6 Expert Tips for Retirees Considering Relocating to a Cheaper City

Are you retired or about to retire and thinking about relocating to a cheaper city? Generally, this can be a great idea, but it’s crucial not to be overly persuaded by, say, lower housing prices. There is a lot of fine print when it comes to relocating — and this fine print can include hidden fees.

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Consider the following six expert tips if you’re considering relocating to a cheaper city in retirement .

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Decide Whether You’re Moving Abroad

Jose M. Berlanga , an investor and real estate developer, said the first thing you need to be thinking about is whether you’ll be living in the U.S. or abroad. If you’re considering moving to another country, be prepared to provide what is needed to obtain a visa.

“When considering an international option, the first thing we need to consider is if a visa is required and what type,” Berlanga said. “Fortunately, most countries will welcome U.S. citizens, as long as they have proof of income.”

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Find Out Your Property Tax Obligation

Property taxes can differ significantly from city to city. Make sure you know the property taxes you’ll be responsible for regarding a specific property. It’s also worth knowing whether the state you’re thinking of living in offers homestead credits.

“Many states offer a homestead credit to help reduce your property tax bill, but you must apply for it,” said Chris Rivers, CFP, CRPC and principal at Armstrong, Fleming & Moore, Inc. “If your new state offers a homestead credit, you should apply for it immediately and confirm whether you are required to reapply annually. Some states offer automatic renewal once you apply the first time, while others require an annual application.”

If Moving Out of State, Know State-Level Tax Laws

If the city you’re thinking about moving to in retirement is a different state, know about state-level estate taxes.

“At the Federal level, estate taxes don’t kick in for individuals until you clear the $13.61 million exemption,” Rivers said. “However, 12 states levy their own estate taxes, with exemption levels and tax rates that diverge from the Federal estate tax.”

And that’s not all — six states impose an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania.

“This is a tax that the heirs pay upon receiving an inheritance. Spouses are exempt from this tax, and some states exempt other immediate family members,” Rivers said. “Maryland is the lone state with both an estate and inheritance tax. The Iowa inheritance tax is set to be phased out in 2025.”

If Moving Out of State, Scope Out Healthcare Costs and Medicare Plans

If you’re enrolled in Medicare and moving to a cheaper city in another state, you could face some challenges. Do your homework carefully here.

“Medicare Part C (Medicare Advantage) and Part D (Prescription Drug Plans) are run by private insurance companies, and the plans vary from state to state,” Rivers said. “Your current plan may not be available in your new state. Even if it is, the pricing will be different, and in the case of Part D, the list of covered medications may differ, as well.”

The good news is Medigap coverage (Medicare Supplemental Insurance) plans do not vary from state to state — but the cost might.

“Pricing may be different in your new state,” Rivers said. “As an additional wrinkle, not every plan is offered in every state. Check to see that yours is available, and if not, start researching a replacement.”

Note that Medicare changes can usually only be made during the open enrollment period, but moving to a new state provides an exception. You can change your plan within a set time period.

Determine Whether Moving Will Make You Happier

You may have no choice, financially, but to move to a cheaper city in retirement. If, on the other hand, you’re moving to a cheaper city not because you absolutely need to save money, but because you want to, then you should think about whether living in this new area will enrich your life.

Berlanga recommended asking yourself the following questions.

• Is this new location going to improve my current lifestyle?
• Do I plan to stay put at this location?
• Will I improve certain areas of my life while compromising others? Are the compromises worth the savings?

“You may pick a cheaper place to live but might end up being discontented with the environment, scenery and people,” Berlanga said.

Don’t Rush a Move

You may start researching cheaper places to live and be quickly lured in by a new area. Pump the brakes, ask yourselves the big questions and do all your homework before buying a home there.

“Don’t rush to buy a place until you have been there long enough to ensure that you have made the correct choice,” Berlanga said. “Fully understand what area of town you want to be in and how much space, number of bedrooms, bathrooms and other things you need, such as internet access, services and utilities.”

This article originally appeared on GOBankingRates.com : 6 Expert Tips for Retirees Considering Relocating to a Cheaper City