retired man with cane sitting on bed

3 Ways Relocating in Retirement Could Backfire

Relocating in retirement can have a lot of upsides. You might be able to move somewhere with a better climate and more activities that suit your interests. Or you could move closer to family you haven't been able to see as often as you'd like. These can be powerful motivators to pack up and leave your home, but it's important to not let the potential upsides make you forget the potential drawbacks of moving in retirement.

Here are three downsides of relocating you should weigh as well. You may not experience all — or any — of these. But if you think they're a possibility, you should start developing a plan now to combat them.

Person sitting on bed, holding cane, and looking out a window.

Image source: Getty Images.

1. It could cost you more

When moving to a new city in retirement, you have to weigh how its cost of living stacks up compared to your current home. Moving to a more expensive area means you'll have to save more to cover your retirement costs. If you build your budget around expenses in your current city, there's a possibility that you'll run out of money prematurely in your new home.

You can't just look at housing costs, either. This is most people's largest expense, but you'll also have to pay for food, transportation, and healthcare, among other things. You must take all these factors into account when determining how the cost of living in your retirement city compares to your current city.

If the city you're moving to is more expensive, make sure you build your retirement savings goal around its average costs. Keep an eye on this over time. Some cities grow faster than others, and this can lead to differences in how quickly housing and other costs rise in the area.

2. It could cost you some Social Security benefits

Currently, there are 12 states that tax the Social Security benefits of some of their seniors. They are:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

Moving to one of these states isn't a guarantee that you'll have to give any of your checks back to the government. Each state sets its own rules for determining who owes these benefit taxes, and many seniors don't pay at all.

But it never hurts to look into the rules for the state you're moving to to see if benefit taxes are a possibility for you. If they are, you'll need to budget for them. It's best to do this by saving up in advance of retirement. Trying to reduce your retirement expenses doesn't always pan out.

3. It might not feel like home

Every city has its pros and its cons, and often one of the biggest pros for the area you live in already is that you have a social network there. You can forge a new social network in a different place, but this isn't always easy, especially when you're new to the area.

Moving to a place where you already have friends or family can ease the transition somewhat, but there's a possibility you could still feel out of place in your new home. Anticipating these feelings and devising strategies to address them, like engaging in group activities that will enable you to meet others who share your interests, can make things easier.

If any of the above challenges seem like too much for you, relocating in retirement might not be your best decision. You could always remain where you are and budget extra for travel costs if you'd like to visit family or explore other cities. Think through all your options before deciding which is best for you.

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