive into some of the factors you should consider to make that decision. 

I’ll also cover a few areas of retirement planning that have most people confused and shed some light on the situation. Don’t miss it! 

You will want to hear this episode if you are interested in…

  • [1:58] The Mid-Year Market Outlook is coming in July!
  • [2:57] Where is the best place to retire?
  • [4:51] Factors that influence people to relocate
  • [13:56] When do you have to take required minimum distributions?
  • [16:48] Most people don’t understand Roth conversions
  • [19:00] You are responsible for the outcome of your 401K

What drives people to relocate when they retire? 

Many people move to Florida, Arizona, South Carolina, Alabama, etc. because of the weather. People are sick of living in states that have harsh winters. What is the weather like where you’re considering moving at every time of the year? 

What about healthcare? As we age, access to healthcare is incredibly important. Quality is important, too. Florida has a high 55+ population because of the great healthcare. 

What about taxes? Florida doesn’t have a state income tax. That’s appealing to a lot of people. Just make sure you look at property tax, sales tax, etc. because some states make it up in those areas.

What about cost-of-living? Florida has a high cost of living. I’ve had clients retire there only to move to Georgia a few years later. I’ve had many clients go on Alaskan cruises who think it’s the trip of a lifetime. But the cost of living is fairly high and accessibility to healthcare isn’t the best. 

According to an article by the Motley Fool, the states with the lowest cost of living are Mississippi, Oklahoma, Kansas, Alabama, West Virginia, Georgia, Missouri, Iowa, Arkansas, and Tennessee. The most expensive states were California, New York, Oregon, and New Jersey.

Now we don’t expect everyone to retire to the lowest cost-of-living states. But if you are going to relocate, keep your budget in mind. 

Do you want to be closer to friends and family? You’ll be far happier close to family versus somewhere you don’t know anyone. 

What hobbies can you enjoy? Florida has numerous golf courses. You can golf nearly year-round.

When do you have to take required minimum distributions?

Most people don’t understand how required minimum distributions (RMDs) work. If you were born between 1951 and 1959, your RMD age is 73. For those born after 1960, your RMD is 75. It extends the window that you can do Roth conversions (which should be part of your retirement plan). 

Most people don’t understand Roth conversions

Many people don’t understand why you have to carefully plan Roth conversions. When you take a big Roth conversion, it may cause you to pay higher taxes on Social Security, long-term gains taxes, or net investment income tax. Your Medicare Part B premium may also increase. You need to be aware of the cause and effect of a Roth conversion. There may be a more optimal time to do it. 

Most people think someone else is managing their 401K

Many people don’t know how their money is invested in their 401K, 403B, etc. They usually say, “Someone is managing it for me.” 

If you and your spouse own a company, you make all of the decisions. You may hire people to help you make decisions—but you are responsible for all of the decisions made.

It’s the same for your investments. You are responsible for the success of your 401K. You should hire a financial planner if you don’t want to make the decisions on your own. 

 

Resources & People Mentioned

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