How to Pick Your Retirement Destination
Prior to retiring in Bend, Oregon, a little more than a year ago, Rick McCarthy was a practicing partner at a prestigious San Diego law firm, Solomon Ward. He recalls his mentor at the firm, Bill Ward, saying, “Kid, I want you to retire at 60 because there’s no old trial lawyers. They end up having heart attacks.”
McCarthy says he took his mentor’s advice to heart, retiring at 61, and chose a place that fit his lifestyle, a place he first fell in love with in the 1970s after camping in the area. “Bend is just east of the Cascades, has gorgeous views and a beautiful river running through it,” he says. “I just loved it, and periodically over the years just kept coming back to it.”
For John Meyer, 77, and his wife, Arlene, 66, their move from Chicago to Sarasota, Florida, nine years ago was about lifestyle as well. They were also concerned about finding an affordable place to live to support that lifestyle as well as a place that had excellent health care services. The Meyers say they didn’t want to be house poor, preferring instead to have more money to travel. That has panned out for them. Since retiring, they have enjoyed vacations in Hawaii, Mexico, Alaska, and Canada, and “had a great time visiting Seattle for about four days,” among other trips.
“There’s another reason we moved here,” adds John Meyer, who retired from the military. “Florida has a lot of older people, so its medical system is geared for those [older] patients, and Sarasota is a very, very good area for medical care.”
McCarthy and the Meyers picked two of the top 10 most popular states for retirement, according to a study by the nonprofit public-policy group the Brookings Institution, which examined U.S. Census data to determine which states are attracting the most senior citizens. Topping the list was Florida, followed by Arizona, North Carolina, South Carolina, Nevada, Texas and Oregon, among others. Overall, on a net-migration basis between 2012 and 2017, nearly 200,000 senior citizens each year moved to the states that are the leading magnets for retirees, the Brookings study shows.
A study by Harvard University’s Joint Center for Housing Studies, found that between 2000 and 2016, census tracts with a majority of older adults, defined as at least 50 years old, increased from 1,499 to 4,764 — a 218 percent jump. Among the areas with big gains in senior population were retirement hotspots identified in the Brookings study, including North Carolina, Oregon and Texas as well as certain Sunbelt metro areas — such as the Florida cities of Fort Myers, Miami and Sarasota as well as Phoenix.
The number of Americans 65 and older stood at around 52 million in 2018 and is projected to rise to 95 million by 2060 — jumping from 16 percent to 23 percent of the U.S. population over that period, according to the Population Reference Bureau. That’s a force to be reckoned with in terms of retirement choices and destinations.
How to Pick a Destination
Driving the decision making in that wave of retirees are three major factors, according to Daniel Levine, a New York–based author, speaker and director of the trends consultancy the Avant-Guide Institute. “The big motivators for retirement are cost, health care and lifestyle, in that order,” he says. “And because people are living longer, the emphasis on health care is creeping up to the top. People who are looking to retire, for the most part, won’t even consider retiring in a place that doesn’t have decent health care.”
Tim Adkisson, co-owner of Fortress Mega LLC, which supports AAA Washington members with retirement and financial planning services, echoes Levine’s analysis, adding that a big part of the nest egg for many retirees in high-cost areas, such as the Puget Sound region in Washington, comes from tapping the equity in their homes. He says they can sell their million-dollar home in Seattle and “buy a $400,000 home, the same size, maybe even bigger” elsewhere, leaving them with a healthy sum to accommodate their lifestyle.
“In addition, one of the biggest expenses in retirement is going to be health care,” Adkisson adds. “So, if you’re thinking about moving overseas, for example, you have to be concerned about health care, because Medicare doesn’t pay overseas. Are you moving to a place that has universal health care and, if so, can you buy into it?”
Increasingly, many Americans are choosing to retire overseas, according to experts and information available through the U.S. Social Security Administration, which now sends more than 700,000 checks each month to retirees overseas, up 40 percent over the past decade. The nations topping the list for those social security payments are Canada, Japan, Mexico, Germany, the United Kingdom and the Philippines.
“The United States is a land of immigrants, so countries where upcoming retirees have family or cultural ties will place high on the list of potential retirement spots,” says Gay Cororaton, director of housing and commercial research at the National Association of Realtors. “In a survey of Realtors about their clients seeking to buy property abroad, Mexico, Costa Rica, Canada, Italy, France, China and the Philippines were identified as countries of interest of their clients searching property abroad.”
Other attractive countries that retirees might want to explore include Panama, Portugal, Spain, Malaysia and Thailand, according to Art Koff, a Chicago-based author and consultant focused on retiree issues. Koff says overseas retirement spots can offer seniors “significantly lower overall cost of living for the same lifestyle” as well as access to excellent, affordable health care, if you do your research.
“I have a friend who lives in France, and she was hit by a car and broke her femur [thigh bone],” Koff recalls. “She was 84 at the time and was in the hospital for a long time. Had she been in any number of other countries, she would have had to come back to the U.S. for care, but because France has [a] spectacular medical situation, her [hospital] room was completely taken care of.”
Koff adds that other factors to consider when looking for a place to retire overseas include government stability, filing taxes, ease of travel back to the U.S. to visit friends and family, language and the attitude of locals toward Americans. In general, regardless of where an individual chooses to retire, other considerations to take into account, according to the AARP Public Policy Institute, include housing, transportation, neighborhood characteristics, the environment/weather and social engagement/entertainment opportunities.
Fortress Mega LLC’s co-owner Jon Erickson, an investment adviser representative with Regal Investment Advisors LLC*, also counsels retirees who plan to relocate after retirement to put some extra cash aside for that move. “Little costs will creep up that can easily total up to $10,000,” he says. “So, just keeping some extra cash on hand to smooth over the transition will help, and then you can kick in your long-term income plan maybe a year after you move.”
Word of Advice
Whether your final retirement destination is in the United States or a foreign country, Rodney Harrell, vice president of family, home and community at AARP, says it’s important to remember that most people end up living in their homes longer than they anticipated, “and the condition you’re in today might not be the same tomorrow.”
If you have a health incident, for example, it could make it harder to get up and down stairs, making part of that dream retirement home inaccessible, Harrell adds. Or, if you retire in a place that isn’t very walkable or doesn’t offer good alternative transportation options, “as soon as you stop driving, you might end up isolated.”
“These are the kind of challenges retirees will face,” he says, “so you have to think about your long-term and current needs at the same time.”
*Investment advisory services offered through Regal Investment Advisors LLC, an SEC registered investment adviser. Fortress Mega LLC is independent of Regal investment Advisors. Registration with the SEC does not imply any level of skill or training.