How to decide where to live in retirement?

moving van in front of a house

Talk about a weighty and also very personal question! All the way back in my very first post, I mentioned that my family relocated just a few short weeks after I left the workplace. How did we decide where to live? This is certainly an important question for all retirees, whether early or at a more traditional retirement age. For some, this answer was decided long ago – whether to stay in their current home, turn a once-vacation property into a primary residence, or some other predetermined path. But for others, it’s a decision made much closer to when they achieve FIRE – and that was the case for my family. We made our final decision on where to live just six months before the big move! How? Read on…

Financial elements are essential to consider – and easier in some respects

A key aspect of deciding when you can retire is determining how much you need to save, which comes from establishing your retirement budget. That budget must of course include the cost for housing, whether that means a new or existing mortgage, current or estimated monthly rent, or at minimum the cost for upkeep, utilities, and all those other things that come along even if you already own your retirement home. For the last eight years prior to my retirement, we lived in the San Francisco Bay Area – among the highest cost of living regions in the world. The budget on which we wanted to live in retirement wouldn’t support us staying there (and we didn’t want to anyhow). So our decision on where to live in retirement was absolutely influenced by our target monthly housing cost. As we were planning to buy a home this meant a mortgage. Spoiler alert: the house we ended up purchasing was less than 1/3 the price that a comparable home would cost in the Bay Area!

Another essential aspect to consider is taxation – particularly in the United States where this aspect varies a lot. There are myriad YouTube videos and articles written about the “Top 10 Places to Retire”, as you may have found. From a financial perspective, these pieces tend to focus on things such as whether a state has income tax and/or sales tax, the relative cost of property taxes, and how they treat taxation of retirement income such as Social Security. There is no question these are key topics to consider. In our case, we elected to stay in California for now, despite the high state income and sales taxes – more on that later. That said, the latter differs based on municipality, and we are now living in a town that has a lower sales tax rate than what we had farther north.

How to pay for healthcare is essential to consider as well, and is a topic I’ve covered previously. If you plan to keep the health insurance you have presently in retirement, ensuring you will maintain access to doctors, clinics, and other elements of healthcare is essential. The availability of these resources, as well as the cost of to access them, often differs markedly based on geographic area, so this warrants investigation. In addition, the cost of your monthly healthcare premiums – even within the same health plan and insurance provider, also can differ substantially. In our case, our monthly premiums are >$300 cheaper in the town we moved to just a few hours south of our previous location – for the very same plan & coverage! If you will shop for a plan on the ACA exchange, the options differ quite a bit depending on which state you are looking at. As healthcare absolutely impacts your retirement budget, these costs must be investigated early so they can be factored in.

These are just a few of the financial factors to consider. Other costs will vary based on area as well, and should be investigated. In our case, our utilities and our auto insurance got cheaper when we moved, which was certainly positive for our retirement budget!

Beyond money – the truly important things

In many respects, finances are the “easy” part of the equation. They are tangible, readily defined, and easily investigated. We definitely spent far more time thinking about all of the other reasons we would want to live in one area vs. another. Leaving the workplace is a big move. Relocating your family is yet another big move (literally, sometimes!). Therefore, there are myriad factors worth considering before making a decision. After all, post-retirement – whether FIRE or traditional, you will no longer spend the majority of your waking hours at work. Where do you want to live? This isn’t just weekends and holidays, but every day! We started from a position of no limitations; staying in the US was likely but not certain. How could we decide when the options were so many?

A bit more than a year before I was to leave the workplace, we started to get serious about planning our future move. It was time to move from daydreams to action! After a period of research and a variety of discussions, we took an international move off the table for the foreseeable future. Our daughter was going to be entering high school and as a family we decided that she would graduate from a US school. We determined that our passion for international living would for the time being, be met by vacation travel (little did we know COVID-19 was around the corner). Besides, we knew we could revisit that decision later. OK so how to choose where to live in the US?

My wife, Lorri, and I decided we would each make a prioritized list of things that defined our ideal retirement town. We each spent time separately coming up with a list of 10-15 factors that mattered to us. We asked our teenage daughter for input as well. For example, living in an area with easy access to hiking and biking, the quality of schools, and various aspects of climate are examples of factors we listed. Then we came together to consolidate and force-rank our list. Since I approach most problems with an engineering mindset, a spreadsheet was central to this process! We then used those factors to evaluate a list of potential areas we’d been considering. This would help us decide what remained on the list, what was off the list, and where we needed more data to make a determination. Here’s a snapshot:

You’ll note that I added some of the financial factors to the table as well. We also used quantitative or qualitative scoring to place each factor into one of three grades: red/yellow/green. This gave us a really good foundation to prioritize our further research. But we weren’t done yet!

Making the decision: there’s no substitute for visiting in person

Next, we started digging in deeper on the areas that ranked highest. That involved a lot of reading and also researching otherwise online. We deprioritized some cities based on our findings, and removed others from consideration. For the former, we decided we might visit them later, but they weren’t on the top of the list. We also started leaning towards staying in California despite some of the financial downsides, due to ready access to the great CA state university system and climate advantages (very important to Lorri!). Next we planned our first visits, including ones to several different parts of California.

If there’s one thing I learned pretty quickly, it is that there can be a big difference between virtual vs. in-person research. I know that seems painfully obvious, but I was surprised several times by how quickly we cooled on a town once we spent a day or two there vs. our initial interest level. It’s also a very different thing to think about vacationing somewhere vs. living there full-time and year-round. Again, that sounds terribly obvious but it really is a mindset shift which I believe you have to undertake.

Lorri was really great about helping us stay focused on the key questions and ensuring we got what we needed to out of our visits. As a simple example, she recommended we walk to downtown from neighborhoods that seemed interesting, as this is something we’d be doing often post-move. It was also important to go beyond the more tourist-type stops and check out the local scene – the stores, schools, entertainment, and other resources. I’m someone that has moved 11 or 12 times since graduate school, and I’ve never spent so much time really thinking through what it would be like to live somewhere new. I had always been working full-time before, and admittedly hadn’t always been terribly thorough in considering these aspects.

So how did we land on the Central Coast? Sure, the great wine was a positive influence but it was a good deal more than that! Honestly, it just felt right. Yes, it ticked the most boxes on the spreadsheet (it is #7 on the screenshot above). But it was a good deal more than that. I had a strong feeling after our first visit, and this sentiment only grew stronger after a few more trips. I believe we kept our minds very open to the other options on our list – and I think this is essential. But I also believe that all three of us in the family felt this was the right spot for us pretty early on in the process. Following the methods we had laid out just made us that much more confident in our selection, particularly in the context of the other areas under consideration. There are always trade-offs, of course. But we are very happy with the decision we made!

But it’s also not necessarily a permanent decision!

Despite having a pretty solid process that we feel was the right level of due diligence, I don’t want to suggest some absolute permanence in the decision we made. We are always open to the possibility of change! For us, we felt it essential to make a decision on somewhere we think we might want to live for the rest of our lives. More than six months later, we are feeling great that we did a good job of that. But it’s still early of course. That said, we also have a built-in hedge here given the very active tourism in this area. By that I mean we could easily rent our new home down the road, should we decide to live elsewhere either part- or full-time. We still have a very real international living itch to scratch and vacations may not be sufficient!

That said, this is an important decision and one to take very seriously. However, it is effort well spent and that time taken will pay off many-fold once you realize how happy you are in your new town. This is not an area where you want to have buyer’s remorse! While COVID-19 restrictions means we cannot do all that we wish to explore our new area, we are very thankful that we prioritized being within a 30-min. walk to downtown – and also having ample access to hiking and outdoor activities!

I wish you luck in your own search, whether near-term or farther down the road!

A brief diversion – some have recommended that I start a Twitter account for this blog, which I’ve now done. If you’re so inclined you can now follow me on Twitter: That also means I can now do fun stuff here in the blog like refer you to my last post:

9 Secrets to Success in Retirement!

chalkboard with "success!"
“9 Secrets to Having a Successful Retirement!” – The Money Guy Show, Dec 18, 2020

If you’ve read earlier posts of mine, you’ll recognize that I have mentioned The Money Guy Show podcast and YouTube channel previously. I find their guidance to be both highly relevant and well aligned with my worldview. They recently put out the show linked above. While watching it I thought that this would be a great opportunity to add context from my own FIRE (Financial Independence Retire Early) journey. I believe that my post should stand OK on its own, but I strongly recommend viewing the above video for the full picture.

Admittedly this is a lengthy article – my longest, I think! In the interest of keeping the content at the right level, I’ve placed many links throughout this article that will take you to posts where you can find more details about concepts that are of interest to you.

1. Have an Attitude of Gratitude

It’s impossible to argue with such sound advice. Irrespective of your path to retirement – and particularly if you retire early, you surely arrived there supported by many others along the way. I am forever thankful for the many positive influences in my life, such as my family, and particularly my wife, Lorri. In my series on keys to success in the workplace, I wrote about the extraordinary value gained from aligning yourself with strong mentors. When I reflect on my own path to financial independence, it is these individuals from whom I learned the most and also gained tremendously in terms of career advancement. There is no question that this accelerated my FIRE goals, and I am grateful to have known them.

As I wrote back in my very first post, I know just how much I have to be thankful for. I find myself reflecting daily on how fortunate I am to have succeeded in my plans to FIRE. Yes, there was lots of hard work involved! There’s also a heck of a lot of good luck and timing as well. I can easily identify opportunities where things could have turned out very differently for me. If you don’t believe that, please read Malcolm Gladwell’s book, Outliers: The Story of Success (he narrates the audiobook as well). I believe you’ll be convinced!

2. Know What You are Retiring To

I love this point, though I also feel there is not merely one way to answer this key question. As I’ve noted before, achieving financial independence does not mean you’re ready to retire or necessarily should! I did not have a finely articulated plan on the day I left the workplace – and for me I think that’s just fine! I have a never-ending desire for learning, and a huge benefit of retiring early for me was simply creating the space for this very purpose, along with pursuing my passions, like cooking. In line with what Brian and Bo mentioned, I’ve got a list of hobbies and interests I have explored pre-retirement, but not in sufficient depth. One example is app development, where you can’t simply dabble. Only now have I had the time to spend hours daily or weekly to dig in as required to understand if this is something I want to do merely at a hobby level, or perhaps as a business – and yet I’m still just getting started!

Leaving the workplace also requires a tremendous amount of adaptation. We spend the majority of our waking hours at work and when that is suddenly gone, you will be surprised by many things. Having a plan or at minimum a loose structure of what you will do once retired is essential. This is an area in which it pays to be thoughtful! You don’t want to find yourself wondering “what do I do next?”

3. Do The Math

It is a huge though necessary change to go from a saver mindset to one of consumption. It’s among the things I thought about the most in the last few years before retirement. While my wife and I were strong savers, we had never employed a formal budget. We spent a full year before I left the workplace developing and living on our retirement budget. By making all our spending visible and holding ourselves accountable for our expenses, we entered this next phase of our lives feeling so much more confident. As I’ve discussed before, Lorri and I also found huge value in working with financial advisors to ensure that we were well positioned to take such a huge step.

That advanced preparation has been hugely supportive to my mental health during these first six months of early retirement. I believe it is essential for all retirees, but particularly when you pull the trigger in the midst of a global pandemic and a highly volatile stock market! I think the best evidence of my financial peace of mind has been that of all the topics I have covered in my “milestones” posts, money concerns are nowhere to be found.

If you’re interested in learning more about the math of withdrawal rate, it’s hard to do better than the simple guidance Bo and Brian share in the video (see ~24 min for this section). I’ve read endless volumes on this and shared some details on this topic before. For us, we landed on ~3.5% withdrawal rate, in line with The Money Guy Show recommendations. That means we needed to save around 29 times (or 100 / 3.5) our annual expenses before retiring. That said, market conditions this year have us ending 2020 withdrawing quite a bit less based on our current net worth – not a bad “problem” to have!

4. Prepare for the Psychological Change

Retiring is one of the biggest life events you will undertake – right up there with getting married or having kids. And just as with those things, you cannot fully prepare for retirement. Even with good research and reflection, you will have to learn to fly the plane while you’re still building it! Frankly, it requires a huge amount of adaptation. This has absolutely been the area of biggest surprise for me, as I assume it is for many. I’ve written about this a few times now, and it plays a central role in my milestones posts to date.

I get tremendous benefit from my daily morning walks. These put me in the right headspace to start my day. They also have become an opportunity to process the emotions I’ve been feeling lately. But I’ve also learned that isn’t enough. I’ve realized I need to talk about these things with Lorri as well, something I admittedly haven’t always done well in the past. I know I am growing as a result of all this change but that doesn’t make it any easier! Retiring early is a seismic shift after all those years of work, and is a journey on which I learn something new about myself seemingly every day.

On a practical note- Yes, Brian is absolutely right: being able to shop/etc. at whatever time I want is really great. We love being able to hike whenever we like and know the trails will be far less busy than on weekends. Particularly when we are all undertaking necessary precautions due to COVID-19, this is a big benefit.

5. Make No Obligations

I love this one – and of course it was one of the things I really looked forward to in retiring early. After a career of timebound and other structured requirements under the direction of others, I really wanted this freedom. I now have very few obligations – outside of a couple of weekly Zoom happy hours with friends 🙂 Like many, I have fallen into some natural rhythms of how my days run. I discussed this in my six-month milestone post. But that doesn’t mean I stick to them like a schedule – or beat myself up when I don’t feel like following my usual course of events. It’s the freedom to spend our time how we want, right? I still find I need to remind myself about that sometimes.

I did encounter one area of caution so far that is worth mentioning. I’ve been approached about consulting a number of times since I left the workplace, and have had some good calls with prospective clients. After 23 years of work, I found myself being really drawn to such familiar ground without really thinking through it. After reflection, I’ve realized that at least presently, I need some real boundaries. A few consulting calls a month is easy to take on, is interesting, and generates some income. But I have also learned I need to be protective of my time and make sure I don’t overcommit. I’m just getting started on this next phase in my life and I need the space to do the things I want to do. I haven’t let landed on “what I want to do” next and taking away the time I need to explore that would be a bad idea, indeed! Thankfully, my wife and friends are great at hammering me on this point!

6. Be a Lifetime Learner

This one is my favorite! As I wrote in #2, my FIRE journey is all about creating space to learn and experience life to the fullest. While I’m not standing still in the moment, once COVID-19 is behind us, that pursuit will only continue and grow. There are courses I want to take, skills I want to learn, and myriad trips that Lorri and I will enjoy – the list is practically endless. Never stop learning is one of the best pieces of advice I can offer to anyone. Our world is enormous and there is so much to experience and discover. Get outside the familiar and comfortable – Carpe diem!

Teaching and mentoring is a natural inclination for me, and as I have learned, one of my most important sources of positive validation. I recently realized this is what I missed most about the workplace! I do get to scratch that itch somewhat from consulting, from this blog, and also the calls and emails I’ve had with others on the topic of FIRE – I really do get a lot out of those exchanges. But I’m still searching for another outlet. My intention is that 2021 will help me identify those things so I can take action!

7. Know Your “Why”

For me, this point ties together several other items on this list. It’s vital to know “why” you are retiring – particularly if you are doing so early. Yes, leaving the workplace means eliminating things you want to leave behind: other people’s deadlines, endless paperwork, long work hours, and the list goes on. But entering upon your next phase of life in retirement, you need to know what you aim to achieve. We didn’t yet know how to do it, but Lorri and I decided nearly 20 years ago that we aimed to retire early, and precisely why we wanted to do that. It was a key goal of ours, despite having challenging, rewarding, and fulfilling careers! There’s just so much more we want to do, and we had a clear vision of what that would look like. We spent the intervening years refining that vision and taking the steps we needed to get there.

A note of caution – for many, a large part of their self-worth and their view on the contributions they make to the world are very tied up with their work lives. Retiring will remove that in an instant! It is essential to have thought through “what comes next” and how that ties into your greater purpose and direction. As Brian mentioned, many people leave the workplace only to return because they were depressed and didn’t know what to do with themselves. Measure twice and cut once!

8. It’s Supposed to be Fun

I have never apologized for loving video games. As a mid-Generation X-er, I was born at just the right time to have experienced the full tenure of these delightful distractions! This is just one example on the lighter side of the fun things I enjoy spending (it’s not wasting!) time on since leaving the workplace. I’ve got a long list! But yes, if you were wondering I am still playing World of Warcraft. On a more productive front, cooking has continued to be another thing I really enjoy. I don’t see my interest in that diminishing anytime soon!

Brian and Bo make an excellent point – one of the most fun and productive pieces of brainstorming you can do in the years leading up to – and after retiring, is thinking about all the things you want to do. I had never been a bucket list person myself, but in the last year before leaving the workplace I started a list of things I wanted to do “eventually” after FIRE. Some were straightforward (cook Oaxacan mole negro – I’ve now made six of the seven Oxacan moles! Here’s my Notion database with recipe info), and some were longer term (learn Spanish). And then there’s the never-ending list of places to which we want to travel… My advice to you: enjoy this time, and known that after retiring, the fun continues as you will think and talk often about what to do next.

9. There’s More to This Life

I imagine this one means something different for each of us. For me, this ties in to purpose, intention, and knowing what is important to you. In my view, retirement – early or otherwise, is just another phase in the continuum of life. It’s not a panacea, a reset on life, or anything like that. Rather, it is simply another stage in this life we are so fortunate to live and get to define as we see fit. For me it is about enjoying the time I have with family and friends, learning and experiencing as much as I can along the way, and contributing in the ways I am able. Leaving the workplace simply provides me the opportunity to spend more time on these pursuits, leveraging the gains made from my time there. What it looks like will surely continue to change and evolve as time goes on. I, for one look forward to all the twists and turns, the successes and failures, and the many experiences that are to follow!

I’d like to close this out by thanking you all for being on this journey with me. I wish you the very happiest of holidays, and all the best for good health, success, and happiness in the New Year. May 2021 bring you only positive things and cherished memories!

image credit: “Success!” by gfdnova1 is licensed under CC BY-SA 2.0

Next up: a guest spot on a ChooseFI livestream!

screenshot of YouTube video

I’m invited to a livestream event!

If you follow the FIRE community it’s highly likely you know about ChooseFI. It’s a very successful podcast, YouTube channel, and online user community. I discovered hosts Brad and Jonathan via their audio podcast about three years ago, after which the show became a regular part of my commute playlist. They recently announced that they’d be doing a YouTube livestream event to celebrate 2020 financial independence wins. Along with what sounds like a ton of other people, I threw my hat in the ring to contribute. I was really surprised and honored to be among those selected to participate!

The show featured short interviews with fifteen different people in various stages of their FIRE journey. The aim of the show was to talk about your wins this year and have a brief Q&A with the hosts. The video above will start at my section of the livestream. But please do feel free to rewind to the beginning of the show as all of the contributors had interesting and varying stories to share about how to succeed on the path to FIRE!

In a small world story, one of my lifelong best friends, Eric Reinholdt, was also selected to be on the show – here’s his section, up just before me. I’ve been talking with Eric about FIRE for over a year now. As you’ll see, he’s come really far on his FIRE journey in a relatively short time. This is no surprise to me given his bent towards rapidly understanding a problem and putting plans into action. I’d be remiss not to mention Eric’s great YouTube channel, one I really enjoy. It’s called 30×40 Workshop, and despite not being an architect myself, I find much of his content highly interesting and often applicable to my own life. Check it out! Oh and Eric and I just might be working on a new project together…

My comments on the show

There were a few times in talking about my FIRE journey where I missed responding to part of a question, or where I thought I could have provided a better response. Having been interviewed in the past, I am all-too aware that this happens when the camera is rolling! Anyhow, I thought I’d take this opportunity to write about some of these things and other related points I hope you will find of interest.

Who else have I talked to about FIRE? Was Eric the first person I talked to about it?

Obviously I talk & write about it a lot these days! But as I’ve mentioned before, I didn’t talk with many people about FIRE outside of my immediate family until a year before I left the workplace. Maybe it’s just bad luck, but I had some really awkward conversations with a few coworkers about my interests in retiring early, and in response stopped doing it unless someone else raised the topic. I did speak in detail about my plans with four or five of my best friends in that last year – including Eric. Some were already interested in or were on a FIRE path, so that was easy territory. But otherwise, online forums and conversations with my (amazing) financial advisors was about it.

I have found that the general acceptance FIRE as a valid strategy is dependent on your age group. Millennials rightfully get the credit for being the biggest FIRE enthusiasts, though there are quite a few Gen Xers other than me who are on the path or have already retired early. But from a ratio perspective, my experiences suggest this idea is more accepted among a younger demographic. On the other side of my generation, I’ve had several pretty negative exchanges with Baby Boomers on topic of FIRE – and I’m not one to “OK Boomer” anyone at my age! Perhaps that’s a topic for another time?

Lastly, financial matters are often uncomfortable ground for friends, coworkers, or even family members to discuss. Therefore it makes sense that FIRE may not be commonly talked about. To suggest you are going to leave the workplace before traditional retirement age may be cause for some to jump to incorrect conclusions about your financial picture – and how you got there, which could result in jealousy or other difficult reactions. I’ve experienced some of this myself, so I know the fear is valid.

Question about savings strategy

I mentioned starting an after-tax brokerage account when at a startup company that didn’t have a 401(k) plan – which is correct. However, some may have wondered why I didn’t also contribute to an IRA at that time. I actually did do that so don’t panic! I just neglected to mention it on the show.

What did my first week post-FIRE feel like?

I’ve written a little about this already, but the show gave me a good opportunity to talk more about the emotional side. It certainly was a whirlwind. I think the distraction of having to move our household helped give me time before I really had to start processing the decision to leave the workplace. Importantly, despite the maelstrom of emotions, it always felt like the right move and one that was overwhelmingly positive! Even after six months, I am absolutely convinced this has been the right decision!

Talking about draw-down strategy

Lest you be concerned that 1.5 years of expenses in cash reserves isn’t necessarily enough to leave the workplace in the midst of a pandemic and the associated volatile market – that isn’t the full picture. We also have an emergency fund of another six months of expenses, so that’s really two years in cash. In addition, our portfolio also includes cash equivalents and fixed income holdings. So there isn’t a scenario readily imagined where we would have to touch our growth engine that is the stock portfolio, which makes up the overwhelming majority of our holdings.

All that said, Brad’s point is a really good one: It is a strange thing to go from a saver / accumulation mindset to one where you are now drawing down. It hasn’t ever really “bothered” me per se, but I did need to make the mental switch. I think I’ve just redirected my saver mindset to my budgeting practice these days, which scratches that itch nicely 🙂

In conclusion

It was a fun interview and while it went by really quickly, overall I’m happy with how it went. As most people on the livestream were much earlier in their FIRE journey, my hope is that my section provided a different viewpoint – as well as some support that they will all get there as well! As always, in hindsight there are “better” answers that I can wish that I gave, but perhaps this post will fill in some of those gaps.

In my interview I also didn’t get the chance to reference the value I have found in working with financial advisors in recent years. This is not to say it’s the right path for everyone, and the FIRE community tends to be rather DIY – and also averse to paying assets under management (AUM) fees. But for my family, it’s been hugely helpful in myriad ways. In the end, we all need to choose what is best for us at each point in time.

Lastly, one more plug to consider watching the whole show – if you have any interest in FIRE or particularly if you are on the journey already, I think you will find it well worth it. And do consider subscribing to ChooseFI! It’s a really great resource.