Americana era actor and humorist Will Rogers once said that people spend the second half of their lives trying to find something to do with all of the time they rush through in their younger lives trying to save. I don’t know if that is a commentary on choosing between the viability of retirement or choosing to work for as long as one is able to. After all, retiring to Florida is the endgame of a long working life, right?
I wish I could say that I have a sound retirement plan, but I do not. As of now, I am focused on launching various small business concerns.
That is not to say that I am not thinking about my future retirement plan. I have a small fund, but it is nowhere near what I need it to be realistically for retirement.
Also, I think that I will be working well into the retirement era of life. I probably won’t be alone. Well over 20% of people over the age of 65 are still working.
About 20% of Americans don’t save any money at all for retirement. Most financial experts recommend that you save at least $1 million to $1.5 million for a future retirement plan.
Most people would be lucky to save 10% of such estimations by retirement age. The average annual cost of living for a retiree is at least $46,000.
The cost of living is a statistic that most retirees must think about seriously.
After all, retirement is just a saving plans for living out the final decades of life, as morbid as that might sound.
As popular culture and stereotypes tell us, all retirees yearn to relocate to Florida. This isn’t true and it may ultimately not be a great idea.
Florida: The 2nd Most Popular State Retirees Flock To
Every TV show and movie of the 1980s and 1990s perpetuated the notion that working people longed to retire at the age of 65 and spend their twilight years in Florida.
The weather is tropical, there are nice beaches, and no state income tax. What retiree doesn’t want to retire to Florida?
However, the more that I learn about Florida as a haven for retirees, the more I think about why it probably shouldn’t be a haven for retirees.
Before I get into all of that, let’s talk about the most popular states retirees actually relocate to as well as the importance of retirement planning.
You’ll might be surprised to learn that Florida isn’t even number one on the list of top 5 retiree destinations. They are:
- New Mexico
- Florida
- Arizona
- South Carolina
- Idaho
More people flock to New Mexico for retirement than Florida each year.
A retiree has to make many considerations to ensure that retirement funds will last throughout retirement.
Retirement funds have to pay a mortgage, rent, insurance, food costs, transportation costs, insurance, and so on.
The average retired couple will have to pay over $280,000 just to cover health care costs throughout the entirety of retirement.
Where a retiree lives throughout retirement is the biggest test of the viability of a carefully crafted retirement plan.
For example, an average retired couple will need $588,000 to retire comfortably in Jacksonville, Florida. At this budget, the annual living expense will be about $50,000.
Sounds pretty good, huh? Well, unfortunately, there are a lot of factors that many people don’t consider when they retire to Florida.
About That No State Income Tax Thing
Just because there is no state income tax in Florida does not mean that you won’t pay any taxes at all.
For example, retirees who work part-time will still pay local payroll taxes.
The state and local sales taxes combined equal about 7.05%. All state retail taxes amount to 6%.
Retirees who buy a house in Florida will pay an average annual property tax of about 1%, or, $1,750.
The Creepy, Crawly Consequences of Retiring to Florida
Florida is notorious for being the home of numerous species of invasive, foreign, wild, and creepy animals.
People and businesses have been importing and releasing foreign animals into the wild for decades.
This practice has steadily wrecked havoc on the local ecosystem over generations.
And it’s created a situation where you may have to pay $300 annually, or more, for rodent, animal, and pest control
services.
There are colonies of rats that live on the beaches, in palm trees, and in the interior cavities of homes.
Over 13 different species of bats live in Florida.
Florida residents must regularly contend with alligators, crocodiles, snakes, and wild, herpes-infected rhesus macaque monkeys causing chaotic public disturbances.
No. No, I wasn’t joking about the last one at all.
High Homeowner Insurance Premiums (Or, the Inability to Get Any)
Over 500 hurricanes have hit Florida since the mid-19th century. About one to two major hurricanes make landfall in Florida annually.
Hurricane Michael killed 20 people in 2018 and caused over $25 billion in damages. In 2017, Hurricane Irma caused over $52 billion in damages.
You may know that Florida is a hurricane magnet, What you may not know is that because of this fact, many insurance companies protect themselves from financial exposure with policy exclusions.
Most homeowner insurance policies in the country, especially Florida, do not cover flood and mold damage.
If hurricane force winds blow down a wall in your home allowing flood water to enter, your policy might cover the wind damage. It won’t pay for the flood or mold damage caused by the hurricane force wind, for example.
If you live on the barrier islands off the Florida state mainland, areas which are invariably hit first by approaching hurricanes, it may be impossible for you to be insured by a private insurer.
The average deductible for hurricane insurance could be as much as 5% the value of the entire policy.
Florida is the most expensive state to acquire homeowner insurance. The average annual homeowner insurance premium in Florida is $2,000.
It’s Hot Most of the Time
Tampa and Miami, Florida ranked number eight and four, respectively, on the list of the 10 sweatiest cities in the United States.
New York City came in at the top spot, but only Florida made two appearances on the list.
It can be as hot as 80 degrees in the dead of winter in Florida.
Choose Your Retirement Destination Wisely
I think I may end up living in a foreign country when I retire to cut down on living expenses. So, it is not my intent to dissuade you from retiring to Florida for your dream retirement.
I will say that you shouldn’t just move there because you think that is where all retired people automatically go.
Think about your retirement year expenses, the local cost of living, and how content you might be living in a new city throughout your elderly years.
If retirees spend the second half of their lives trying to find something to do with to do with the time they rushed through their youth taking for granted, it would be wise to use a lot of it fine tuning a retirement plan with the help of a financial adviser.
Read More
PROS AND CONS OF LIVING IN A NO INCOME TAX STATE
HOW TO FIND CONDOS IN MAJOR CITIES LIKE MIAMI
IT IS NEVER TOO EARLY TO MAKE RETIREMENT PROVISIONS HOME
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.