Planning for Retirement: A Young Couple’s Dilemma

“My husband and I are both 66 and quite active as we prepare for retirement. We have a strong passion for our careers, enjoy traveling, and we’ve even adopted two boys who are now on their own. Recently, we made a significant shift, moving to Florida to be closer to my parents after selling our home of 23 years. Thankfully, the Florida house has appreciated, though not quite as much as I expected. After my parents passed and with my health intact, we’re considering moving again because we’re not keen on staying in Florida.”

Initially, we thought about heading back to Southern California where we started out after college. However, given California’s high taxes, Charleston has crossed our minds as a potentially better fit, though honestly, we’re not really in love with the vibe of the East Coast these days. Thankfully, I have virtually no mortgage or debt, but we’re pondering where we can settle down, enjoy the great outdoors, and meet new people. There’s also the tricky question of how much we can responsibly spend, along with some tax planning assistance. I’m somewhat interested in building a house, especially considering the significant shortage out there, but the current interest rates make that a daunting prospect. We’re more on the conservative side when it comes to adventure. So, how do I find the right financial advisor for us?”

Advice on Finding a Financial Planner

In general, experts suggest that hiring a financial planner is beneficial, especially as you gear up for retirement. Planning for spending is best supported by comprehensive cash flow modeling through a knowledgeable advisor. Bill Harris, CEO of Evergreen Wealth, emphasizes that at 66, it’s crucial to start planning for around 25 years of expenses, considering taxes and all available income sources.

Interestingly, a good advisor will delve into conversations about everything that matters to you—living life outdoors, traveling, enjoying time with grandchildren, and engaging with your community. Trevor Houston of ClearPath Wealth Strategies advises that couples often begin by discussing their monthly lifestyle budgets before getting into the nitty-gritty of their finances: what a fulfilling month really costs. You need to be transparent about the lifestyle you envision for retirement, as everyone’s desires differ. That number helps you evaluate compatibility with Social Security, investment withdrawals, and other income streams.

Considerations for Relocation

If you’re set on moving to a different state, picking a location wisely is essential. Harris notes that relocating to a high-tax state needs careful financial modeling to understand its impact. Consider factors like state income taxes, housing, health care costs, and the taxes on future investment withdrawals as you age.

However, JB Beckett from Beckett Financial Group warns against basing a move solely on emotional factors or fleeting tax incentives. With things like the One Big Beautiful Bill Act temporarily easing tax burdens in certain states, it’s crucial to consider the long-term implications once such incentives fade. Relocating to a state with historically high taxes can affect your financial stability in retirement, so ensure your reasons for moving align with your broader goals.

Moving to a high-tax state can be feasible if you’ve adequately assessed the costs involved. Harris adds that understanding your tax bracket can heavily depend on your tax planning strategies. Techniques like loss harvesting and careful asset allocation can prepare you accordingly.

One recommendation from pros is to rent temporarily—perhaps for six months—to get a feel for the community and lifestyle before fully committing.

Building Your Own Home: Is It Worth It?

As you look to build a new home amid soaring borrowing costs, solid tax-aware planning can shield you from unfortunate investment liquidations and maintain your financial health. Harris mentions that the saying, “you marry your house; you decide your interest rate” holds weight. But in retirement, it’s crucial not to let high rates dictate your budget too rigidly, notes Beckett.

Hyland mentions that some retirees find borrowing advantageous during high-expense years. If a sizeable amount of your retirement savings is locked in pre-tax accounts, pulling out large sums at once could be financially daunting. Thus, weighing financing costs against tax implications can often reveal the more cost-effective route. For example, paying 6% interest on a mortgage might come out cheaper than jumping into a higher tax bracket.

Choosing the Right Financial Advisor

While not everyone requires a financial planner, if you’re considering one, now might be the perfect opportunity to focus on retirement goals. A good advisor manages your resources effectively so you can concentrate on living rather than worrying about finances, according to Harris.

Hyland suggests that collaborating with a financial planner can help create a tax-efficient withdrawal strategy and give you peace of mind about your plan. Even a short engagement with a fee-only advisor can provide you with confidence and a roadmap for the future.

It might help to think about your financial health as you do your physical health. When needing a specialized surgery, would you prefer a general doctor or a renowned expert? It’s similar with finances. To understand how much you can spend before retirement, seeking skilled financial advice is invaluable—especially from someone who has a successful history of guiding pre-retirees and retirees, says Beckett.

If you’re still uncertain about whether you should hire a financial professional, Houston suggests reflecting on three crucial questions: Do you fully grasp the details? Do you actually enjoy it? Do you have the necessary time? If you answer “no” to any of these, it might be wise to seek help from someone who does.