{"id":3860,"date":"2014-06-15T06:42:30","date_gmt":"2014-06-15T10:42:30","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=3860"},"modified":"2014-07-22T19:17:21","modified_gmt":"2014-07-22T23:17:21","slug":"the-new-york-times-column-taxes-and-more-when-moving-in-retirement","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=3860","title":{"rendered":"The New York Times Column: Taxes and More When Moving in Retirement"},"content":{"rendered":"

\"the-new-york-times<\/a>Models of pre-retirement planning, Don and Reina Weiner bought an acre of land almost a decade ago in the Woodlands of Chapel Hill, a mixed-age community in North Carolina.<\/p>\n

The couple, living in Leesburg, Va., at the time, had visited several towns around the country in their hunt to find a place to live when Mr. Weiner was ready to leave his job as senior sales director at Airbus Americas. Chapel Hill met their three criteria: warm weather, access to top medical care and proximity to a university to continue learning, Mrs. Weiner said.<\/p>\n

So they paid $130,000 for a lot and $11,000 to an architect to design their dream home. They sold their townhouse in Leesburg and rented an apartment in Chapel Hill so they could supervise construction.<\/p>\n

That\u2019s when Mr. Weiner, now 68, and Mrs. Weiner, 67, hit a barricade. \u201cI had a significant allergic reaction to the environment,\u201d Mrs. Weiner said. She felt an intense pressure in her head. Her throat hurt. There was sinus pain. \u201cThe question was, Could I live here?\u201d she said.<\/p>\n

They decided to hold off breaking ground on the home while she tried to see if she could acclimate to the area. But she had an epiphany: \u201cI decided you know what, this is crazy, I\u2019m trying to do something that I can\u2019t do.\u201d So they regretfully put up the \u2018for sale\u2019 sign on the lot, and are back in the search for a place to live.<\/p>\n

\u201cThe whole experience was disappointing,\u201d Mrs. Weiner said. \u201cThere was money that just went flying out the door. On the other hand, when I decided I couldn\u2019t do it, I just felt it was the right thing to do. I haven\u2019t looked back.\u201d<\/p>\n

As people grapple with whether to pull up stakes and retire in another part of the country, there\u2019s small margin for error. Get it wrong, and it\u2019s hard and costly to undo.<\/p>\n

According to a\u00a0report<\/a>\u00a0this year from Better Homes and Gardens Real Estate, 57 percent of baby boomers say they plan to move to a new home in retirement. When asked which type of community they were likely to choose, 39 percent said a small town, like Chapel Hill, or a rural community. The next choice was a 55-and-older community (27 percent), followed by a metropolitan city (26 percent); 8 percent picked \u201clifestyle\u201d communities (such as ones for active retirees, planned around golf courses).<\/p>\n

Almost one-third of those canvassed plan to spend retirement in a different state from the one in which they currently live.<\/p>\n

Deciding where to move entails some careful planning, perhaps compromising with a partner, and setting priorities. \u201cNo place is perfect,\u201d Mrs. Weiner said.<\/p>\n

READ “RETIRING” COLUMN ON THE NEW YORK TIMES.<\/a><\/strong><\/p>\n

A\u00a0recent report<\/a>\u00a0by Bankrate.com looked at several factors in determining which states offer the best quality of life for retirees, including local weather, cost of living, crime rate, health care quality, tax burden and well-being (a measurement from the Gallup-Healthways Well-Being Index that quantifies how satisfied residents are with their surroundings).<\/p>\n

The five best states for retirement were South Dakota, Colorado, Utah, North Dakota and Wyoming. Popular retiree spots like Florida and Arizona don\u2019t even make the top 10. The five worst states for retirement, according to the report, were New York, West Virginia, Alaska, Arkansas and Hawaii.<\/p>\n

A shrewd relocation choice can reinforce a financial plan for living the longer and healthier life that baby boomers are expecting.<\/div>\n

One big reward of relocating to a smaller home, or one where the real estate market is more affordable, is taking advantage of the equity built up in the home that\u2019s left behind and paying cash for the new place.<\/p>\n

If the timing is right, there\u2019s cash left over to reduce or eliminate credit card and other consumer debts.<\/p>\n

Moving from a high-tax state to a low-tax state is also strategic. Many people pick a retirement destination because there\u2019s no income tax. \u201cWhile income tax considerations in choosing a place to retire are important, accounting for other forms of state and local taxes that are imposed in the new locale is a necessary step prior to the move,\u201d said Jamie C. Yesnowitz, state and local tax principal at Grant Thornton in Washington.<\/p>\n

Florida, for example, imposes no income tax but has sales and property taxes that may be significant. State and local sales taxes vary greatly, with some at 7 percent or more. Five states \u2014 Alaska, Delaware, Montana, New Hampshire and Oregon \u2014 have no state-level sales tax.<\/p>\n

Property taxes are generally the biggest tax burden for homeowning retirees. According to the Tax Foundation, states with relatively low per capita real estate tax collections include Alabama, Arkansas, Louisiana, New Mexico and Oklahoma, while those with high per capita real estate tax collections include Connecticut, New Hampshire, New Jersey, New York and Wyoming.<\/p>\n

Most states give breaks to residents over a certain age, and there may be property tax credits or homestead exemptions that limit the value of assessed property subject to tax. But it\u2019s usually in the hands of a local assessor to determine the total taxable value.<\/p>\n

Review the total tax picture of each of your possible destinations as part of a balanced assessment of the optimal place to live, Mr. Yesnowitz advised.<\/p>\n

For many retirees, working is also part of a retirement plan, so moving to a town with plenty of retiree jobs is something to keep in mind. A new Merrill Lynch study,\u00a0Work in Retirement: Myths and Motivations,<\/a>found that 47 percent of today\u2019s retirees say they either have worked or plan to work during their retirement. But 72 percent of pre-retirees age 50 and up say they want to keep working after they retire, and in the near future it will become increasingly unusual for retirees not to work.<\/p>\n

Work, paid or unpaid, provides a sense of purpose, being relevant, feeling connected and needed. And it helps keep the mind sharper. Researchers from the RAND Center for the Study of Aging and the University of Michigan published\u00a0a study<\/a>\u00a0showing that cognitive performance levels decline faster in countries that have younger retirement ages.<\/p>\n

College towns in particular are attractive places to live and work in retirement. They tend to have entertainment and sports locales and offer a range of part-time and seasonal jobs because these communities tend to be recession-resistant.<\/p>\n

Each year, a new class of students moves into the area, which keeps the economy in gear. Plus, many towns are situated in regions with leading health care centers that are also a source of jobs for experienced workers.<\/div>\n

AARP\u2019s Best Employers for Workers Over 50<\/a>\u00a0winners include several universities and health care providers like Cornell University in Ithaca, N.Y.; Blue Cross and Blue Shield of North Carolina in Durham, hometown of Duke University; West Virginia University in Morgantown; the University of Pittsburgh; and Virginia Commonwealth University in Richmond.<\/p>\n

The retired lawyers Joan Fencik Parsons, 57, and Dave Parsons, 68, aren\u2019t looking for work, at least for now. But when they decided in 2012 to move from their home in the Lincoln Park section of Chicago to\u00a0The Cliffs communities<\/a>\u00a0in South Carolina on Lake Keowee, the fact that Clemson University was about 20 minutes away was one of the appealing factors.<\/p>\n

\u201cIt\u2019s nice to have a college town close \u2014 you get some sports and some theater,\u201d said Mrs. Parsons.<\/p>\n

It has been a lifestyle change for the couple, though. In Lincoln Park, they could walk to the Steppenwolf Theater and to dozens of restaurants. They could walk to Whole Foods. There was an Apple Store down the street. \u201cHere, I have to drive 12 miles if I run out of toilet paper,\u201d Mrs. Parsons said.<\/p>\n

The Parsons tested the waters before they packed their moving truck. They bought the property in 2008 and used it as a vacation house for a few years. \u201cThe year before we actually moved down here, we took a two-week vacation here because I wanted to see what it would be like to live in the area,\u201d she said.<\/p>\n

One niggling drawback. \u201cI miss the ability to fly nonstop anywhere in the world,\u201d she said. The tiny Greenville-Spartanburg International Airport is about a 45-minute drive away, but unlike O\u2019Hare International Airport in Chicago, most destinations require a connection.<\/p>\n

In addition to access to a good airport, before buying a retirement home, soon-to-be retirees and retirees should consider what their daily transportation needs will be when they are in their 70s and 80s.<\/p>\n

That\u2019s one reason the Weiners are now considering Portland, Ore., in addition to Charlotte and Asheville, N.C. \u201cDon hates traffic, and there is a great light rail system\u201d in Portland, Mrs. Weiner said. \u201cPlus, our daughter, Laura, is living there now.\u201d<\/p>\n

What about the warm weather she said was a priority when they first started looking for a retirement home? \u201cI figure we could always leave for a couple months in the winter and rent a furnished apartment in Maui,\u201d she said with a smile.<\/p>\n

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