Checklist for Retiring Outside of Illinois

Have any of your friends ever retired outside of Illinois and regretted it? Judging by my Facebook feed, it sure doesn’t seem as if people regret retiring out of state. As happy as we are for those friends and family, I sometimes groan at our sub-zero grey winter morning when I see gorgeous pics posted from their warm Arizona or Florida homes.

It was one of those mornings, where I found myself doing plan updates for a client who recently moved out of state.  As often happens, I see many of her costs of living were even lower than expected! Later that same week, I had a discovery meeting where a couple shared their dream of retiring to a warmer locale and “escaping Illinois and their high taxes”. While these occurrences seem to happen more and more frequently, I also realize there are benefits and challenges wherever you might retire. It’s just a matter of considering all of the factors and weighing the advantages against the disadvantages.

The allure of a warmer climate, coupled with lower living expenses and lower state and local taxes is tempting.  It promises not just a change in scenery but an enhanced quality of life. With that in mind, I created a checklist to outline the considerations and steps that might be involved with retiring outside of Illinois.

Comprehensive Retirement Relocation Checklist: Beyond Illinois

Personal Reflection:

• Define Your Retirement Vision: Identify your key motivations for relocating. Is it weather, lifestyle, proximity to family, cost of living or reduced taxes? Envision your ideal retirement lifestyle.
• Share Your Dreams: Discuss your relocation thoughts and feelings with family and close friends who have made the move out of state for support and insights.

Financial Planning:

• Estimate Moving Expenses: Research and budget for the total costs associated with moving, including movers, transportation, and immediate living expenses upon arrival.
• Evaluate Real Estate Costs: Consider the equity in your current home, realtor fees (typically around 6% of the sale price), and closing costs in both your current and future locations.
• Mortgage Rate Evaluation: Compare your current mortgage rate (if you have one) to the prevailing rates in your potential new state. Consider the financial implications of moving from a rate near 3% to rates that could be around 7%.
• Run Mortgage Scenarios:  Use mortgage calculators to project monthly payments under different scenarios and assess how these changes impact your long-term retirement budget. This comparison is key to understanding the financial impact on your retirement plan.
• Budget for Non-Recurring Costs: Include a buffer for unforeseen expenses in your relocation budget.

Tax Considerations:

• Compare Property Taxes: Investigate property tax rates and any senior exemptions in your potential new state.
• Analyze State Income Tax: Research how your retirement income will be taxed, considering pensions, Social Security, and withdrawals from retirement accounts.
• Understand Sales Tax Impact: Evaluate the cost of living differences, including state and local sales taxes on everyday purchases.

Housing and Living Environment:

• Research Property Values: Look into housing markets in your areas of interest to understand what your budget can afford.
• Cost of Living Comparison: Compare the general cost of living, focusing on groceries, healthcare, utilities, and other daily expenses.
• Community and Lifestyle Fit: Ensure the communities you’re considering match your lifestyle preferences, including activities, climate, and cultural offerings.

Insurance and Healthcare:

• Check Insurance Rates: Compare auto and homeowner insurance rates in prospective states.
• Evaluate Healthcare Services: Investigate the availability and cost of healthcare services, including hospitals, specialists, and long-term care facilities.

Final Preparations:

• Visit Potential Locations: If possible, spend time in the communities you're considering to get a true feel for the lifestyle and amenities.
• Professional Consultation: Discuss your comprehensive retirement plan with a financial advisor, focusing on the impact of relocation.

Making the Move:

• Timeline and Checklist: Create a detailed moving timeline and checklist to manage tasks and deadlines efficiently.
• Update Legal Documents: Ensure your will, power of attorney, and healthcare directives are updated according to the laws of your new state.

Post-Move Financial Adjustments:

• Update All Financial Records: Notify banks, investment firms, and any other financial institutions of your change of address. Ensure all your financial documents reflect your new residence.
• Revise Your Financial Plan: Account for the changes in living expenses, taxes, and any other financial implications resulting from your move. Adjust your budget accordingly to align with your new cost of living.
• Schedule Regular Financial Reviews: Arrange for ongoing meetings with your financial advisor, utilizing Zoom or phone calls, to keep your financial and investment plans aligned with your current needs and goals. These regular check-ins are essential for adapting your strategy to any unforeseen changes and ensuring you remain on track for a secure and fulfilling retirement.

Seeing friends flaunt their new, sunny lifestyles while we're bundled up here can really get the wheels turning, can't it? Sure, those snapshots of warmer climates or promises of lower living expenses and taxes are tempting, but making a move in retirement is a major life decision that requires careful planning.

That's where the importance of a solid relationship with a financial advisor comes in, especially before you make any big moves. McBeath Financial Group has always been at the forefront, helping clients navigate through the complexities of relocating in retirement. We're here to ensure that every aspect of your financial plan is carefully considered, helping you understand the implications of moving on taxes, living costs, and your overall retirement strategy.

And the best part? Our commitment doesn't end just because you've changed your address. McBeath Financial Group prides itself on maintaining strong, effective relationships with our clients, no matter where they call home. Through virtual meetings or phone calls, we continue to offer tailored advice and support, ensuring that your retirement plans stay on track, even from miles away.

So, if you're dreaming of changing your latitude, McBeath Financial Group can help through the process, from the decision-making and preplanning stages throughout the transition and even after.  We can be your guide every step of the way to ensure your move is as financially smooth as possible.

One last item to add to the checklist: Go easy on those Facebook posts flaunting your new, sunny locale during the dead of winter, for the sake of your friends and family left behind!

McBeath Financial Group's CEO, Krista McBeath, is an Investment Advisor, Chartered Financial Consultant, a Licensed Insurance Advisor, a Fiduciary, and an experienced tax advisor who specializes in financial planning, investments, and insurance. Krista's Amazon best-selling book, The Generational Wealth System outlines a holistic approach to preserving lifestyle, wealth and legacy.

The McBeath Financial Group team utilizes advanced tools for in-depth calculations that analyze tax and retirement scenarios to help their clients avoid a future tax time-bomb. Whether this means enjoying more of your hard-earned money in retirement or passing along assets to loved ones with less tax burden, planning makes the difference.

Learn more about the McBeath Financial Group Team.

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