Investopedia and SmartAsset, two groups did a study recently, and in the past two years, the number one state in the entire nation for losing retirees, people moving out is California. So why do people want to move? Lower cost of living, tax benefits, a better climate, close to family, other things that you might add in, and so you say it’s just going to be a better quality of life. I get it. Nobody ever moves from California and says we’re moving over there because we’re going to have a horrible life there. Everybody that moves has the intention that things are going to get better over there for this reason. Taxes or lower cost of living or all the things that we’ve named or even some that you might add in. Just be careful, make sure you’re taking into account everything and the reason that you are moving is probably more than one reason, it’s a valid reason, and look also at the negative. Many times, when we want to do something, we mount up all of these reasons to do it and we don’t look at all of the reasons that maybe we shouldn’t do it.

It’s like a confirmation bias type situation where everything you see just says, move, move, move, because you want to move, your heart wants to move. Your head might say well, maybe we shouldn’t, but your heart wants to move, so be careful. That pretty much wraps up the reasons people leave California and want to live somewhere else. Now we’re going to move in and talk about some of the things you really need to be careful about financially as you make this move. We’re talking about moving out of California, but broaden that. You may be watching this and you say, “Well, I live in Kansas and I’m thinking about moving to Florida.” That’s valid. Wherever you are, if you’re thinking about moving, you need to be very careful from a financial standpoint as you decide to move somewhere else that you’re looking at all of the aspects of it.

Let’s talk about one of the things we talked about and the reason that you want to move. Let’s delve into that cost of living. There could be a financial cost there as well because when you move somewhere, for instance, you move from Southern California and you say, well, everything’s high here, but you move to Texas where many times you say, well, they don’t have an income tax there, and you stack up the reasons for moving to Texas. I’ve had people move to Texas and say, “My air conditioning bill in the summer when it got up to an average of 88 or 89 degrees, sometimes hotter, sometimes a little cooler in July and August, my air conditioning bill was almost non-existent.” You move to Texas and your power might cost you $500, $600, $700, maybe $1,100, maybe $1,200 a month because you’re running the air conditioner all the time.

There was a person on the radio when I lived in Texas and he had a joke of a saying and he said, “When it’s 98, 98 and you can breathe it or drink it,” and he was talking about the temperature being 98 and the humidity being 98. He said, “You need an air conditioner, and I’m telling you what, when you need an air conditioner and it’s 98, 98 and you’re living in one of those popular states in the South where it’s humid, I grew up there so I can speak. I’ve lived there a lot of my life, so I can speak for those areas. Sometimes it does, you’re no good to take a shower, you just go outside for a while, come in and towel off because it’s a whole different… You’re going to pay for that. You’re going to pay for that different climate. You’re going to pay for that humidity in the way of air conditioning.

When you’re evaluating cost of living, you’ve got to evaluate everything. You say, “Well, the house costs so much less over there.” I own rental property in Texas. I can tell you that many times you’re paying 2.75 to 3.5% of the value of that house. Every single year that you get assessed a tax assessment, you’re paying sometimes 3.5% of the value of that house in taxes. You say, “Well, it’s lower than California.” Your house here may be four times as much. It’s the same as in Kansas. That may be true, but your taxes may be much lower where you are. When you’re doing this cost-of-living comparison, you’ve got to consider everything. For instance, we talk about groceries being higher in Southern California and in California where I live, and that’s absolutely true, but guess what? California grows a ton, a big percentage of fruit, avocados, walnuts and things like that. You buy them in California at the grocery store and you’re going to get a really good price on them.

You go buy them in Kansas or Texas or Minnesota where they don’t grow very much fruit at all, you’re going to pay a much higher price for those items. Now I’m getting them to the minute details here, but I’m just saying when you’re looking at cost of living, you need to really delve into that cost of living and say what are the differences. It may make an impact on your decision. Let’s talk straight up about the tax issue somewhere else. Many people say, “I want to move to Tennessee. I want to move to Texas. I want to move to Florida. They have no state income tax in those states.” That’s great, but I’ve always said this because I’ve actually lived in two of those three states and I have family that lives in Tennessee. Here’s what I’m saying, Tennessee has roads and bridges, and Texas has schools and libraries, and Florida has an infrastructure that’s really, really good. If the state is paying for things that make that state very livable, they’ve got to be collecting taxes somewhere.

Somewhere along the line, the taxes are coming in. I mentioned in the earlier segment that Texas has a very, very high real estate tax because they’ve got to pay for all of that infrastructure and all of the things that the state provides. They’ve got to pay for it somehow. They’re going to pay for it, some states will get you in the auto licensing where you buy your tags. Some people will get you there, they’ll get you in the state income tax, they’ll get you in the state sales tax, they’ll get you in all kinds of things. When you’re evaluating taxes, you need to be very careful. When I get my tax assessments on the properties that I own in Texas, I mean there’s city tax, there’s maintenance tax, there’s trash tax where they charge you on your house for carrying off out taxes. There’s school tax, there’s state government tax, there’s every single tax.

It’s a list about that long, and it’s really a small type of all the different taxes they get. They’re going to get it somewhere. You just need to do a comprehensive evaluation not only of the cost of living, but also of the true tax situation in that new area if you’re going to make a right financial decision when it comes to, do I move from wherever I am now, California, Minnesota, Kansas, wherever you are, do I move from here to another place? Let me make sure I’m comparing apples to apples. The third thing you consider when you’re going to move somewhere else, I think it’s really important, especially for retirees, that you consider the healthcare situation. When I say healthcare situation, I’m not just talking about the cost of healthcare, but I’m talking about the quality of healthcare and the availability of healthcare in certain areas.

Now, here’s what I mean, and this is learning it from people who’ve moved to all of the popular places. Some of those popular places have a very high quality, and their grade on their healthcare quality that they provide for their retirees is very, very high. I have to also tell you that some of those low-cost places that people are wanting to move to have a very… One reason they’re low cost is they have a very low quality of health insurance that they provide for people. Then there are other people, and I’ve read so many studies on this. I mean 29 years I’ve been working with retirees and their financial situations. I’ve read every study that’s like this, catches my attention and I stop and read it. Not only could a quality of healthcare be really up there, but then you have to consider the accessibility.

If I need to get an MRI, do I need to get on a list and I get it eight months from now, six months from now, or do I get it six days from now or six weeks from now? Because there could be a really big difference. In California even, I recently signed up for an appointment with my doctor for a physical, and it was four and a half months out in the future. Not only the quality of healthcare that’s available to you, but can I get in to see a doctor? All of those things are there. Then of course, from a financial standpoint, when it comes to healthcare, you need to evaluate the cost, not just of your Medicare supplement or your Medicare advantage, and the Medicare Advantage is individual to the states that are out there as well as the Medicare supplement. You’re going to have to change your Medicare plan, you’re going to have to pick up a Medicare plan with your new state, in almost all cases.

There are some national plans, but most of them are state specific. You’ve got to evaluate your healthcare situation before you just jump and move and you find out the quality is not there or the quality is there, but I can’t get in to see my doctor and the cost is sky high. You’re going to move, you’re going to evaluate the cost of living, the taxes, the healthcare, like we just said. You also need to evaluate the housing market. Now, believe it or not, 100% of the people that I have worked with and have ever worked with in 29 years of helping people retire, they’ve always wanted to live in a house. Now, there’s several things involved with housing and everybody wants to look at just the price of housing.

Let’s move to Florida, the price of housing has actually gone down. There’s some reasons for that. In the past couple of years, it’s stabilized in the growing areas and has actually gone down a little bit in some of the areas that are not growing. Why? Because not only when you get a house do you have that mortgage, and not only when you get a house or you say, well, I’m going to pay it off, but you’re not going to pay off your house insurance, your home insurance, your homeowners insurance. That, in Florida is up because of all the hurricanes and the damage and the thing. Somebody’s got to pay for that and insurance and homeowners insurance is just a way of those companies and the state taking this person’s money and this person’s money and this person’s money all over the state and sharing the coverage and the cost of what happened.

They may have a hurricane down in southwest Florida like they did a couple of years ago, and it comes through and it just decimates, for instance, Fort Myers Beach. Well, if you’re living in Pensacola or you’re living in Jacksonville, your homeowners insurance is going to be impacted by that because that homeowners insurance company is operating in the entire state. If they’ve had a big casualty down here, it’s going to impact you. You say, “Well, that’s not fair.” Let me ask you a question. How many times has your house caught fire and burned or been damaged completely by a fire? You said, “Well, never.” Yet, you cover fire insurance with your homeowners insurance. You say, “Yeah, but it’s the guy down the street.” The guy down the street lost everything. Guess what? Everybody on that street helped that person, that couple down the street pay for it through the homeowners insurance coverage that’s across the board.

It’s a sharing of risk. That’s the basic principle of all insurance. When you go to get that house, you may say, “Man, look at this. The mortgage is almost nothing. The cost is almost nothing.” What’s the homeowners insurance? What’s the tax on that house? How much am I going to be taxed? We talked about that a little bit earlier, but you’ve got to look at the whole ball of wax and do you live in a human environment? Because in a human environment, do you live in an environment where there are wind storms and tornadoes and a lot of hail damage and stuff? It’s only going to drive up the total cost of that house till you say, “Well, I’ve got insurance.” Back to insurance, it’s going to drive up all of those costs. If you’re really going to make a solid decision, and from a financial basis, you’ve got to consider what will housing really cost us when we get there in the way of not just the cost of the housing, but the cost of the insurance, the cost of the repairs, the cost of the upkeep.

It all goes in to one bottom line, financial decision. Here’s another thing, people, when they’re looking at a financial decision and they’re going to sell their house here and they’re going to move somewhere else. Don’t forget the moving expenses. What I mean by that is when you move, you usually have a house here and most people want to sell it here so they can get the equity and maybe completely buy a house somewhere else. You say, “Wow, I won’t have any cost anymore.” Well, let’s think about it. You’re going to have to pay a realtor to sell your house here. You’re probably going to have a list of demands from the person who buys it and they say, “We want you to fix this and this and this.” I’ve seen those run sometimes into the $15,000, $20,000, $25,000 range of things you had to fix on your house before you could actually find somebody who would buy it and it pass inspection and then be okay with it.

You’ve got the realtor costs, the fix-up costs. Then you’ve got to go rent a U-Haul and endanger your own health and back, or you’ve got to haul and buy a moving van to come in and move you, and they’re going to destroy some of your… I’m just saying there’s costs there. I’ve had people say the moving people in their fine print, it wasn’t covered and they destroyed thousands of dollars’ worth of our furniture in the move. I’m not trying to scare you, I’m just trying to tell you. Then you’re going to go buy a house somewhere else. Well, no realtor in that new place has a welcoming package is going to give you a realtor fee for free. You’re going to buy a house there and whatever they have in that house, you’re going to want to change and fix up something, and you don’t like the drapes or the blinds or the window covers, or you don’t like the way the lawn is laid out, so you want to go out and put in a barbecue and things like that.

All of those things are fine, but many people, when you’re in retirement, you’re saying, “Man, the fixed income I’m on here in California is not enough. It’s so squeaky, squeaky that I need to move somewhere else and I’ll have all of this margin because my house will be so much less.” Well, when you get ready to make a trip and to take a trip, you need to count the cost. Do I have enough money to do all of this? Particularly if you’re close to being on a fixed income. You say, “Well, I’ve got money in my IRA.” What I just described in a realtor fee here, fixing up a house here, moving a realtor fee there, fixing up that house the way you want it there. That could run $100,000 to $125,000. Without giving away any names, I can show you how that has cost people that much. If you’re minimal on what you’ve got saved and otherwise from that minimal savings you’re going to go to a fixed income, you better really count the cost of, let’s call it the relocation aspect of moving. It’s something that many people don’t consider.

A couple of other things to consider when it comes to the finance. If you move to another state and you’ve got a trust that’s been written in California according to California law and registered in California, you then need to go to an attorney in that new state and they may need to adjust it. If there’s a difference in the laws, they may need to modify it a bit. They’re going to charge you a little bit for that probably. I’m sure they will because they’re an attorney and they have to take responsibility for it. It’s just something else to consider that you may need to adjust your wills and your trust, your wills that are in that trust because you may want somebody else in that area making healthcare decisions and financial decisions for you. You may have had a child here that was your ultimate trustee or successor trustee, and when you move to another state, you may be close to another child.

So just some things to consider. You have your house here that’s titled into the trust as it should be. Well, you’re going to want to take that house out and put the house in the new place into the trust. So those are the kind of things, and then some little bitty things like you need to make sure and find out what the requirements are. How long do I have to get a new driver’s license here? How long do I have before I need to retag my cars? I know when I lived in Florida, they would actually drive by your house. Many people were moving in and they just kept out-of-state plates, out-of-state plates that now if you go to Florida, there’s not a ton of out-of-state plates because they’ll drop by and give you a fine for not getting that plate upgraded to a California to a Florida plate when after you’ve moved in for 30 days or 60 days, you need to check wherever you move to find out what that regulation is.

You need to acclimate yourself to the regulations that you’ve been used to in California, they’ll probably be less, but you need to acclimate yourself to the regulations, driver’s license, tax licensing. You’re going to need to get homeowners insurance in that area if you don’t get it in association with a mortgage that you’ve had to get. You just buy the house outright, you’re going to need to get homeowners insurance on your own. There’s so many of those other little regulatory insurance tax type things you need to acclimate yourself to in your new environment. One final consideration, you need to consider your estate tax. What happens when you’re no longer here? If you’re married, what happens when the two of you are no longer here? Well, different states have drastically different estate tax laws. For instance, all of my friends who do the same thing I do and they’re housed in Massachusetts and New York, tell me that a state tax starts in New York and Massachusetts at $1 million worth of assets. Now, you start adding up what you’ve got and it doesn’t take long to get to $1 million.

You need to make yourself aware, and maybe when you go to upgrade your trust and localize your trust to that new state that you’ve gone to, you need to ask that attorney. It’s in his field, it’s in her field, it’s in the ballpark of trust and wills and estate tax and things like that. Most of them will be able to answer the question, what are the state estate tax laws where I’m moving to? What are those? You probably need to find that out ahead of time. If you’ve got estate tax at $1 million and it’s 5%, it’s just 5% and you move to a state and you’ve got a total net asset with your house and your valuables and your money in the IRAs and the money in your brokerage accounts and your annuities and everything else, you’ve got, it amounts to $4 million, then your kids are going to have $150,000 worth of state estate tax.

I’m just giving you a for instance. I don’t know what the numbers are. You’ve got to make sure you take into consideration before you move. If I move, am I putting my estate that I want to leave in generational wealth to my kids? Am I putting that in jeopardy of being taxed? Let’s put a wrap on this. A lot of reasons to move out of California. Many of them valid, some of them could have gotchas with them. Like if you move somewhere chasing your kids, we talked about what if they moved two months later, then you’re out of luck. You’re on your own. It’s the yo-yo plan wherever you’ve moved. You don’t like where you moved, but you’re stuck there because you just bought a house there. A lot of reasons to move with some pitfalls, a lot of financial considerations to take into your evaluation.

I think before you move, you need to find all of those things out so that you don’t go into a rat trap and then you’re not able to get yourself out of the rat trap. How would you go about doing that? Well, I think you need to talk in general to a financial planning financial advisor. In other words, somebody who’s saying I’m not just concerned about what you’ve got right now and making you money right now, and you don’t work with somebody like Blank Investments because they’re even by their title, only working with you for investments. Work with a wealth management firm, work with a financial planning firm that really has the focus of the long haul of your retirement. Now, what are you going to do? Well, let me tell you what I do. When somebody comes in and says, “We’re moving to X.” Number one, I tell them every single thing I know about the state they’re moving to.

I tell them all of the things that I’ve learned, and then I get on the phone and call some of my friends who are advisors in that state and they know everything about that state because that’s their domain. That’s where they operate. You need to get, again, your financial planner can help you, your wealth management person can help you even before you move to tell you all the things that, that state is particular to and all the things to be aware of, all the things for you to investigate. For instance, when I have somebody move to a new state and they’re on Medicare, either the supplement or Medicare Advantage, I tell them, if I’ve got a contact there, I say, “Call this person. They will help you.” If I don’t have a contact, I tell them, I say, “Call somebody who does Medicare, but they’re not isolated to one product or one type of Medicare.”

You need to get that kind of input and that kind of advice. Just like you’re looking at housing prices, you’re looking at what their income tax is. They don’t have a state income tax. You need to go deeper. Those are only surface-level issues that you’re going to run into a lot deeper. Work with a financial advisor, a financial planner, a Wealth Management person to help you. They can give you a lot of those pitfalls and they can say, “Watch that landmine over there. I’ve investigated that landmine. I don’t know anything about that one, but here’s who you call when you get there or call before you go.” You need to know the path that you’re going to take. At least have a plan before you take that very first step. I hope that helps you make sure and look for the pitfalls before you go.

So, you know we’ve talked about the reasons to leave and the financial issues that you could run into. I think this is information that you might want to look over again, because unless you were stopping and taking notes, all of these things, any one of these things can, and in my experience of 29 years of seeing people move has been a gotcha. Did I cover them all? No, because the next gotcha, I’ll learn about next week. Go back through, highlight all of these things and you’re going to be smart enough and you’re going to be exposed enough to that state where you’re thinking about moving, that you’re going to have your own questions to ask. When you have all those questions, go to your financial planner, go to your Wealth Management person, and ask them, okay, of all these questions, what do you know? All these that you don’t know, where can I go to find those out? Hey, if you want to talk to us on a one-on-one basis, wherever you live, we can do Zoom, phone, whatever. Go to the website, www.mosleywealthmanagement.com

There’s a place on there where you can book an appointment with us and you can request an appointment. We’ll call you and make sure that it sets up with the right advisor that we have. Maybe that advisor has some experience in the state that you’re thinking about moving to. We can give you personalized information if you want us and our individual help. Secondly, if you like this information, we put a lot into and many years of experience, went into putting this together. If you like this, hit the like button. If you want to hear about future shows and topics that we put out, hit the subscribe button. If you know somebody who’s about to move, send this info to them so that they can go through it, and they can avoid some of the pitfalls that are out there. Until next time. I always tell you I am Tom Mosley, and if you’ll give me just 8, 10, 15 minutes every single week, I’ll do my best to increase your financial knowledge.