Retirement Savings Draining Faster Than Expected? This Surprising Move Could Help

If you feel like your retirement savings are draining faster than you expected, one idea is to relocate to a more affordable area. Even though 75% of adults over 50 want to age in place, according to an AARP survey, housing costs may be unaffordable for some retirees.

What you can afford, of course, depends on your streams of income in retirement. Many people save and invest in a retirement plan during their working years, while others rely solely on income like Social Security. Given the cost of everyday expenses like housing, utilities, and health care, many retirees struggle to afford their basic needs.

A vast majority of Americans over 50 say housing is unaffordable

According to AARP research, 87% of people over 50 say that housing affordability is a major problem. This is a significant financial issue for many, as housing accounts for 33.4% of household spending, according to Bureau of Labor Statistics data. For those reasons, being able to cut down on this large monthly expense can help retirees improve their cash flow and create room in their budgets. More cash flow means more available income to pay for necessities, like groceries, but also to have a cushion to pay for unexpected expenses, like health emergencies.

Moving to a new area can impact more than the price of your home

Many people who consider moving think about the cost of a mortgage payment or rent. However, moving can also lower the cost of other bills like property taxes, homeowners insurance, utilities, and transportation. To find cheaper places to live, retirees can research rankings of affordable towns. For example, U.S. News lists Eagle Pass, Texas, as the cheapest place to retire, where the median monthly rent is only $632. The second most affordable place to retire is Decatur, Illinois, where the median monthly rent is $644. Home values in those two cities are quite low as well.

Relocation doesn't have to mean moving across the country

Even though homes might be cheaper several states away, relocating as a retiree doesn't have to mean making a huge move. You can always consider moving to a cheaper neighborhood in your own city or remaining in the same state, just moving an hour or two away from where you live currently. The benefit is that moving a short distance can be far more affordable, as the cost of a local move is $1,400 and the average cost of a long-distance move is $5,450, according to Moving.com data.

Not every move will save retirees money

Whether or not a move will save you money in retirement depends on a few factors. For example, your new destination may have higher taxes that cancel out the housing savings. Or, moving to a smaller place may cost more if it's in a more desirable city. Even staying in place may get more expensive. For example, data from Harvard's Joint Center for Housing Studies found property taxes have increased 31% since 2019, which many retirees still have to pay, even if they live in a paid-for home.

Homeowners who want to stay put can reduce costs in other ways

For retirees who don't want to move due to community ties or family nearby, there are other ways to reduce costs. For example, they can refinance their mortgage, tap into home equity, sell some belongings, rent out a parking spot, and more.

Retirees who are renters can also take steps to reduce costs

For retirees who don't own a home and are renting, there are still options to reduce expenses. For example, living with a roommate or family member can help to reduce costs. Negotiating with a landlord can also help, especially if you're able to provide services to them, such as mowing the lawn or taking care of the garden.

Run the numbers before making major financial decisions

Ultimately, the right choice about where to live in retirement will come down to the individual. Some people may need to make a big move, especially if their retirement accounts are dwindling. Others may be able to stay living in their town or state by moving nearby to a more affordable home. Regardless of what you choose, running the numbers before making major financial decisions will help.

Bottom line

If your retirement account feels like it's draining faster than you expected, it may not be because of financial mistakes you're making. Instead, it may be due to rising housing costs as well as increasing costs on everyday goods, like groceries and utilities. In order to preserve your nest egg, consider relocating to a place that's more affordable. Just make sure that you take the time to research all aspects of your potential new home, including taxes and insurance costs in addition to other homeownership costs.

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