Don’t Let That Retirement Dream Home Turn Into a Nightmare

Americans dream for years of buying or building a retirement “dream home.” Many want their new homes in warm weather climates like Florida or Arizona.

According to The 25 top places to retire in America, a Time Magazine analysis of Census records, of the 3.3 million Americans 50 and over who were no longer working and move to another state, their destinations were “overwhelmingly” clustered in just a few places: Florida, Arizona and the coast of South Carolina.

The top destination, according to the magazine, is Sumter County, Fla., (home to the retirement community The Villages, which has the highest median age of any county in Florida.) Lake Havasu City, Ariz. is a close second, following by Hilton Head Island, S.C. The remainder of the top 20 locations included five cites in Florida and two in Arizona.

Retirees are leaving snow-bird states in the Northeast for better weather, walkable communities and golf. But it’s a huge decision, both financially and emotionally. There is a litany of things retirees should review before they make such a big decision.

Financial professionals nationwide have many stories of mistakes that have been quite costly. So, before you make that decision to pick up states and move, you need to make sure the move and the location are right.

Here’s seven mistakes people often make, according to financial professionals.

  1. If you haven’t lived in the city community before, spend a year renting or leasing. One financial advisor told a story about a couple who lost $200,000 because they bought a new home without living in the community. They ended up hating it. The sold the home at a loss and moved back to their original home.
  2. Are you sure you can be away from children and grandchildren? You might not want to move away if being near your children and grandchildren is important to you.Don’t get caught up in the hype,” says David Blackston, of Blackston Financial Advisory Group in The Villages, Florida. “Do you want to be around your kids? Seventy to eighty percent of people who live down here, their kids live up North.”
  3. Make sure you have access to the airports and health care. “You want to be around good, quality health care,” says Blackston. A home out in the country may be bucolic and peaceful, but as you age, being close to your health care professionals and world-class hospitals is important.
  4. Consider what is important to you. If access to restaurants, arts and theater is important to you, you may want to make sure your new community offers those kinds of things. If you love to walk or bike, make sure you have access to walking trails or bike paths. If it’s a city, make sure walking or biking is safe.
  5. Talk to your finance professionals before you make the purchase. Most financial professionals don’t recommend pulling the money from your retirement accounts – you don’t want to be house rich and cash poor, especially in retirement. Consider all of your financing options.
  6. Make sure you can afford the mortgage. There is a lot to consider here. Blackston says you need to make sure you can afford the mortgage if your spouse passes away. “People buy these homes, then they come down here, and a spouse passes away and they can’t afford to be here,” he says. Remember, if your spouse dies, you may be subjected to a major reduction in income and an increase in taxes. Social Security will end for the deceased spouse, and depending on how the pension was structured, that could also end or be reduced. And you will go from married filing jointly to filing as a single.
  7. Have an emergency fund. Finally, many couples underestimate the upkeep of their retirement homes. You must be prepared for major repairs and expenses as they come up. What happens when your air conditioning goes out in the middle of the summer. Are you prepared to replace it? What about upkeep such as landscaping and minor home repairs? What happens if the spouse who handled upkeep dies? Are you prepared?


This article is for informational purposes only and is not intended to provide any tax, legal, or financial advice. We encourage you to work with qualified professionals for your specific goals.