I’m going to retire. Now what? (part 2 of 2)

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The first part of this post discussed when to file your retirement request and the big-picture items to consider for your finances, departure date, and medical/dental checks.  It also discussed how to spread the news among co-workers, friends, & family.

Neither one of these posts is a detailed checklist– your command already has one of those.  Instead it’s a list of issues that will affect your choices not only as you separate from your command, but also during the first few years of retirement.  Let’s start with one of the hardest ones.

Choosing Where to Live

This is only one of your retirement decisions, but it’s probably the one that needs the most preparation. Start early– even a year may leave you wishing that you had more time for your research.

This is not your typical military relocation.  After 20 or more years of travel, many deployments, and a dozen moves (perhaps with a growing family), you’ve learned that you can set up housekeeping in record time. You may even be able to arrive in town on a Friday and by the following week have a place to live, put the kids in school, and report to your new duty station.

When you retire, it’s tempting to simply fall back on those skills one last time. It’s easy to find a new town and quickly set up a new life– although this time you’re in charge of all the decisions. The biggest difference, though, is that this new life may be for the rest of your lives!

The family discussions that led you to retirement will help you again when you decide where you’re going to live. (Yes, this time it should be a group decision, and you may end up with a minority vote.) This time it’s not even about you or your immediate family, but also your extended family and your preferences. Do you want to live near your siblings and cousins? Are your parents likely to need your support with medical issues or home maintenance or even full-time care?  Are your kids going to mutiny if you move before they graduate from high school with their friends?  Or would you rather choose your own lifestyle, climate, and location while accepting that you may have to travel to visit your extended family?

Take your time. After decades of making quick decisions, there’s no need to rush to make this one. Learn the latest rules on base housing and storing/moving your household goods, and use those benefits as much as possible. You may have to vacate your base housing after you retire, and you may only have a year to decide where to move your possessions, but you can take years to decide on your eventual retirement location. It’s only a matter of what issues you (and your family) are confronting– and how many times you want to move.

Once you decide on your rough location and timing there are many books, websites, and magazines to help you decide exactly where you want to live and whether you want to own your own home. Take advantage of those resources very early in your retirement planning– subscribe to the town’s newspaper or read it on their website. Ask the local Chamber of Commerce for more information or (if possible) look up old friends, shipmates, and relatives. Join an Internet discussion board in that area and ask for advice. Gather all the information you can, discuss it with your family, and make sure that you still want to move there. You may decide to change your mind more than once.

After you arrive at your chosen destination, don’t rush to set up your new life. There’s no need to buy a house that weekend or even to put the kids in school right away.  Take a short family vacation and get to know the area.  While you may already know the basics, now you can reacquaint yourself with the details. This is a great time to rent for a while and to learn the local real estate market.  Is the old neighborhood still a great place to raise a family, or is it looking a little run-down? How has traffic changed over the years? What new roads or neighborhoods will be built over the next decade? Are there any issues with electricity, water, sewage, schools, or zoning? What activities do you and your family enjoy, and how close do you want to be to them?

How Far Away from the Commissary, Medical, Dental?

Your new life also needs to consider your veteran’s benefits. Although the savings of exchanges and commissaries are always under pressure from multinational stores and big-box chains, you may still prefer their selection and pricing. Although you can choose many different levels of TRICARE health insurance, you may want to be near a major military medical facility. If you (or a loved one) have a chronic health condition then you may not want to spend hours driving hundreds of miles every month.

When you consider your new life, you’ll have to shop around for more than a home. Sample the selection and pricing in the local stores. If you’re in an area with several military bases then sample them all– the Army may actually have a better exchange than the Navy exchanges you’ve always patronized, or it may be closer to home.

Military-Friendly States

During your career you’ve probably been a resident of a state that doesn’t tax their active-duty military, or at least gives you a big tax break on your income. That’s going to change!

Taxes are one of the minor reasons for choosing your retirement location, but they will affect your retirement budget. While you’re discussing climate, family, and lifestyle you should also consider how much you’ll have to pay for the privilege of your chosen location.

Most states do not tax disability retired pay, and many states do not tax military pensions. The rules are always changing (Ohio stopped taxing military pensions just a few years ago) and the details may have more impact than you appreciate. You’ll also want to consider the cost of sales tax, property tax, asset taxes, taxes on investment income, and even county/city taxes. Registering your vehicles in your new state may require hefty fees and taxes.

If you’re planning to continue your education or if you have kids in high school, there’s another factor to consider in choosing your state residence: college tuition rates. Several state colleges offer reduced tuition to residents and may even offer veteran’s scholarships for you or your family. Other state schools may reduce their tuition for even minor veteran’s disability ratings.

If you’ve decided on a civil-service bridge career, you may choose to work for a state’s civil service instead of the federal government. The state may offer hiring preference to veterans (especially with a disability rating) and other benefits for you and your family.

While you shouldn’t choose your retirement residence solely for its tax advantages, it can make a difference in your retirement budget and your quality of life. If you’re unhappy about paying thousands of dollars a year in property taxes then you may want to cross a state line in search of a similar lifestyle. If your retirement plans take you near a state line, then consider the tax situation on both sides before making your decision.

Are You a Perpetual Traveler? What Does Your Family Think?

After decades of changing duty stations, maybe you don’t want to tie yourself down to one location!

One of the biggest interests of retirees is travel– seeing the world at your own pace and without a set of orders. Perpetual travelers (PTs) stay weeks or even months in a location, or travel with a motor home. Campgrounds are certainly a cheaper way to stay but options include discount vacation rental condominiums, trailer parks, or house sitting. Recreational vehicles are by far the most popular travel mode but others wait patiently for hops on military flights.

A surprisingly frugal retirement lifestyle is living aboard a boat. Particularly near the Intracoastal Waterway, large groups of boaters move north during summers (away from hurricane season) and south during winters. Others head for the open ocean on both coasts.

Even families can adopt a perpetual-traveler lifestyle. Although the recreational vehicle or boating life is easiest for adults, a few families make it work through homeschooling or only summer travel. If you’re the type of family who’s always enjoyed a boating or outdoor lifestyle, then this may work for you.  One family who’s been on the roads for months of military retirement is the “Wandering Wahls”.  Browse their blog and decide whether their lifestyle would work for you and your family.

Technology has dramatically improved the logistics of perpetual travel. With national cell phone roaming, mobile Internet access, and overnight shipping, the lifestyle has never been easier. Bills can be paid electronically or through automatic debit. Traditional mail-forwarding services will send your paper to your next port call. Other companies will actually open your mail, scan the contents, and post the images to a secure website for you to peruse at your leisure.

Banks, stock brokerages, and other regulated financial institutions may need a more permanent address than a post office box or a mail-forwarding service, but PTs also use the mailing address of friends or families and conduct their business online. If you’re planning to keep a current driver’s license and pay your taxes then you will also need to claim residency in a state. The amount of time you spend in other states during your travel may also render you susceptible to that state’s income taxes. However, these (and other challenges) have already been faced by thousands of PTs and many solutions have been worked out.  A great place to start your research is the RV forum.

The Expatriate Lifestyle– Intriguing but Not for Everyone

A significant minority of retirees have noted that their financial portfolios won’t support their lifestyles in Manhattan or Los Angeles, but their investments are more than adequate for expenses in Mexico or Bangkok.

The most famous overseas ERs are Paul & Vicki Terhorst and Billy & Akaisha Kaderli. They’ve been traveling the world since 1984 and 1989 respectively and show no signs of stopping. After two decades of travel through Europe, Asia, and South America the Terhorsts built a home in a rural area outside Buenos Aires but continue visiting their favorite places. The Kaderlis have spent most of their time in Southeast Asia and Mexico but have been to many other countries. They maintain a small home in a U.S. resort community but they spend the majority of their time abroad.

You may have seen some of the expat lifestyle on overseas duty or during port calls, but now you can live it full time. Both couples (and many other retirees) have learned that expat living offers a chance to get to see the “real” country and to know its people. Instead of staying in resorts and hotels they’ll rent city apartments, shop at local stores and eat at local restaurants, and blend into the community. “Going local” means learning to speak the language and to cook the cuisine, celebrating that culture’s holidays, understanding how to get around by public transportation, and knowing where to do your laundry.

Once again modern technology has made the lifestyle easier than ever before. Many overseas cell phones are actually more common, more fully-featured, yet less expensive than in America.  Cheap Internet access is widespread in metropolitan areas and most rural ones. Modern clothing fabrics and compact toiletries mean that luggage can be reduced to a roller bag and a backpack. Most finances can be handled through ATMs and websites. A dropping dollar may raise prices for every expatriate American, but plenty of bargains can still be found by staying for weeks or months in an area and really getting to know the local culture. If the dollar rises, then expat purchasing power just went up with it.

Expat retirees rarely become overseas citizens or residents. Instead of navigating the bureaucracy (and perhaps paying double taxes) they request long-term tourist visas or “restart the clock” by leaving the country for brief periods. Tricare is not easily accessible overseas (except when space is available at U.S. military medical facilities) but you may pay less out of pocket or even purchase your own catastrophic-care policy. It’s possible to find work (teaching English or providing services over the Internet or consulting) but earned income will subject you to taxation by both your host country and possibly the U.S. As a U.S. citizen you are still expected to pay U.S. taxes and maintain a state residence address.

Don’t despair if you have a family– just like perpetual travelers, many families have found a way to let the world be both their residence and their school system. If your kids have put up with your changing duty stations then they’ll easily adapt to the overseas lifestyle and be far worldlier than their domestic cousins.

The perpetual-traveler and expatriate lifestyles aren’t as difficult as they appear, and technology provides a wealth of solutions. You don’t have to be a trailblazer or even a rugged pioneer, and you can travel the world at your own pace.

As you and your family are sorting through these big-picture issues, you’ll still be working on your retirement checklist.  In the next post we’ll start discussing how to handle the final few months.  Until then, post your transition comments here!

WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

3 Comments
  1. Thanks, Doug… Oh, by the way, regarding your writing that expats rarely become citizens or residents of their chosen resident country, my wife and I lived in South America for a year — 2007 – 2008. We lived in Peru for eight months, six of those months doing volunteer work in the Peruvian Andes. While living in Peru, we had tourist visas allowing us to remain in the country for up to 90 days. Thus, every 85 days or so, we’d travel to Bolivia (the nearest border) for a few days, then return to Peru on our new “90 day pass.” A bit of a pain, and I wouldn’t want to do it for decades on end, but it did afford us a bit of a “travel vacation.” Also an opportunity to pass through, and spend a few days in Cusco, a favorite city of ours. Bill

  2. Yes, I very much agree with your saying that “where to live in retirement?” is a most important decision for the new retiree. In fact, I’ve posted on this very subject on the Adventure Retirement blog. Most recently, I’ve offered a caution about avoiding three common errors in selecting a place to live.

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