Transcript

[00:00:00] Intro: Welcome to Retirement Unlocked with Larry Heller, your life Your Way, unlimited possibilities. Join us as we explore how tailored financial planning and investments can help you navigate life transitions with confidence. Let’s dive into this week’s episode.

[00:00:20] Bill Tucker: And welcome back to Retirement Unlocked with Larry Heller.

And before we go any further. I need to tell you that Heller Wealth Management is now a part of Savant Wealth Management. So going forward, you may hear the Heller Wealth Management team referred to as Savant or Savant Wealth Management, but that does nothing. To keep them from keeping their commitment to you and helping you unlock your best retirement remains exactly the same.

Just a new name thrown in the mix for you. Now today we’re gonna tackle the topic of that Many people spend years preparing for this thing called [00:01:00] retirement, but far fewer. Focus on the critical window that surrounds it. The five years before and after you retire are often called the retirement danger zone.

A period where key financial and lifestyle decisions can have a lasting impact on your future. During this time, your income changes. Benefits disappear. And new planning challenges do in fact emerge today. Larry explains why this window matters, where the biggest risks often show up, and how to navigate this transition with a greater clarity and a lot more confidence.

Hey Larry, it’s good to see you again. How are you?

[00:01:38] Larry Heller: Hey, I’m doing great. Good to see you, bill.

[00:01:41] Bill Tucker: So give us a quick overview. What are we, what are we looking at here in terms of. This window.

[00:01:46] Larry Heller: Okay. Yeah. So I mean, we we’re, we’re gonna kind of really focus on is really a lot of people looking to retire and they may be in a high income state and going to a low income state or a no income state.

And we’re, [00:02:00] we’re up here in New York and you hear a lot of people going down to Florida. So New York’s a higher income state in Florida. You get to cover

[00:02:05] Bill Tucker: governor trying to talk people to come back from Florida.

[00:02:07] Larry Heller: Yes. He is trying to call people, come back and pay your fair share. That’s what he wants.

That’s what she wants. Yes,

[00:02:13] Bill Tucker: that’s exactly right.

[00:02:14] Larry Heller: So, uh, so that’s the case. But there are other states such as Texas and, and up until recently, the State of Washington and some others, but we’re gonna talk about that. You have to think about more than just income taxes, right? There’s property. Property taxes, sales taxes, estate taxes matter.

Um, and then you also should think about, you know, the cost of living and the cost of healthcare. Not only just the cost of healthcare, but actually the, your, your doctors on that. Um, so some of the insurance can offset that. And if you have to. Wanna fly back and forth to see a specialty or a doctor in a state that you’re not gonna be in, that’s something to consider.

Mm-hmm. If you’re not the healthiest or even later as you get older. Um, and then there’s lifestyle and [00:03:00] social impacts that can really affect your personal happiness beyond your finance. So, you know, the guidance is crucial for, for estate planning, for income tax planning, for long-term financial strategies when, when relocating to other states.

But you wanna kind of, you know, think about some of these strategies and we’re gonna talk a little bit about a couple of real life scenarios to illustrate surprises that retirees can face when, when relocating.

[00:03:25] Bill Tucker: Yeah, let’s start with income tax. ’cause this is funny and I told you, I right before we started this recording, this episode, I said, I’m not gonna tell you who said this, but I was talking to somebody who had grown up in the northeast, that had done some traveling, had been around but hadn’t lived anywhere else.

They were shocked Larry, to find out that there are states that don’t have any income tax and, which made me laugh out loud. And I thought, what? You know, if you haven’t lived there and you don’t know, maybe you just don’t know.

[00:03:55] Larry Heller: Yeah. And, and, and maybe you just moving just to save the income [00:04:00] taxes so you know, it’s beyond the income tax.

So yes, there is definitely a, a, an appeal to moving to a state with low or no income taxes. Right. Um, and possibly a state with low and no, no, no estate taxes are inherent taxes, but like I mentioned there, you know, there are some. Possibly higher property taxes. Mm-hmm. Higher sales, taxes, insurance. I know insurance in Florida with all the hurricanes they have could be even hard to get, let alone, more expensive.

So th those are kind of some of the things you kind of wanna factor in beyond the, you know, beyond the taxes.

[00:04:37] Bill Tucker: Yeah. It’s really interesting because I, I think a lot of people look at it and, and you know, they’re looking at another state. Like, I’ll, I’ll, I’ll give you an example. I know people I know looked at Pennsylvania and go, well, they have a flat tax there.

They got a 3% tax. But then they start looking at all the other taxes and they realize all of these states have to raise money. They gotta fund it. So the money’s gotta come [00:05:00] from you somewhere. One way. Yep. Or the other. If it’s not through income tax, it, it could be some through some other, through other, other taxation.

[00:05:07] Larry Heller: Abso, absolutely.

[00:05:09] Bill Tucker: You know, and as we go through today’s episode, I do wanna remind people that don’t worry about taking notes. Okay? Don’t need to do that, because Larry’s team has put together a summary, a takeaway on the retirement danger zone that you can access in the download link in the episode description below.

So do, have you got any real life examples? Anybody you know or a client you worked with that you know was shocked when they did the calculations?

[00:05:32] Larry Heller: No, not really shocked. And we’ll talk a little bit about that in a, in a little bit, which kind of puts everything that we’re gonna talk about in, in perspective.

I, we do have a couple examples, but you know, some, some of the things, you know, the surprises that we, we, we talk about is that, you know, you wanna look at the difference in housing costs, post pandemic, some of these. States such as Florida, the housing costs have gotten very expensive. Um, the HOA fees and some of the, uh, communities down there have gotten [00:06:00] very expensive.

So, uh, before you’re moving from your, from one state with where you know what your costs are gonna be for housing, uh, that could be a little bit of a shock. And like I mentioned, the healthcare expenses and the, you know, could be different and the specialized care could be different. You know, plus just the daily living from one state to the other that you want to take into consideration.

So you do wanna do some research to really kind of see what makes sense and, and, and what doesn’t make sense for you o on on that.

[00:06:27] Bill Tucker: Yeah, and I think people really, really, really need to take a look at healthcare because I don’t think people think about healthcare. So they have to have healthcare and they realize that, whoa, you know what?

My doctor’s actually pretty good. I really am happy with, with my, with the, with the people that I see. And they’re not everywhere. You, you know, it’s like you can, difficult to go see a doctor in a state that you no longer live in.

[00:06:54] Larry Heller: Yeah, I mean, being in New York, we’re really lucky. We’ve got some really quality specialists in New York [00:07:00] City here.

And then, so if you’re not gonna be, or being in a state or an area which doesn’t have access to the healthcare or some of the, you know, proximity to hospitals and specialists. So you do wanna kind, you know, research that and see kind of, is that gonna be a factor? You know, one thing is it may not be a factor today, but who knows what tomorrow is gonna be.

We’ve had clients that have, unfortunately, have gone down there, and not only is the healthcare become an issue, um, with doctors, but also family, helping them get to and from doctors as they age. Uh, and we’ve had clients that have moved back to the, to the northeast, moved back to New York and New Jersey, just to be closer to family members at that particular time.

So maybe you were planning on going to Florida for. You know, for estate tax purposes and you come back to New York. So just that that’s something to consider is the healthcare impact and how important that is.

[00:07:56] Bill Tucker: Yeah. You know, and it sounds silly, but like accessibility, I think in the [00:08:00] Northeast we’re all pretty used to, well there, there’s not a hospital, not that far away, but there are states you can move to where the hospital may be.

Quite a few, quite a ways away from you. And if you don’t have family that can help you get back and forth, it can become a really big problem, which kinda gets into and hints at one of these other issues that I know you want to talk about, which is, that’s gonna affect your lifestyle.

[00:08:24] Larry Heller: Yeah. And it, it, it’s really kind of the, the lifestyle and the social impacts that some people don’t, don’t realize, you know, leaving.

A community where they have a lot of family and a lot of friends and you know, a home feeling and going to someplace new. How are they gonna make, you know, where are they gonna make friends there down there? Have they, you know, looked at different clubs and support areas? Because again, that, that’s a big factor in longevity is really, uh, friends and lifestyle.

And especially, you know, if you’re a married couple and what happens if one passes away, are you gonna get comfortable in that, in that [00:09:00] lifestyle? So, you know how your lifestyle shift can in impact your overall satisfaction. Well above your, your, your finances,

[00:09:09] Bill Tucker: you

[00:09:09] Larry Heller: know? You know, one of the, one of the tips that we really kind of say to people when they’re looking to re relocate is to rent first.

Wherever you’re going, if you can, in any possible way, rent before you get down there, see how it feels. ’cause until you’re there, um, even if you know somebody there, it’s, oh, this is great, you’ll love it. Um, you know, we, we’ve had people move and then they said, oops, this isn’t the right thing for us, and now we gotta move a.

Again, so we, we highly recommend that, that, that you rent first in a, in a new area before buying,

[00:09:41] Bill Tucker: you know? Well, that is a great idea. I actually knew a couple. They were getting ready, he was getting ready to retire, sell his business, and they had identified a couple of states that they thought they really would like to move to.

Uh, and. Then they went and spent time in one of those states, visited a lot [00:10:00] there, had extended stays. And were they, they, they, they, it made, it made their mind up for them. They were like, no. That, that, that state is now off the table. So Yeah. Underscore that. Yeah. If you can spend, if you can, if you can go and spend some time somewhere, you really should because,

[00:10:16] Larry Heller: yeah.

And, and today with Airbnbs, you can even do a long extended state. Yeah. You don’t have to commit to a year lease and get furniture and do that. You can do a, a few different Airbnbs, a different, uh, uh, Airbnbs at different times of the year for an extended to say, stay to see if that’s a place that you’re gonna like.

[00:10:34] Bill Tucker: What about long-term, uh, pitfalls, possi possible pitfalls, Larry?

[00:10:39] Larry Heller: Yeah. So going from one state to the other. You, you, you, you’ve created, I’m gonna talk about estate planning. So you’ve created your documents, wills, beneficiaries, tr possible trusts, um, and then you move to another state. Well, the, the wills still are good, but do they function the way that you wanted to?

Mm-hmm. [00:11:00] Um, so you may be moving to a community property state, which has a whole different set of rules than where the state you’re coming from. Or you may be moving from a state that has. A, a low cost in probate, going to a high cost in probate, which may, you know, want to kind of reco, uh, make you ha have more of a need for a revocable trust.

So if you are moving to a new state, you really want to have somebody that specializes in that state review. All your documents to make sure that you’re, that they’re in, um, in, in proper order. And you know, some states like Florida have like what’s called homesteads. You wanna make sure you can take advantage of some of those type things and not be tripped up by paying higher costs.

So, uh, so that’s a real important, uh, pitfall that we see people don’t really kind of look at in until it, sometimes it’s too late.

[00:11:51] Bill Tucker: Do you recommend to your clients that the, it, you know, that they, they, they have an attorney review it in it, like in the state they’re thinking about going to [00:12:00] having an attorney review it or, or how, how?

[00:12:02] Larry Heller: No. I mean, you, you can, if you’re pretty, if you’re pretty sure that you’re gonna be moving, you moving down there, but the thing about it is your current. A state attorney may not be, um, able to review in another, in another state, ’cause that they don’t, they don’t practice in that state. Right. So you gotta find somebody in there.

The good thing, now one of the things that savant that we have is we have a state tax, uh, planners. In-house. So we can, that can review no matter what state you’re looking at, but um, so that’s something just to be con considered. And once you become a permanent resident in that particular state, um, do you want to have somebody review it to see if you need to make any changes?

Plus some, some states have different documents that are needed. For, um, um, you know, a, a final death and healthcare proxies. Yeah. That may be different in a different state that you’re going to. So it’s real important that when, if you are relocating that you do, you do speak to a attorney that’s licensed in [00:13:00] that state that, um, can get you make sure that your documents are fine or if they need to be updated.

They are, they do get updated.

[00:13:08] Bill Tucker: Yeah. Yeah. You don’t wanna find out too late that they needed to be updated. That is not, that is not the way you want to go with that. So, do you have any real life scenarios? You mentioned up at the top of the podcast that, you know, you had a couple of examples you could give us about people moving and, and the things that they discovered.

[00:13:23] Larry Heller: One of the pitfalls that, you know. You should be kind of, uh, if you’re moving to a different state that maybe is not a low income tax state, but you wanna kind of look at some of your state specific nuances when it comes to pensions, um, or withdrawals. Yeah, yeah, yeah. You know, just, you know, one in New York state, they exclude the first 20,000 of income from a retirement plan.

And so if you’re married, they exclude 40,000. So another state may not do that. So even if you’re moving to not a. Um, a a zero cost income tax state, but just to another state. Yeah, really want to know what kind of the nuances, nuances are. So again, you know, [00:14:00] planning, discussing that planning professional guidance is crucial when you’re relocating for retirement.

[00:14:05] Bill Tucker: Fair point, fair point. ’cause there are some states that don’t tax Social Security benefits. There’s states that do tax it as a matter of fact. So yes, absolutely avoid those pitfalls.

[00:14:16] Larry Heller: So let’s, let’s, let’s kind of get to a couple of, you know, real life, um, scenarios. Um, um. Both of ’em happened to be, you know, re relocating.

This one was relocating from New York to to Florida.

[00:14:30] Bill Tucker: Okay.

[00:14:30] Larry Heller: So a couple in their, in their early sixties selling their New York home and moving to, um, coastal City in Florida. And, and they were under the impression that they were gonna save, you know, tens of thousand dollars in state income taxes. But again, when they looked at their property taxes and homeowner’s insurance and Florida were much higher, the savings weren’t as as great ’cause their income taxes weren’t as high.

Um, when they both were, were retiring, so they weren’t [00:15:00] saving a ton of money on their, on their income. Income taxes.

[00:15:03] Bill Tucker: Mm.

[00:15:03] Larry Heller: In addition, the healthcare costs. Increase because unfortunately they needed to see travel for further to see specialists than they had in New York. So, and, and one of them wanted to come back to their specialists in New York, so they had to fly back in every time.

So the additional costs of, of, of that was something to keep, you know, keep in mind. Um, and then some of the estate planning comp complications that, uh, that arose in, in, in, in Florida inheritance laws and some of the new. Property tax rules that are going on made it a lot more complicated for, for them.

So again, lesson tax savings need to be compared to include healthcare, to include estate considerations, to include living away from, from your family and all those type things. The tax savings, there would’ve been some tax savings. This client didn’t have it as a, a major estate tax that they were gonna be [00:16:00] saving, but the income taxes.

That they were saving turned out to be not, not as great. Mm-hmm. And when they added in the healthcare and the family being far away, even though the weather was nicer, um, and they thought that they would enjoy that a lot more, the weather was nicer. But it turns out they didn’t like the summertimes down there.

So, so they gave up the harsh winters.

[00:16:21] Bill Tucker: They didn’t like 150 degrees summers come on.

[00:16:25] Larry Heller: Yeah. Right. So they preferred actually having the winters than having the. Very hot and humid summertimes down there, though maybe if they would’ve rented and stayed, you know, a few weeks during, uh, the August, they would’ve known that before they happened to have purchased a home down there and ended up, ended up moving back.

[00:16:45] Bill Tucker: Oh man. Yeah. You know, that made me left. ’cause it, it made me think of my dad. My dad used to complain. He used to say, you know what, it, it’s hot. I can take all my clothes off. I’m still gonna be hot, but when it’s cold I can put clothes on and get warm. So,

[00:16:58] Larry Heller: you know, there, there you go. [00:17:00] So, uh, exactly. So, you know, so everyone is a little, everyone is a little bit different.

Another scenario that we, we had, we had a client that was moving to, to a second home in Florida. Um, they still owned a home in New York and they were trying to figure out first, which, which home that they wanted to make their primary residence, um, because they had a home in New York. That had appreciated.

So they didn’t wanna sell now, but they knew they would be able to have a $500,000 exclusion on capital gains if they, if eventually they kept, um, New York as their primary home. But if they, if they made Florida their primary home, they would save a lot of money on income taxes. They, they would save money on property taxes by making it their homestead.

So in this scenario, they decided to make. Florida to the primary home. Well, they moved to Florida, they moved to a high rise on the east coast, and then they were like, you know what? [00:18:00] We don’t like being in a high rise. We can’t meet anybody. We wanna be in a golf community. Mm-hmm. So a couple years later they, they, they moved from the east coast to the west coast.

Now they did benefit because the, they did have some capital appreciation on there. Um. Apartment. So they were able to benefit by not paying any capital, uh, any tax on the capital gains from that house. ’cause they did make Florida their primary residence. Um, but then they moved to the west side of Florida, uh, and they were there and they liked the golf community.

But after being there for a little while, they realized. Life’s kind of short, and they didn’t wanna be so far away from their family. So now they’re selling their, um, house on the West Coast at a loss. Not a huge loss. At a loss. And now they’re buying a, a home in South Carolina. So they can be closer to their, closer to their family.

Yeah. Um, and then they have the [00:19:00] same question again. Do they make South Carolina their primary residence or they make Florida the new go back to making New York their primary residence And we’ll talk about residency in a few minutes. In this case, they ended up making South Carolina their, their residency.

So let’s, in here relocation decisions must weigh lifestyle social factors alongside your financial savings.

[00:19:22] Bill Tucker: Yeah, man. Oh man. Absolutely. There is, there are, there’s a lot to consider and it’s not just, look, it, it, they don’t have income tax down there because every state. In the country has gotta raise money to fund the government.

So be sure you look at how they do it, as a matter of fact. Uh,

[00:19:40] Larry Heller: yeah, so, so some of, some of the, you know, some of the, you know, kind of the key takeaways we talk about, and I wanna talk a little bit about a, a scenario of kind of, you know, moving from Florida and talk about residency Yeah. Residency, a a a, a little bit.

So I’m gonna kind of jump ahead and kind of talk about that. Yep. That first we’ve talked about the, you know, [00:20:00] the expenses of, of. Moving and the lifestyle and the tax highlights, but there’s also, um, uh, residency along those lines.

[00:20:08] Bill Tucker: Yes.

[00:20:09] Larry Heller: So, um, because you know, just moving to another state and spending more than 183 days, six months doesn’t.

Mean that you’re a resident in there. So if you are moving from one state to another, make sure you follow the rules. Hmm. Um, and I’m just gonna touch on this a little bit, but it doesn’t mean this is entirely what will make you resident in that state, but, you know, usually, um, spending more than 183 days, six months in there, and, and, and we’re talking a little bit now more about Florida.

Um, you must intend to make Florida your primary home. Um, so this includes changing your addresses on. All financial and legal documents. Um, you can file this one statement with a county clerk where you live, um, and just, you know, kind of legal ties making your, you know, Florida your license, um, your driver’s license in [00:21:00] Florida within 30 days of establishing residence, registering your vehicles, registering the.

So it needs to be kind of your, you know, show more than just staying 183 days mm-hmm. In a particular state. And one of the reasons why I mentioned this, and we’re talking about kind of relocating to Florida, is because New York is extremely aggressive for people that decide, Hmm, I’m not gonna pay New York state taxes.

I’m gonna make. Florida, my resident, and Florida. What happens? New York loses a lot of tax money. Yeah. And they’re not too happy about that. So they go very aggressively after people. So you wanna make sure you have all your ducks in a row, speak to an expert that can help you maybe with the residency before you moved to Florida from New York.

[00:21:46] Bill Tucker: Absolutely. I, I’ve heard n nightmare stories actually from people who, uh, did not do that and, uh, were shocked because gee, New York State didn’t just overlook.

[00:21:59] Larry Heller: Yep. [00:22:00]

[00:22:00] Bill Tucker: So give us some key takeaways on this, uh, on this episode, Larry.

[00:22:03] Larry Heller: Yeah, so, you know, we, some of the key, the summary of hidden costs that a lot of retirees.

Off and overlook, uh, and really wanna emphasize relocation is more than a tax decision. It affects finances, healthcare, lifestyle, and planning. And finally, you know, I encourage all listeners to evaluate the full picture, uh, and consult with professionals before making such a big change to relocate to another state.

[00:22:29] Bill Tucker: Yeah, sit down and talk with your financial advisor. It’s a big move. Take the time. Right. Absolutely. Consider it. Absolutely. Well, thanks Larry. This was a great episode and gave us a couple of things to think about from listeners. Thank you for listening to Retirement Unlocked. If today’s episode helped you better understand the retirement danger zone and how to navigate this critical transition, please like, subscribe and share this podcast with someone who could benefit.

And if you’re within five years of retirement or. Just recently [00:23:00] retired and wanna make sure that your income, benefits, and overall plan are aligned for this important window. Check the episode description for resources and a link to schedule a complimentary 20 minute call. Because retirement success is not just about how much money you have, it is about how you manage those moments that matter the most.

We’ll catch you next time. Thanks, Larry.