Most Chevron employees over 50 are already thinking of retirement. But retirement doesn’t have to mean staying put. Majority of chevron retirees are seeking out new places to live – a few states away, across the country or even abroad. Nearly one in three retirees moved at least once during a 12-year period, according to a report issued by the Center for Retirement Research at Boston College.1
The study cited many reasons for those moves (including being closer to family and relocating to a warmer climate), but finances figured prominently. Saving money is always an attractive option, but a move made for financial reasons needs to be carefully thought out. Here are five things to consider before making any decisions.
1. Cost Of Living
Cost of living varies from state to state and city to city. One example: Groceries in Memphis cost 15% less than they do in Miami. This is also a consideration for those moving abroad. Mexico, a popular retirement destination for Americans, offers cheaper durable goods and staples.
When comparing the cost of living, look at more than just essentials such as food and gas. Consider as well the costs of activities you like—such as golfing—and the cost of luxury items you may want from time to time. Those expenses can vary from place to place.
Also be mindful of taxes. State sales and income tax rates differ, and they can add to your new cost of living. For instance, seven states don’t levy any personal income taxes, while 15 states tax Social Security benefits to some extent, and some states even tax income from pensions. Make sure you talk to an Insight Wealth Strategies financial planner to weigh the potential tax impact of any move.
Taxes can be a particularly dangerous area for those looking to move overseas. Retirees have long been attracted to France, but its budget issues have led to some of the highest tax rates for the wealthy in the world—especially when real estate is involved.
2. Housing Costs
Many retirees plan to downsize their homes in retirement as a way to cut costs. Relocating to another ZIP code can help you trim costs without the need to downsize—a move from Boston to San Antonio could drop your housing costs by 43%. Keep in mind, however, that any move may trigger unforeseen costs. For example, a move south might lower your winter heating bills but lead to higher cooling bills in the summer.
3. Proximity To Family
Family is the top reason for moving in retirement, according to the Center for Retirement Research study. Such a move may take you closer to grandchildren, a relative in need of assistance or even help for yourself. But many retirees move away from family in search of warmer climates or lower costs of living. In that case, you may want to factor in higher travel costs if you plan to visit family regularly, especially if your relocation involves moving to a foreign country.
New studies show that increases in healthcare costs are starting to ease up.2 While that’s a relief, the bad news is that it can cost more than $80,000 a year for home assistance in some areas of the U.S. The federal government offers information on the healthcare resources for different communities online at medicare.gov. You also should keep healthcare in mind if you are considering moving abroad. One reason countries such as Mexico and Costa Rica are such popular retirement destinations: access to high-quality healthcare at a fraction of the cost of care in the U.S.
5. Retirement Job Opportunities
Working part time in retirement can be a valuable way to help stretch your savings. Just remember that a move to a city with a lower cost of living probably means lower wages for part-time work as well. And if you move to a foreign country, you’ll need to make sure there are no restrictions on the type of work you can do.
Whether you’re planning a move to the other side of town or across the world, considering the financial costs of that move can help ensure that your new home doesn’t jeopardize your retirement security.
Chevron offers employees two major retirement savings tools – the ESIP and the pension (CRP). If you are not already taking full advantage of the Chevron’s employer match, it would be smart to start doing that now. By doing this, you will feel more confident that you’re making a money-smart move that will help you during your retirement.
I’d be happy to sit down with you to review your current plan to ensure you’re saving enough towards your retirement goals. Because I work with some Chevron executives, managers, employees, and retirees, I’m knowledgeable about your various compensation plans and benefit offerings, plus other issues specific to the Chevron employees (in addition to the retirement, investment, and estate planning issues everybody faces). In fact, chances are you may know one of my Chevron clients and you can ask them how working with a financial planner has helped them.