Mid-January some retirees think, “That’s it, I’m done with the cold.” Let’s face it—winter is often better in theory than in practice, especially as we age. From increased fall risk to aching joints to social isolation, winter can be a challenging season for many retirees.
That’s why so many people de-ice their cars and leave the flurries in the rearview mirror as they seek out warmer horizons. The snowbird lifestyle has become increasingly more popular for retirees whose primary residence rests in chilly climates, but retiring to the sun requires much more than sunscreen and a dream.
Today, we’re going to explore top considerations for a smooth flight path to living the snowbird lifestyle.
Determine your living arrangements.
The debate between renting and buying has never been more essential than for snowbirds. Selecting the right living arrangements for you ultimately depends on your goals and budget. Let’s dive into some of the pros and cons of each.
When to rent
Most people find that renting a property (house, condo, apartment, etc.) in their warm-weather state is preferable, especially if they aren’t completely sold on the location or won’t spend more than half the year there.
Retirees new to snowbirding might need time to travel to different cities and states before they find the right spot for them. In this case, renting is best because it gives you the freedom and flexibility to try out locations on your own terms.
Even once you’ve found the place to hang your board shorts, renting comes with several benefits. First, your maintenance costs will be little to none. You also won’t have to worry about a homeowners association (HOA) fee for a part-time property. It may not make sense to shell out your hard-earned money on a luxury condo that will remain vacant for 8 months out of the year.
Renting does come with some notable drawbacks. If you’re renting, you don’t have familiar items around the place like furniture, pictures, decorations, or your favorite dish set to help it feel like home. You are also at the mercy of the market when it comes to rental costs each year. One year, prices may be in your favor, and another year, they shoot up.
When to buy
But renting certainly isn’t right for every snowbird out there. Buying a property could be a good move for you if you plan to make it your primary residence or if you see yourself living there full-time at some point. You may also benefit from appreciation if you’re snowbirding in a popular area.
Owning property also makes sense if you have an established community and life in your new area. You might love your neighbors, take part in all the community events, and have a great support system in your new area. All of these qualities make buying an attractive option.
If you’re buying in a vibrant area, meeting people and making new social connections could be much simpler. Many communities in Arizona, for example, are lively with clubs, interest groups, and activities that make it difficult not to meet people who are interested in the same things you are. Even if you don’t have a built-in social network, buying in a dynamic community can make that transition smoother, and more exciting!
Homeownership isn’t without its heartaches. You will have to consider how property taxes, insurance, home maintenance, and long-distance care will come into play. If you’re eventually planning on living in this home full-time, make sure it’s suitable for aging-in-place like larger entranceways, zero-entry showers, handrails, and more.
Alternative living options
Think that renting or buying are your only choices? Think again. Some retirees who are passionate about travel and exploring different places might consider purchasing an RV to live in several places over the years. This way, you could live somewhere full-time and then move on when it’s best for you.
Choosing the RV life will come with added travel and maintenance costs, but it could be a great way to discover different places and have unique experiences in your golden years.
You might find that a condo close to town and top of the line amenities makes more sense than a stand-alone home or maybe buying an RV and seeing where life takes you is more your style. No matter what you choose, relocating in retirement is a big decision. The right place for you depends on your goals and priorities both now and in the future.
Snowbirding increases your spending.
Even if you’re heading outside the bustling Seattle metro to a slower-paced environment, snowbirding tends to put a strain on your spending.
Say you split your time evenly between Washington and Arizona, with Washington being your primary residence. In this scenario, your children and grandchildren are living in the evergreen state.
Since Arizona is your snowbird spot, you likely have many communities and social engagements you enjoy while you’re there. This leads to spending more on entertainment, dining, shopping, festivals, beach gear, and other social activities.
Your spending doesn’t necessarily decline when you return north as you’ll redirect your social energy to spending time with your family and social network in Washington. Since snowbirding tends to stretch your spending, you must be honest, careful, and deliberate about building your budget and sticking to it.
To help counteract increased spending, some snowbirds may consider remote or part-time work. Working in retirement can supplement your income and help you find a greater sense of purpose, especially when you’re doing meaningful work.
If you have the opportunity to work remotely from your snowbird state, it’s certainly worth considering. Keep in mind that it might be a challenge connecting to the club house wifi while watching happy golfers play through. With every choice you make, there will be tradeoffs. It’s about striking the right balance between your money and your lifestyle.
Planning early is critical for any retirement plan, but especially for those who want to split their time. If snowbirding is a fundamental part of your retirement plan, let’s start working on creating a savings plan as early as possible. We love helping our clients use their money to enhance their lives, and we would love to help you find fulfillment and joy in your retirement plan.
Unexpected costs of splitting your time.
Alongside higher day-to-day spending, here are a couple of other expenses that tend to sneak up on you.
- Vehicle costs
- Will you have one car or two? If one rests in each location, how will you store it when you aren’t there? Two cars also mean double insurance, registration, maintenance, taxes, etc.
- Winterizing your house
- If you’re leaving the snowy mountains for a sandy beach, you’ll need to take steps to winter-proof your house. Perhaps the last thing you would want to deal with is a burst pipe right when your beach book gets interesting. Prepping your house for winter encompasses a myriad of tasks like shutting off the water, checking your sensors and detectors, increasing home security, outdoor maintenance (shoveling, gutters, etc.), forwarding mail, storing your car, the list goes on and on.
- Our advice? Build a checklist for each house, so that you are prepared each time and don’t forget a crucial step. It’s also sound to have someone local (friend, family member, etc.) check up on the unoccupied house periodically.
- Getting from point A to point B isn’t necessarily cheap. Flights can be costly and even more expensive if you have to check multiple bags to accommodate your lengthy stay. Driving could also be tough, especially if you have to stop overnight (lodging, food, gas, tolls, etc.). Depending on what you want to bring, you may need to hire a moving truck or rent a larger vehicle, which also increases your spending.
- Outside regular travel to your hot-spot, what other traveling will you do throughout the year? Do you plan to take a separate vacation? Are family/friends nearby or does that require another plane ticket? As you can see, these travel costs add up.
Understanding these costs will help your spending be intentional, not spontaneous. Planning for your spending will help prevent over-spending, especially in the first few years of retirement.
There is no short-cut to creating a retirement income plan for snowbirds. No two people’s snowbirding experiences will be the same. Your unique vision for retirement will help us work with you to build a plan that helps you reach your goals.
Make tax-conscious choices.
If you’re dusting off your wings and ready to be a snowbird, odds are you’ve already settled on the perfect sun-soaked spot. But have you considered the tax implications associated with the new digs?
First, you’ll need to decide on your primary residence. Keep in mind that every place has it’s tax trade-offs. While Washington doesn’t levy a state income tax or tax retirement accounts, the general cost of living tends to be higher near the water and larger cities.
If you want to be taxed in your snowbird spot, you’ll need to establish it as your primary residence, which requires several steps. Here are a few:
- Spend at least 183 days there (a.k.a more than half the year)
- Change your driver’s license
- Register to vote
- Find a place to live (rent or buy)
- Change mailing address
- Update banking
These are just a few ways to establish residency in a new place. Work with your financial advisor and tax professional to determine what makes the most sense for your situation. If you only plan on spending 3-4 months in another location, for example, you’ll need to file taxes in your home state.
When you’re evaluating the tax-solvency of your snowbirding nest, consider the following:
- Property taxes
- Arizona has lower property tax rates than Washington (average of .62% to 1% respectively).
- Income taxes
- Washington doesn’t have a state income tax, whereas Arizona does even though it is rather modest compared to other states.
- Sales tax
- Both Arizona and Washington have high sales tax rates (5.6% and 6.5%).
- Vehicle license fees
- This includes vehicle registration, licensing, and other taxes.
Remember, when it comes to taxes, there will always be trade-offs. Determining your primary residence should take tax responsibilities into account and put them in context with your budget and other retirement lifestyle choices.
Wherever you live, TFS can help.
Our team at TFS is dedicated to helping you live a meaningful retirement—no matter your zip code. Relocating in retirement, even if it’s part-time comes with many considerations. If you need help with your financial plan we can take you step by step and create a plan that works best for you.
Are you thinking about adopting the snowbird lifestyle? Let’s talk about that vision together. Contact our team today!
UPDATED: February 2023