Pros and cons of relocating for retirement in today’s housing market
Key takeaways
- Relocating to a less expensive part of the country when you retire can help your retirement money go further.
- But in today’s housing market, buying a home in a new location may require taking on a higher mortgage rate and steeper monthly payments.
- Beyond a home’s purchase price, there are also other expenses associated with relocating, including closing costs, commissions and the price of movers.
Many people’s retirement goals include escaping the daily grind and relocating to a lakeside cottage, a beachfront home or perhaps a peaceful mountain retreat. There are plenty of upsides to fulfilling this retirement dream and finding a rewarding place to enjoy life once the pressures of working are behind you.
But in today’s housing market, relocating to a new home is costly. Home prices have hit record highs, and stubbornly elevated mortgage interest rates aren’t helping matters.
It can be a challenge to navigate these realities, along with the general cost of living, to find an affordable place to retire. No wonder Bankrate’s 2024 Best States to Retire Survey, which involved a comprehensive analysis of dozens of data points for each U.S. state, including housing costs, had some surprising results. (Spoiler alert: Florida didn’t even crack the top five!)
Here’s an overview of all the costs associated with relocating for retirement, as well as the pros and cons of making the move.
Top places to relocate for retirement
In addition to housing affordability–related costs, factors analyzed for the Best States to Retire Survey included living costs, health care, weather and crime statistics. From all of this data, Delaware won out as the best state in the country for retirees. Rounding out the top five states were West Virginia, Georgia, South Carolina and Missouri.
Delaware ranked above all other states in part because it doesn’t have any sales tax, and its property taxes are also lower than in most of the country. As an added benefit, Delaware does not tax Social Security benefits, and it also has more affordable homeowners insurance than most states. All of these factors combined can make a significant difference if you’re considering relocating and buying a home in a new state for retirement.
For the many Americans who are behind on their retirement savings, affordability is critical.— Alex Gailey, Bankrate Lead Data Reporter
“For the many Americans who are behind on their retirement savings, affordability is critical,” says Bankrate Lead Data Reporter Alex Gailey, the author of the study. “It’s easier to stretch your fixed income in a state that has a lower cost of living compared to pricier states.” The states that ranked most highly were financially friendlier for retirees thanks to lower housing and health care costs, as well as tax benefits. States at the bottom of the ranking were most costly, and therefore, less sustainable over the long term on a fixed income, Gailey said.
How much does it cost to relocate?
Relocating for retirement typically means selling your current home, which comes with a variety of associated fees and expenses, and then buying a new one, which costs even more. But the proceeds you make on the sale can, ideally, be put toward the down payment on your new purchase.
“If you’ve owned your home for a long time and it has appreciated, you might walk away with a substantial profit,” says Becky Pendergrass, an agent with Benchmark Realty in Tennessee. “That profit can serve as a significant down payment on your new home, potentially lowering your financing needs.”
However, she says, be aware of how your mortgage rate will affect your monthly payments. “If your current mortgage has a lower interest rate, stepping into today’s higher rates could mean that your monthly mortgage payments on the new property might be higher than expected, even if the home itself is less expensive.”
The median home prices in the top five best states to retire all clock in below the national median home price, which as of July 2024 was $422,600 according to the National Association of Realtors.
| State | Median home-sale price |
|---|---|
| Delaware | $394,000 |
| West Virginia | $242,400 |
| Georgia | $380,000 |
| South Carolina | $383,200 |
| Missouri | $274,200 |
| Source: Redfin, July 2024 data | |
In addition to the actual price of the house, here are some other costs to budget for when you relocate:
- Agent commissions: Realtor commissions are no small expense — they typically add up to 2.5 or 3 percent of the home’s sale price, per agent. As a seller, you’ll pay your listing agent and potentially the buyer’s agent as well, depending on the details of your deal. Then, as a buyer in your new location, you may have to pay your agent for that transaction too. It adds up.
- Seller closing costs: Beyond commissions, common closing costs for sellers include transfer taxes, attorney fees, seller concessions (if applicable) and any fees related to paying off your existing mortgage.
- Buyer closing costs: If you’re financing the purchase of your new home, there will be closing costs associated with the mortgage loan as well, including potential application, origination and home appraisal fees. You’ll also likely want to pay for a professional home inspection. And keep in mind that mortgage interest rates today may be much higher than they were when you bought your previous home.
- Moving costs: Finally, there will be expenses associated with moving your belongings to your new home. Hiring movers can cost anywhere from $880 to $2,556, according to HomeAdvisor. The average for a local move is around $1,700, but for a long-distance move it can cost much more.
If you’re relocating outside of your current town or city, don’t forget to consider the daily living costs in a new location, as well. These can vary substantially from state to state and may mean everything from groceries to gas to utility bills are higher — or lower.
Is relocating right for you?
Homeowners who are transitioning from an expensive state like California to a more affordable state may find their retirement move to be a cost-effective no-brainer. But it may not be as budget-friendly if you’re transitioning from a lower-cost state to a higher-cost one — even if you’ve built up a solid nest egg.
“You have to assess whether you can afford a move,” says Gailey. “Relocating for retirement doesn’t make sense for everyone, and there’s no state in the U.S. that will check all the boxes for all retirees.”
There's no state in the U.S. that will check all the boxes for all retirees.— Alex Gailey, Bankrate Lead Data Reporter
“Consider the overall cost of living in the area you’re eyeing,” says Pendergrass. “This includes everything from taxes and health care to the price of a cup of coffee.” There are also many non-financial variables to take into account when you’re deciding whether or not to relocate. “It’s not just about the money,” she says. “Think about where your family is— how often do you want to see them? Are you OK with the idea of being farther away?”
Other factors to take into account are health care, arts and culture, and entertainment options in the area you’re looking to move to. It’s also smart to evaluate whether the area is prone to severe weather or natural disasters, which can result in much higher home insurance costs.
Pros and cons of relocating for retirement
As with any major decision, there are both benefits and drawbacks to bear in mind when it comes to relocating for retirement.
Pros
- New lifestyle: You’ll get the chance to explore new things, make new friends and find a community that better suits the life you want to live now — whether that’s spending more time in nature, taking up a new hobby or enjoying a warmer climate.
- Potential savings: It may be possible to lower your cost of living both in terms of day-to-day expenses and housing costs, especially if you opt to downsize. This is certainly a bonus if you’ll have a fixed or limited income during retirement.
- Living closer to family: If you’ve spent years living far away from children or grandchildren, relocating can allow you to reconnect with loved ones.
Cons
- Higher mortgage rates: If you’re financing a new home purchase, you’ll have to deal with today’s high interest rates. That in turn could cause your mortgage payment to be more costly.
- Steeper cost of living: The overall cost of living could be more expensive in your new location, especially if it’s near a popular vacation spot like a beach or lake. And there’s significant variation from state to state in the cost of housing, groceries, gas and more.
- Leaving the familiar: Saying goodbye to a home and community that you’ve spent a significant amount of time in can be challenging, as can making new friends and finding your way in a new area.
Bottom line
Relocating for retirement is a big life change, one that should be considered carefully before making a decision. There are many potential upsides to this type of life change, including finding a less expensive place to spend your golden years, enjoying a warmer climate or living closer to loved ones. But in today’s costly housing market, the move may end up being far more expensive than you anticipated. Research the options carefully first and make sure the move works for you both financially and personally. “At the end of the day, it’s about finding a balance between what you want and what makes sense,” says Pendergrass.
