This isn't the first time I've researched an area. Before his death my husband and I looked at various retirement areas. We compared accessibility and enjoyment and cost of living and compared them to our current location (Germany). After his death I had to make some quick decisions, based on some very quick research. Along the way, I've learned that it takes a great deal of research and experimentation to compare real costs. There are many quick click cost calculators out there and while they give an initial impression, my experience is that they don't give you an in-depth explanation of costs. Whether moving to downsize or to find a better climate, there are many things to take into consideration. Along the way I've learned that:
- Averages are that, just averages. The fact that a location is a higher cost of living area doesn't automatically mean that you will not find something reasonable in your price range. There are very few areas of the country I would rule out completely based only on a cost of living calculator comparison-and I live on a fixed income. Most greater metropolitan communities especially have a wide variety of housing options.
- We can't compare apples to apples, especially when downsizing. I live in a 2400 square foot single level home built in 2000. It has four bedrooms, two baths and two living and eating spaces. It also has a large yard and a full attic. I paid $180,000. A similar sized house in Denver would cost closer to $300,00 (and probably higher maintenance since I would have to pay someone to shovel the snow). On the other hand, I looked at three bedroom two bath condos with small yards and covered patios that started at $125,000 and ranged to $200,00. Even with condo fees added on, the total amount would be a good three hundred less than I am paying now-and I wouldn't need a house fund for garage doors or leaking piles
- We need to look at ALL the costs of a home. This is always true, but especially in retirement. Even a paid off house has financial requirements. Again using myself as an example, I pay $160 every single month (averaged per year) for electricity. That's keeping the air at 79 degrees to eighty in the summer. Because I live in Texas if I cannot mow my lawn, I have to pay for that service from March to November. Because I live in a place with clay in the ground, the chance is that at least once in the life of a house, the foundation will have to be raised. All those need to be figured into my math.
- You can't just look at the house. Yes, the housing cost is the highest pot of money you'll be dealing with, but other factors quantify that. I lived in an inner suburb of Washington DC for over twenty years. That said, we lived in Arlington Virginia, comfortably, one one government income. How? There are a great many really good grocery stores and they were and are in fierce competition. This meant that every single week even Whole Foods had a group of drop dead loss leader prices to stock up on. We're talking meat and seafood here, not just canned goods. There were many ethnic restaurants (often in competition) and dining out what very reasonable. Public transportation is excellent and fairly cheap. In most inner DC suburbs you can walk, and walk and walk. Even with two teenagers we had a single car and a bike for my husband until my daughter became a high school senior-when I gave her my car. There are more free things to do in the DC area than anywhere I have ever lived or visited (and that's bunch of places). It starts with a whole museum system that is free to the public and moves on to festivals and get-togethers. The end result is that spending half our income on housing costs was not a painful experience.
- We need to "know ourselves", for lack of a better way to put it. Evaluate the things you want to do in retirement and where and how you will do them. As an example, some places have many good public golf courses and other places require that you spend more money and or join a club. In my experience a higher tax base means better recreational services but there is no given. Will you be commuting to a job or a volunteer position away from your home? In Dallas all the major highway arteries except one are toll roads. This means that "commuting" anywhere is more costly. My alternative is to use the access roads, but that of course is more time consuming. Will you be commuting regularly to see family members elsewhere? Do you need to figure things like travel in your budget or are you homebodies who are happy to pay a larger housing cost since you will be there most of the time. All of these and more are issues to consider.
- We need to look at the WHOLE tax burden. It would be easy to note that Texas has no income tax and leave it at that. However, my taxes on that house are over four thousand dollars yearly (remember that high school football stadium?), and an almost nine percent sales tax. And that's not all. On the other hand, my brother has never paid as much as two thousand dollars per year on his equally large house.
Finally for me at least, cost is only one part of the "moving in retirement equation". Soon I'll try and put into words the other factors and issues i'm considering, from church into the equation to being closer to (and farther away from) family. Oh, and I rushed out of Denver Wednesday morning-avoiding the shut down of traffic on an epic scale, thankfully! One crisis missed.