Retirees are rethinking their retirement relocation plans as rising daily expenses make high-cost cities less affordable across the U.S.
A recent report from Nationwide found that nearly one-third (32%) of all investors do not believe their current living location is financially sound. This is especially true for Northeast (41%) and West coast (37%) retirees, who often face higher tax burdens in states like New York and California.
As a result, non-retirees anticipate working past their retirement age to afford living expenses. Forty-one percent of non-retired investors expect to leave the workforce at 66 or later, with northeasterners (47%) slightly more likely to work longer.
“While it’s clear that investors across America are facing many of the same challenges, their attitudes and actions may look a little different, depending on where they live,” said Eric Stevenson, president of Nationwide Retirement Solutions. “Between inflation and a lack of savings, many pre-retirees are likely feeling they don’t have enough to make a traditional retirement work.”
Despite describing their financial outlook as “optimistic,” with the average northeasterner holding a median retirement savings of $250,000, high costs are prompting non-retirees in these cities to change their financial lifestyle. Twenty percent plan to relocate to an affordable region in retirement due to a higher cost of living, beating the national average of 16%.
Others expect to continue working throughout retirement out of necessity, and 19% of non-retired northeasterners believe they would need to begin withdrawing money from their retirement savings prematurely if they retired within the next year.
Investors in regions outside the northeast also anticipate working longer, despite living in cities and states with lower taxes and day-to-day costs. Twenty-seven percent of southern investors expect to delay retirement and 39% say they would have to continue working to supplement their income if they retired within the next 12 months.
Well over half (62%) of southerners do not believe in the idea of retiring at 65, adding that it “doesn’t apply to people like them,” respondents say. Another 72% believe living costs will impact their ability to retire.
Meanwhile, inflation remains a concern for Midwest investors, with only 41% being optimistic over their 12-month financial outlook. This group is also the least likely to make any changes to their financial lifestyle, and 32% plan to work outside retirement. Just 11% expect to relocate to another area.
Lastly, western investors are much more hopeful about their retirement compared to any other group, with 44% feeling optimistic over their financial outlook within the next 12 months. Investors in this region also had the highest median level of savings, at about $300,000.
Inflation and rising costs continue to weigh on their minds, however. Seven in 10 expect high costs in the West coast to impact their ability to retire, and 31% say their current state or city is not where they want to retire in.
Financial advisors are in tune to their client’s needs and concerns, Nationwide reports. Clients widely report inflation as their top concern over the next 12 months, cited by 34% of advisors, with regional variations: Advisors said inflation concerns among clients were highest in the Northeast and Midwest (36% each), followed by the South (34%), and West (29%).
Among topics discussed, tax planning and retirement savings remain top priorities across regions. Advisors and clients regularly discuss tax planning strategies (Northeast 33%, Midwest 37%, South 37%, West 33%) and accumulating sufficient retirement savings (Northeast 27%, Midwest 31%, South 32%, West 33%).
“It’s good to see advisors tuned into the needs of their clients who are thinking about relocating in retirement. Advisors have an opportunity to help these clients consider factors like tax implications, healthcare needs and availability, and community support to make a more informed decision about whether or where they should relocate,” Stevenson said.
SEE ALSO:
10 U.S. Cities with the Highest Retirement Income
10 Cities Where Social Security Benefits Evaporate Fastest… And 10 Where They Last Longest
Best and Worst U.S. Cities to Retire in 2024: WalletHub
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
