Rick Gross
Special to the Tribune

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February 7, 2014
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Financial matters: Smart moves for retirement relocation

Retirement opens the door for many retirees to consider a change in residence. Here are answers to questions about the financial implications of relocation at this stage in life.

Q: When I retire, I’d like to spend the winter in a warmer climate. Should I purchase a second home in my favorite destination?

A: The decision to buy a second home in another state may depend on how well your budget can endure the costs. Can you afford to take part of your nest egg to buy another home or allocate monthly income to new mortgage payments? Will you be left with sufficient funds to manage unpredictable retirement expenses, such as future medical care? You also need to think about travel, upkeep, homeowner’s insurance and taxes as you tally up projected expenses of owning a second home.

As an alternative to buying a second home, consider renting a vacation property in the desired area. This option poses less financial risk, and ultimately offers more flexibility, including the freedom to visit other locations to get your warm-weather fix.

Q: My spouse and I are debating whether to stay in our current home or move to a smaller residence once we retire. What are the pros and cons of downsizing?

A: Trading in the family home for something smaller can be a good financial decision for some people. Generally speaking, a smaller home is easier to maintain. That means less work and expense for the occupants. Assuming your new home is less expensive, you can put the difference toward retirement savings or remodeling projects in your new home. Downsizing also provides the option to choose a home with fewer levels or other features that may be more suitable as you age. And, with less room to fill, you won’t be as tempted to make unnecessary purchases.

Q:I’ve heard of retirees moving abroad to stretch their retirement dollars. Is this a good idea?

A: It’s true that some Americans are moving abroad in retirement. If you’re eager to experience a different country and culture firsthand and have the resources to make such a move, foreign relocation might be a dream come true. Popular relocation spots in Europe, Central America and South America can provide a warmer climate, more relaxed lifestyle and may be more affordable.

On the other hand, living in a foreign land can have drawbacks. Medicare dollars will not follow you overseas. If you’re wary of healthcare services in your new country of residence or can’t afford to purchase care abroad, you’ll have to travel to the U.S. to use these benefits. In addition, social security dollars generally can’t go to foreign banks, and Americans retired abroad will likely still need to file a U.S. tax return. Foreign currencies can also be unpredictable. Should conversion rates change abruptly, the buying power of your American dollars may fall quickly.

— Rick Gross is a Financial Advisor and Private Wealth Advisor with Ameriprise Financial Services, Inc. in South Lake Tahoe, Calif. He specializes in fee-based financial planning and asset management strategies and has been in practice for 20+ years. To contact him visit www.rickgrossadvisor.com or 530-542-6266.


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Tahoe Daily Tribune Updated Feb 7, 2014 05:27PM Published Feb 10, 2014 11:14AM Copyright 2014 Tahoe Daily Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.