Considerations for Snowbirds

If you’re not ready to move in retirement but are weary of shoveling snow in the winter, renting or buying a home in a warm-weather state could offer the best of both worlds. So-called “snowbirds” keep their longtime home near family and friends and spend the cold-weather months in a sunny destination that offers warmth.

More than 1 million people spend part of the year in Florida, and many of them are retirees. The Carolinas, Georgia and Alabama have also become popular destinations for snowbirds.

But before you join the flock of snowbirds…

Wannabe snowbirds should consider:

Buying versus renting

Renting will help you determine whether a community is a good fit before you decide to purchase a condo or house. Kevin McLoughlin, a certified financial planner in Sterling, Virginia, says he encourages clients who are thinking about buying a second home in a warmer climate to spend one winter renting.

“Sunshine is a plus, but you’ve also got to create a sense of meaning if you’re going to stay for a month or two,” says Heather Gibson, a professor of leisure, tourism and sport at the University of Florida.

Owning two homes can be expensive, even if you’ve paid off the mortgage on your primary residence and can afford to pay cash for your second home. The cost of homeowners insurance has skyrocketed in many coastal communities, and insurers typically charge higher premiums for second homes; because second homes are usually vacant part of the year, they’re at greater risk for insurance claims. You’ll also have to pay property taxes, which may be higher than taxes in your home state. Maintenance and utilities add to the cost, too. Renting will help you get an estimate of the costs of owning two homes.

Health care

Make sure that you have access to good medical care during the winter months. This is particularly important if you’re enrolled in Medicare Advantage, a private insurance plan that typically requires beneficiaries to use in-network physicians and hospitals. If you have a Medicare Advantage plan, contact the provider to find out whether you’ll be able to get in-network care at a potential winter destination. Otherwise, you may have to pay extra for an out-of-network provider, or your care might not be covered at all.

Some Medicare Advantage plans are specifically designed for individuals who will need coverage in more than one location, which is worth considering if you’re planning to be a snowbird. Another option is to enroll in original Medicare, which provides coverage anywhere in the United States if the provider accepts it.

Taxes

States in the South and Southwest have long appealed to affluent retirees seeking to escape high state tax rates. But to demonstrate that you’re a full-time resident of a no-tax or low-tax state, you must spend the majority of the year in that jurisdiction.

Estate plannin g

Each state has its own laws and regulations governing estate planning, which complicates matters for snowbirds. For example, a health care directive or power of attorney that’s legally binding in one state may not be recognized in another.

Sandra Block is a senior editor at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com .

©2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

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