Retirement is one of life’s significant milestones that mark the ending of one chapter and the start of another. You have been working hard and earning, of which a chunk goes towards retirement plans for your entire life. There was a time when everyone started to look for settling down options in Florida after their retirement. The “baby boomers” were all strolling around the beach on the warm Florida coast and soaking in the sun.
After you have hung up your running boots, is it worth it to take the Florida route? The most important thing before shifting or investing you should rent a property or an Airbnb. Live there for a few months, soak up the atmosphere and neighborhood, understand their culture, lifestyle, government policies, tax pattern. Then, you can take the plunge or change your mind.
These days a lot of retirees seem to be moving out of Florida. Let’s understand why?
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Florida is Bustling with Boomers
You’re not the only one who has considered retiring in Florida. There are many before you who took this leap. Florida has the most retirees compared to its neighboring state down south. The overall population of Florida is 21 million, out of which 4.2 million are above 65. The number of senior citizens will increase to 32.5% by the year 2030.
Your desire to retire in Florida isn’t solely yours. If you think it is a good idea to live in a state with many peers, then this scenario would work for you. However, many people prefer the diversity of the population compared to always being around the greying crowd. Many others are also singing the same tune.
Hurricanes are a Real Menace
In the last leg of summer, water in the equatorial Gulf of Mexico and the Atlantic warms up and stimulates the development of tropical waves. Due to Florida’s location and its long coastlines. Florida’s official Atlantic hurricane season is from June 1 until November 30. The season is at its peak between mid-August and late October. Unfortunately, hurricanes destroy many houses and towns and kill many people. Hurricane Irma struck Florida in the year 2017. It was one of the costliest natural disasters in the history of the U.S., resulting in $52 billion in losses. In 2018, another most potent storm, Hurricane Michael, hit towns in Florida’s Panhandle and devastated the U.S., killing at least 20 people. According to NOAA, the total losses were more than $25 billion.
Areas such as Jacksonville,Tampa, and the Big Bend that aren’t as susceptible to direct land-falling hurricanes, still run a high risk of landfall every year. If you plan to shift to the state of Florida, you should be mentally, physically, and monetarily prepared for the effects of the hurricanes. Another shock that retirees face is the steep hurricane insurance, which ranges from 2% to 5% (and sometimes goes up to 10%) of the policy coverage instead of $500, a fixed amount citizens pay up north for natural calamities.
If you plan to save on insurance, you will need to invest in a wind mitigation test for your house. This test shows how strong your house stands against the strong and severe winds. This investment proves a much better deal because a home without a mitigation feature can get four times much expensive. If you plan to buy a house in a flood-designated zone, your mortgage company will make sure you have taken a floor insurance plan. Usually, the insurance covers wind and rains but not flooding in your house.
Wilderness and Critters in Florida
The state is covered with a lot of wilderness, national parks, and endless forests. It is also a place with a lot of alligators. The state is full of invasive Burmese pythons, green iguanas, and herpes-carrying wild monkeys. That’s not all; there are rats everywhere. Rats are on the beach, rats are in palm trees, and rats are on your roof. The average cost of keeping away the rats can be $300 annually. People shifting from the Northern part of the U.S are not used to creepy crawlies around them. If it is unusual for you to see snakes and alligators, especially on golf courses, you should give shifting there a second thought.
You Will not be Outdoors as Desired
Retirement in Florida is synonymous with happy mornings on the patio outside and strolls along the pleasant beaches soaking up the sun. These dreamy thoughts might not convert into reality. The state becomes too hot, the seniors who wish to play golf and other outdoor sports are confined to play only in the early mornings and late evenings. If you go a little north in the state, the temperature gets milder. Cities like Pensacola, Tallahassee, and Jacksonville, in North Florida witness snow in winters.
Besides the weather, the critters, the mosquito swaps, and the biting flies prevent you from going outdoors.
This blue-green toxic algae mess was caused partially by the U.S Army Corps of Engineers when they discharged water from Lake Okeechobee into nearby waterways. The algae need extra nutrients, like nitrogen and phosphorus, which are drained as pollutants by the nearby industries. The main culprit to this red tide bloom is Florida’s lax governmental laws allowing industrial companies to dump their wastes into the waterways. When Florida is so warm and sunny, algae blooms quickly.
If you live near the Gulf side of Florida, you will witness tons of dead fish and other creatures killed by the toxins in the algae wash up on shore and start to rot in the warm, humid air. The stench is nauseating. Economically it’s a double whammy to the community. One, the loss of tourist dollars and happy faces on the beach. Secondly, cleaning up the mess and burying it in a hole somewhere.
Before 1992, typical homeowners in South Florida paid replacement costs on contents that ran between $200 and $550. Today those numbers range from $1,200 to $8,000. Since the state of Florida is so prone to hurricanes, it’s not so easy to get insurance for this calamity. Many insurance companies might not insure you, and searching for one can be very taxing. If you are lucky to find one, they will charge a much higher deductible amount.
More so, if you are living in a “flood zone,” your mortgage company will ensure you get flood insurance. Wind and rain are covered by regular insurance, but not floods.
No State Income Tax?
Florida boasts no state income tax, none whatsoever on social security benefits, pension, and retirement income. But don’t get swayed away, “no state income tax” does not mean “no taxes at all.” You are being taxed in other ways. Like, sales tax and vehicle tax. This comes out much higher than most other popular states and can take a bite out of your retirement benefits.
According to the Tax Foundation, the state and local sales tax combined averages 7.01% in Florida. These are much higher combined rates that retirees from snowbird states like Michigan, Pennsylvania, Massachusetts, and New Jersey are accustomed to paying. You will have to pay a 6% tax on the purchase price should you plan to buy a new vehicle. To register an out-of-state vehicle, the state charges a steep “initial registration fee” of $225. A driver’s license costs $48 for eight years, which is much higher than $10 for an Arizona driver’s license for people above 50 and above for 12 years.
Swimming Pools Are Expensive
Swimming pools are the place to be in hot and humid Florida. More so, as grandparents would love to see their little grandchildren splashing away with smiles and giggles. A spa attached to the pool would be an added respite.
Unfortunately, the upkeep of an average 14×28 pool round the year costs as much as $3,000 to $5,000. This includes maintenance, repairs, electricity, and water. You will have to also spend hundreds and thousands of dollars on routine repairs from torn liners and leaky plumbing. You are expected to shell out anywhere from $100 to $600 a month to run a pool heater if you want your water heated. Pandemic has worsened services and escalated the prices.
The Sun Tan and your Skin
During the era of the 60s and 70s, people loved the tan on their Skin. The same generation, now aging, is eager to soak up the Florida sun. Unfortunately, they did not realize the adverse effects of the harsh sun on their Skin. Too much sun causes premature aging, extra wrinkles, and uneven skin color.
According to Florida’s Neuroscience Center, “The skin of elders here has become leathery and tough. We notice a lot more wrinkles. Sun can cause red, grey and blue spots on their skin”.
These same people who love to bask in the sun are instructed to avoid the sun between 10 am to 4 pm. Hence these are the prime times to be in the pool, on the beach or the poolside. Prolonged sun exposure and recurrent sunburns may increase the risk of skin cancer.
When elderly people relocate to Florida, they are keen to visit their family and friends from the north. Initially, they get a lot of visitors and family to spend vacations and weekends in sunny Florida. But after a few trips, their visitors keep reducing, as it is a bit far and inconvenient for the northerners to visit again and again.
These days video calls on the phones are a big savior for these elderlies to stay connected with their family.
Can you transfer Florida retirement to another state?
Pensions are not portable like other retirement accounts. If you transfer your account, which receives a pension from one state, to another, you will most likely lose service time. You might, however, be able to retain some of your benefits. It entirely depends where you are vested.
Can you lose your Florida pension?
Any public employee of a city, county, or state employer participating in the Florida Retirement System (FRS) can face an action to forfeit their retirement benefits, including any pension plan, if they are accused of a specified criminal act or enter a plea of guilty or no contest even if the court withholds the same.
What are my options and benefits when I decide to retire?
When it is time to retire, seek your Retiree package in the mail, you should be able to avail the following:
Health: You can elect for retiree coverage or continue through COBRA for another six months.
Dental and optician expenses: You can continue to use COBRA for the next six months.
Day-to-day living benefits: You can choose between $2,500 to $10,000, depending upon your insurance plan.
Supplemental Plans: You should contact your insurance company regarding converting your policy or buying an individual plan.
Health Savings Account: You should continue to make contributions until Medicare is eligible. Please note the state will no longer make contributions.
Healthcare FSA: Complete the FSA Options when your Employment Ends and continue till the end of the year. You can pay the balance amount.
Dependent Care FSA: This ends with your last employee payroll deduction. You can file claims incurred before your termination date.
At what age do you stop paying property taxes in Florida?
One of the homeowners must be 65 years old as of January 1 to qualify for homestead exemption. Also, remember the total ‘Household Adjusted Gross Income’ for everyone who lives on the property cannot exceed statutory limits.
How much money is required to retire in Florida comfortably?
To retire comfortably in the state of Florida, you will need at least $175,000 saved in your kitty.
To stay in Florida or not is a personal choice. When you plan to settle for your retirement, make a list of destinations that are pleasing to you. Make a detailed list of weather conditions, tax benefits, leisure activities, proximity to your family, income to expenditure ratio, and more. Meticulously find out all the benefits or disadvantages of the state you plan to settle. Retirement relocation is a huge decision. Before taking the plunge and zeroing all your life savings on the location, first try renting a house or Airbnb there. Experience the place for a few months and absorb the art, culture, neighborhood, weather, etc. Relocate with a calm mind and calculated moves. Involve your family in this process.
Alex Sherr is the founder of My Long Distance Movers, a blog that provides moving information and resources for people who are relocating. He has more than two decades of experience in the moving and relocation industry, and he is passionate about helping people relocate smoothly and efficiently. When he's not writing or blogging, Alex enjoys spending time with his wife and two young children.