Where wealthy retirees are spending more than 3 months a year, and what it actually costs
When choosing a location to spend part of your year, it鈥檚 important to consider more than just climate. The real question isn鈥檛 just, 鈥淲here is it warm?鈥 It鈥檚 鈥淲here can I comfortably spend a quarter of the year without creating tax, healthcare, and housing problems?鈥
Many affluent retirees spend three or more months of the year in states like Florida, Arizona, or the Carolinas and increasingly, retirees are considering international destinations. When deciding where to spend part of your year, make sure to consider all key factors. In this article, shares what you need to know.
Why 3-Plus Month Stays Have Become So Appealing in Retirement
Extended stays aren鈥檛 exactly a new concept for retirees. After all, are snowbirds, spending colder months down south in destinations like Florida, Arizona, and Texas. But these seasonal stays aren鈥檛 just for snowbirding, and they鈥檙e becoming increasingly popular among the 50-plus crowd as travel enthusiasm 鈥 鈥 rises.
Because they no longer have a job to go to, retirees can relocate for weeks or months at a time. Not only can these trips serve as extended vacations, but they also allow people to test-drive new locales before making a permanent move.
The Main Places Wealthy Retirees Are Spending Extended Time
There are a few destinations that retirees tend to flock to for extended trips, often because of their warm weather, tax-friendliness, and existing retiree communities.
Florida for warm weather, social communities, and lifestyle density
Florida continues to be a popular destination for retirees, whether they鈥檙e just snowbirding or planning a permanent move. Florida has the key benefit of no income taxes, which can be a major financial draw for people in their golden years.
draw retirees who want already-established retirement communities located in walkable cities with easy access to golf courses, the airport, and the coast.
Arizona and desert markets for dry winters and active living
Arizona is another state that has long been a snowbird destination. Its consistently dry climate and outdoor activities appeal to plenty of retirees. Cities like Scottsdale, Tucson, Sedona, and communities around Phoenix serve different preferences, whether you鈥檙e looking for luxury resorts and golf or beautiful scenery.
Unlike Florida, Arizona does have an income tax, but it鈥檚 one of the lowest in the country 鈥 lower than many northern states that retirees might be moving from. Its cost of living is also lower than some of Florida鈥檚 more popular retirement destinations.
The Carolinas, Tennessee, and 鈥渉alf-back鈥 alternatives
A half-back retiree is someone who relocates to a popular southern retirement spot such as Florida or Arizona, but then moves halfway back, often landing in the Carolinas or Tennessee.
There are plenty of reasons someone might decide to relocate from their original retirement plans, including escaping heat and humidity, desiring an area with less congestion, or seeking a slightly lower cost of living.
Retire-abroad stays for value, novelty, and slower living
As mentioned, international travel is becoming increasingly popular among retirees, especially among the affluent. Many plan two- to four-month stays in countries with a high quality of life, lower costs, and well-established immigrant communities.
There are plenty of , but Mexico and Southern Europe are particularly popular. Mexico offers the draw of easy access and warm weather, while Europe has an infrastructure and lifestyle that appeal to many older individuals.
A key consideration with international travel during retirement is healthcare. While Medicare provides some coverage outside the United States, it is very limited. If you鈥檙e planning to spend any extended time outside of the United States, you鈥檒l need a supplemental or international plan of some sort.
What the Data Says About Where Retirees Are Moving
According to , Florida is by far the most popular state for retirees to move to, followed by North Carolina, Arizona, South Carolina, Georgia, and Texas. These patterns align with what financial planners often see among their older clients 鈥 the desire to move somewhere with warmer winters and a lower tax burden.
The table below breaks down the top 10 states for retirees to move based on SmartAsset鈥檚 data, along with the net number of retirees (those who moved in versus those who moved out):
Renting vs. Owning for a 3-Plus Month Retirement Stay
One of the most important considerations when planning an extended stay is whether you鈥檒l rent or own. It makes sense to rent if you鈥檙e not planning to move permanently, but if you鈥檒l be making extended stays to the same place once a year or more often, owning could be the right choice.
Why more retirees test-drive a destination before buying
Renting has some obvious benefits, including increased flexibility and liquidity. You鈥檙e not tying too much of your money up in a piece of real estate. Additionally, if you鈥檙e just test-driving a place and aren鈥檛 certain it鈥檚 right for you, then renting is almost certainly the right choice.
The hidden costs of owning a seasonal property
Renting is a great option when you鈥檙e testing out a new location. However, once you鈥檝e settled on a place and plan to make it a regular part of the year, you might decide it makes more sense to buy, and maybe even rent it out while you鈥檙e not there to help cover the costs.
Moving during retirement has plenty of , including insurance, taxes, upkeep, home or condo owners鈥 association fees, furnishing, and travel to and from. Additionally, if you鈥檙e planning to rent the place out, you鈥檒l have to contend with vacancy risk and the possibility of not having that extra help paying the mortgage.
That鈥檚 not to say buying isn鈥檛 the right choice, but careful consideration and understanding all the expenses tied to a second property is essential.
The Financial Filters That Matter More Than the Weather
Warm weather may be at the top of your list when deciding where to spend your winter months. But there are some financial considerations that are even more important.
State taxes and residency rules
Spending three or more months in a second state raises some real tax and domicile questions. Most states define residency as 183 or more days in a year, while others have different requirements.
Establishing a domicile in a state like Florida or Tennessee, which have no state income tax, can be a particularly . But you also have to make sure you鈥檙e meeting the requirements. If you don鈥檛 tread carefully, you could end up unexpectedly owing income taxes in your last state.
Healthcare access while you are away from home
As mentioned, healthcare is a key consideration when you鈥檙e away from home. If you鈥檙e on a Medicare Advantage plan with a regional provider network, you may have trouble finding affordable healthcare in another state. Before planning your trip, confirm your plan covers nonemergency care at your destination, not just emergency treatment.
Traditional Medicare offers more flexibility within the United States, but it doesn鈥檛 cover you abroad like it does at home.
Medicare generally unless the emergency happens on U.S. soil and you鈥檙e taken to a foreign hospital, you鈥檙e traveling through Canada between Alaska and the lower 48 states, or you live in the U.S. and a foreign hospital is closer to your home than a U.S. hospital.
If you鈥檙e planning to be out of the country for any extended period of time, it鈥檚 important to purchase either a supplemental health insurance plan or a travel health insurance plan.
Estate and planning documents if you split time between states
Estate planning documents, including wills, trust agreements, healthcare directives, and powers of attorney, are governed by state law. Even if you already have these documents in place, they may not carry over to your other home, especially if your document is at odds with the local law in one state.
Before going on your extended stay, be sure to work with your estate planning attorney to designate your domicile state in your documents and ensure they鈥檒l be enforceable in both places.
A Simple Framework for Choosing the Right 3-Plus Month Destination
Choose your priority
Before narrowing down your list of destinations, identify your specific priorities when choosing a place to spend part of your year. Knowing what you鈥檙e looking for is an important first step in identifying locations that address your wants and needs. Some considerations are:
- Luxury lifestyle
- Tax efficiency
- Affordability
- Healthcare access
- Proximity to family
- Ease of travel
- Low-maintenance housing
Score each option using a decision matrix
Once you鈥檝e identified your top priorities, run the different destinations you鈥檙e considering through a scoring framework for an easy and consistent comparison. You can rate each location based on a handful of weighted criteria. The location that returns the highest score is likely the best fit based on your desires.
Here鈥檚 an example matrix to consider:
Of course, there鈥檚 also an element to this decision that鈥檚 purely emotional. If you feel yourself pulled to a location that doesn鈥檛 necessarily get the top score, it may still be worth considering. The benefit of a three-month stay over a permanent move is that you can test drive more than one location. Maybe you spend your first winter in Florida or Arizona, followed by the next winter in Southern Europe. If you鈥檙e not ready to commit to one, you don鈥檛 have to.
What to Do Before You Commit to a Seasonal Move
Even if it鈥檚 not a permanent move, a three-month extended stay is a serious lifestyle and financial commitment. Before signing a lease or making any purchases, these practical steps can help you prepare:
- Visit in both the off-season and peak season. A location that feels right during part of the year may be the wrong fit during another part.
- Price the stay as a complete budget, not just lodging. Make sure to account for other costs like healthcare, dining out, entertainment, travel, etc.
- Review your domicile and estate documents. Have an attorney familiar with both states鈥 laws review them and reinforce your domicile.
- Check your insurance network. Make sure your Medicare or other insurance plan will cover you while you鈥檙e away, and purchase alternative insurance if necessary.
- Build the move into your . An advisor can help you coordinate any necessary retirement plan distributions or changes to your financial plan.
FAQ
What are the most popular snowbird destinations for retirees?
Florida is the most popular snowbird location, followed by South Carolina, Arizona, and even foreign countries like Mexico and France.
Are affluent retirees renting or buying for 3-plus month stays?
It generally makes sense to rent while you鈥檙e exploring your options. However, once you鈥檙e ready to commit to a place for every winter, buying might be the right choice, as long as you factor in hidden costs like insurance, taxes, and home maintenance.
Does Medicare cover you if you stay outside the U.S. for several months?
No, Medicare doesn鈥檛 cover you outside of the country, except in very rare situations. Instead, you鈥檒l need a supplemental or travel health insurance plan to cover you for any emergencies or routine healthcare abroad.
What taxes matter when you live in two places during retirement?
In general, you only have to worry about taxes in the state where you鈥檙e actually a resident. If you split your time between a high-tax state like New York or New Jersey and a low-tax or no-tax state like Arizona or Florida, it might make sense to establish your domicile in the lower-cost state. However, you鈥檒l need to understand all of the different residency requirements to make sure you meet them.
The Bottom Line
There鈥檚 no universal right answer to where you should spend your extended stays. Florida, Arizona, and the Carolinas are popular options for many retirees, but they aren鈥檛 the best for everyone. You have to consider all of the logistical and financial factors, not just the weather-related ones.
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