Housing is typically the biggest expense in a household budget. It would be nice to reduce that major expense when you're retired. Once you are near retirement, you might want to consider downsizing or relocating to somewhere more affordable. There are many choices because you won't be tied down to a location near your (former) employer.
Downsize. For most retirees, the easiest way to reduce housing costs is to downsize to a smaller home. This way, you won't be far from your local friends and family members. Retirement is already a big adjustment, and it will be easier with your support network close by. With the kids gone, most retirees won't need as much space anymore. A smaller home will also help you save money on utilities, maintenance and even vacuuming time.
Relocate to a cheaper town. Many of us choose to live in a location that has good schools, is close to work or has conveniences like shopping. There is likely to be a more affordable option within a 30 minute drive from where you currently live. The area might be less desirable for families with kids or a little further out from an employment center. However, this type of location is a good option if you want to be near your friends and save on housing costs, too.
Move to a more tax-friendly state. Some places are more affordable for retirees than others. Some states have high state income tax, sales tax and property tax, and low inheritance tax thresholds. If you're not tied down to a state, then you should take a look at state tax rates for retirees. Moving to a lower tax state could help increase your spending power by quite a bit.
Move to a more affordable country. Who doesn't dream of traveling more when working in a stuffy office all day? Once you are retired, relocating to a warmer and more affordable country becomes a real possibility for adventurous retirees. You can live a more comfortable lifestyle on a similar budget in countries like Ecuador and Nicaragua. A dollar goes much further there than in the U.S. Also, retiring in another country doesn't have to be permanent. You can always come back to the U.S. after a few years or just move on to a different country. Why not see the world a little while you can?
Become a nomad with a recreational vehicle. If you don't mind living in a smaller space, then a recreational vehicle retirement might be a good fit. You can travel at your own pace and even pick up some part-time work. Many RV parks hire RVers to handle reservations and other tasks. You can also volunteer to be a park host and enjoy a free site and utilities in exchange for a few hours of work. One side benefit of being a nomad is the ability to choose any home state. This is an easy way to avoid states with high taxes on retirees.
Retire part time in several places. One attractive choice is to live part time overseas and part time in the U.S. Living overseas for six months and then renting or RVing for six months is a great way to see the world. You can see your family and friends at the best time of the year and enjoy your travels when it's snowing in your home town.
Once you retire, you can decide whether or not you will continue to live where you currently are. Retirement opens up possibilities, especially if you wish to relocate. With careful planning, you can stretch your income further during your retirement years while reducing your housing expenses.
Joe Udo blogs at Retire By 40 where he writes about passive income, frugal living, retirement investing and the challenges of early retirement. He recently left his corporate job to be a stay at home dad and blogger and is having the time of his life.
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