As Certified Financial Planners ™ in New Jersey, we frequently get the question “should we move out of state to save money on taxes in retirement?” New Jersey is certainly an expensive place to retire and those close to retirement often believe that they need to get out of Dodge in order to retire comfortably. It seems logical that if NJ is “expensive,” you should leave.

But the answer is not as straightforward as one may think. Here are some things to consider:

• Do you have family and friends nearby?
  • Do you have family and friends where you intend to move?
  • Will you spend a lot travelling back to visit frequently?

Rose and Pat are lifelong NJ residents. They retired last year with a sizable investment portfolio and find they are busier than ever with a robust social calendar. Nothing gives them more pleasure than spending time with their children and grandchildren, all of whom live within an hour radius. Rose and Pat also love to travel. Finally mortgage-free, they are considering moving south rather than be burdened with a hefty property tax bill and income taxes. Their children have expressed the concern that they may not be able to visit often due to scheduling and financial constraints. In this case, it probably makes very little sense for Rose and Pat to make a move. They may see an improvement in their quality of life from a financial perspective but at what cost? Their life is in NJ. It’s also possible that any savings in taxes may be more than offset by the travel required to maintain important relationships in their lives.

• Do you like where you live?
  • Will you be able to maintain your lifestyle elsewhere?
  • Is the other area conducive to your interests and hobbies?

Bob and Peggy have lived in NJ their whole lives. While they have always enjoyed going into the city for shows, they find that they do not visit as frequently. Their children are married and have moved out of state. Most of their friends have moved south. Bob and Peggy are avid golfers and enjoy the beach. They have come to really dread the change of seasons and have been contemplating downsizing and moving to South Carolina to save on taxes. And why wouldn’t they? Their quality of life, financial and otherwise, will likely improve with the move.

• Are there other considerations that might impact this decision?
  • Healthcare
  • Other Taxes (Income, Sales, Probate)

Sometimes in life, we make decisions based on what looks good on paper rather than what feels right. Certainly, as financial planners, we want the numbers to make sense. But you have worked your whole life to get to this point. If your life is where you live now, you enjoy it, and you can make the numbers work, then it probably makes little sense to make a decision to move based solely on the amount of taxes you pay. And by all means, if the grass really is greener elsewhere, then make your move!