About 400,000 American retirees relocate each year, on average, and of that, a large portion is deciding to retire in Texas. A recent report showed that Texas is the number 2 State behind Florida for the number of retirees relocating here. And this statistic seems to be trending upward. And it’s not just retirees moving to Texas, thousands move to the Lone Star State each year.
Of course, there are many reasons people choose to move in retirement, but among the most common are downsizing to a smaller home, moving to a state with more retiree-friendly tax laws, and chasing milder weather and a sunnier climate.
If you’re one of the many considering a future move, make sure you have really thought it through, because relocating – whether you’re moving across town or across the country – can be time-consuming and expensive, and not a retirement decision you can easily undo.
The average cost of a local move is over $1,000, not including mortgage closing costs and other home-buying expenses. Long-distance moves cost nearly five times as much!
Retiring in Texas? Schedule a no-obligation conversation with the team at PAX Financial Group to see how we can help.
And it’s not just a matter of buying boxes and packing tape. There are a lot of other expenses associated with relocating – some small, some big – that can add up quickly, potentially amounting to thousands and thousands of dollars you may not have budgeted for.
Many retirees often forget to account for one or more of the following relocation costs:
Closing costs on your home
If you’re selling your home, it’s likely the buyer is footing the bill for the closing costs, but if you’re buying a new home, you’ll probably be responsible for those closing costs.
Closing costs are processing fees that mortgage lenders charge to facilitate your loan, to cover things like an appraisal, title search, home inspection, etc. They are typically anywhere from 3 to 6 percent of the loan amount but may be lower or higher.
It’s also important to remember that closing costs may require additional funds for the escrow of property taxes, and do not include your down payment.
Down payment on a new home
Conventional home loans typically require a down payment equal to 20 percent of the loan amount. For a $200,000 mortgage, that means you’ll have to make a $40,000 down payment.
Although this is a hefty chunk of change, remember that you may be able to use the proceeds from the sale of your previous home, if the sale price exceeded any outstanding loans against it.
Fees or rent for senior housing
Some retirees decide they no longer want the hassle and responsibility of home-ownership and opt to rent or move into a senior-living facility.
The costs of senior housing will be different depending on where you live and what type of residence you choose. For example, the cost of living in an independent living community, also known as 55+ developments, ranges from $1,500 to $10,000 per month, whereas an apartment in an assisted-living facility averages around $3,600 per month.
These costs will vary significantly depending on the distance of your move and how much stuff you have.
A small van or truck for a local move might only set you back $50, whereas a large truck for a long-distance move may be more like $2,000, and renting a moving container can cost as much as $5,000.
For boxes, packing materials, and tape, if it costs $100 to pack up a two-bedroom apartment, you can expect to easily spend several hundred dollars for a four- or five-bedroom house.
And if you want to hire movers, the going rate is about $25 to $50 per hour, per worker, for a local move, and several thousand dollars for a long-distance move, depending on distance and square footage.
A full-service move, where professionals come and pack up your whole house, move everything to a new location, and unpack everything, can cost anywhere from $550 to $12,000.
Travel to visit an area/spend time in an area
If you plan to retire and relocate, consider spending at least a few weeks “living” in your potential new locale, even if it’s somewhere you’ve vacationed, or just a few states over.
You need to see what the community feels like from the perspective of a resident, which may be very different from the way a vacationer might experience it. Does your potential new community have the right lifestyle and culture for you? This might include arts, amenities, access to healthcare, shopping, recreation, lifestyle, weather, and people. Remember, this may be where you live out the rest of your years.
Is your retirement income sufficient to cover the costs of living in this area?
If the answer to any of these questions is “no,” then you still have time to reconsider either your chosen location or your location requirements before making the big move.
Costs to furnish a new home
Sometimes it makes more financial sense to sell or donate your furniture and large items when you sell your house, and buy new stuff for the new place, especially if you’re moving a long distance, or you’re moving to a house which is much smaller.
The average cost of furnishing a 2,000-square foot house is around $69,000 with new items and $25,000 if you buy used items.
Whether you’re buying your next home or renting, you’ll need some kind of insurance coverage. The average annual cost of homeowner’s insurance is $1015 and protects against loss or damage to your home, property, and family members.
Renter’s insurance costs an average of $168 per year and covers your personal belongings against theft or damage. You may be able to add additional policies for liability and other coverage.
How a financial advisor can help
There are so many options and variables at play here – from the ways you can move and where you move to what you move into – we can’t possibly cover all the possible permutations. But you know who can help you navigate the world of relocation? Your financial advisor.
Know your options, decide what’s best for you, think things through and have a plan. That’s the best way to make it a good move, one you can really live with.
At PAX Financial Group, we have more than 100 years of combined experience helping families retire in Texas – and nationwide – and one thing has become inherently clear: Everyone is different! What works for one person may not work for another. We will take the time to construct a custom retirement plan created just for you.
The team at PAX Financial Group is here to help with all of your retirement planning needs! Schedule a no-obligation conversation today.
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