Retiring in 2026? How Moving Could Affect Your Social Security and Medicare Benefits

Moving to an area with a lower cost of living is a key part of many seniors' retirement plans, but the financial reality can be quite different from what they imagined. 

Before you pick a retirement destination, you need to check more than just the average cost of utilities or the median home sales price in your new area: You also need to pay attention to how moving could impact your senior benefits, including how they're taxed and whether your Medicare plan will stay the same.

Keep reading to learn how a retirement move can impact your Social Security and Medicare benefits. We'll also give you tips on how to minimize impact and plan for any changes.

How moving in retirement can affect your benefits

No matter where you are in the country, you'll be able to access your Social Security and Medicare benefits. However, the amount you receive in Social Security and the networks or prescription drugs you can afford with certain Medicare plans can vary based on location.

Fortunately, you can mitigate most of the consequences of moving by preparing well in advance.

How moving in retirement can affect your Social Security

While your gross Social Security benefit won't change if you move, the take-home amount could fluctuate. Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont all have some sort of tax on Social Security benefits.

Most of these states have income limits on Social Security taxes, so if you make below a certain amount, you might not be subject to the tax. However, you'll want to consult with an accountant or a tax professional to understand exactly how your new state's tax codes will hit your budget.

How moving in retirement can affect your Medicare Advantage plan

If you sign up for Medicare Parts A and B (also called Original Medicare), you can access medical services at any Medicare-authorized hospital in the country. In contrast, Medicare Part C (also called Medicare Advantage) is a private insurance plan offered by an insurance company that partners with Medicare to offer services. It limits users to a region-specific network, which can cause complications when you move.

Since some Medicare Advantage plans are region-specific, you might not need to switch plans if you're moving nearby. But you definitely shouldn't assume your plan will carry over, so do your research ahead of time to find a new Medicare Advantage plan that will cover you in your new area.

How moving in retirement can affect your Medicare Part D plan

Medicare Part D is specific to prescription drug coverage. Most Medicare Advantage plans include Medicare Part D, but if you're on Original Medicare, you need to choose your own Medicare Part D plan that covers the prescription drugs you need.

As with Medicare Advantage, there are multiple plan options within Medicare Part D. Not all plans apply to all regions of the country, so you'll need to review which Part D plans are available before you move.

What happens to your Social Security benefits if you move abroad?

If you're retiring outside of the United States, you can likely still receive your Social Security benefits, but there could be some delays or adjustments depending on the country you move to.

You can't receive Social Security benefits in countries that are being sanctioned by the U.S., including Cuba and North Korea. For the most part, U.S. citizens cannot receive payments while living in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, or Uzbekistan.

In some countries, you might only be able to receive payments for six months in a row before they stop. The Social Security Administration's Payments Abroad Screening Tool can help you figure out how leaving the country will impact your Social Security benefits.

What happens to your Medicare benefits if you move abroad?

For the most part, Original Medicare won't help you pay for any medical care while you're out of the country. But if you ever plan to come back to the U.S. permanently, you should maintain your Medicare Part B coverage by paying the monthly premium (most people do not pay a Medicare Part A premium).

If you enroll in Part B late, you'll pay a lifelong penalty in the form of an increased premium. And if you come back to the States without coverage, you'll likely have to wait until the next open enrollment period to get coverage, which could impact the care you're able to receive.

How to plan ahead for a move in retirement

Despite potential changes to your Social Security and Medicare benefits, moving might still be the best option for your retirement budget. You can minimize any impacts to your benefits by taking the following steps well ahead of your move:

• Update your address with the Social Security Administration as soon as you move to prevent payment delays.
• Research Social Security tax laws in your new state and start saving now if you have to pay additional taxes.
• Verify whether your Medicare Advantage Part D plan offers coverage in your new area.
• Use Medicare.gov to compare Medicare Advantage and Part D plans in your new area.

Bottom line

Sometimes, to avoid wasting money in retirement, the best move isn't to move at all. It's to stay put. 

Checking Medicare Advantage premiums, Social Security taxes, and mortgage interest rates, along with the general cost of living in an area, can help you understand if relocating really will save you money. You just might find that staying where you are, warts and all, will ensure your retirement savings last the rest of your life.

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