As prices rise, more retirees are moving to other states

Retirees are on the move again. But for more and more of them, it's less about chasing their golden year dreams and increasingly about fleeing high prices.

After a sharp decrease in 2021, the number of Americans relocating for retirement jumped back up in 2022. A survey by the moving company United Van Lines found that of all the interstate moves last year, 20% were by Americans settling some place new for their post-work life. And according to a study by Hire a Helper, an intermediary between customers and movers, more than 234,000 new retirees moved to another state in 2022 — 4% more than in 2021. 

Why are so many retirees moving? In an increasing number of cases, inflation is sending them packing. Hire a Helper found that 12.2% of migrating seniors were moving in search of "cheaper housing" — an uptick from last year and almost double the percentage in 2019. And for the first time in a decade, that motive overtook a more positive one — the pursuit of a "new or better home" — which sank to 9.9%.

This data dovetails with a broader trend. As inflation rose to its highest levels in 40 years, many seniors struggled to keep up with rising consumer prices and housing costs, typically the single biggest outlay for older people who don't own their home. One survey by the Employee Benefit Research Institute found that in 2022, 36% of American retirees said their expenses were higher than expected. United Van Lines said inflation explained many of the moves it observed.

"The study underscored that Americans are moving from expensive cities to lower-density, more affordable regions," said Eily Cummings, the company's vice president of communications.

In the United States, the cost of retired life depends a great deal on where one retires. A study by Lending Tree found that while retiring in San Francisco would require a nest egg of about $1.37 million, retiring in Johnstown, Pennsylvania would only necessitate saving $780,000.

In recent years, taxes have also been a factor behind many retiree relocations, thanks to the Tax Cuts and Jobs Act of 2017. That law put a $10,000 cap on the federal deduction for state and local taxes, including those all-important property taxes. The limit, known as the "SALT cap," effectively made some states far more expensive for taxpayers to live in than others. One study by the Baker Institute for Public Policy at Rice University found that the limit caused "a surge in migration and resources from high income-tax states to low income-tax states." (Those high-tax states include New York, New Jersey and Connecticut, which sued unsuccessfully to undo the SALT cap. While more than 20 states have passed SALT cap workarounds, the moves involve using entities like partnerships.)

So which states are retirees moving to? Not surprisingly, Florida was the most popular choice, according to Hire a Helper, with 11.8% of the inbound migration — enticed by the state's warm climate and lack of state income taxes. Following the Sunshine State were North Carolina with 9.6%, Michigan with 6.6%, Arizona with 5.9% and Georgia with 5.5%.

Meanwhile, the states that retirees moved out of in the largest numbers were Oregon with 9.8%, Maryland with 7%, Idaho with 3.4%, Texas with 3.3% and Virginia with 2.9%.

Read more: The 20 cities where retirees need the biggest nest eggs

Interestingly, some of the states with the most outward migration were the ones retirees had flocked to in previous years. Idaho, for example, was the 5th most popular destination as recently as 2020.

"With an influx of new residents, housing prices and other living costs start to increase over time, and these popular destinations become hot spots for inflation," Cummings said.

So how are retirement advisors coping with all this relocation? Pretty easily, it turns out. Thanks to the pandemic, many firms had already gotten used to working with clients remotely. So to a large extent, where they live doesn't matter.

"If we learned anything during COVID, it's how to do a Zoom session," said Glenn Downing, a CFP and co-founder of the advisory CameronDowning in Miami. "It's not a big deal when people move away — we can keep in touch virtually."

Eric Roberge, the founder of Boston-based RIA Beyond Your Hammock, said his firm has clients all over the map. In recent years, they've shifted to conducting all meetings by video conference, and Roberge said not a single client has complained.

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"Before the pandemic, we were about 50% virtual," Roberge said. "Since COVID forced us to go 100% virtual in March 2020, we haven't gone back… So regardless of whether clients move, their experience with us stays the same."

Even advisors in Idaho say they've adapted smoothly as clients moved away. Ron Strobel, the founder of Retire Sensibly in Meridian, Idaho, said that until recently, his state had been "one of the most popular retirement destinations."

"We're starting to see the opposite happen now; the transplants are starting to re-think their new location and many are moving back," Strobel said. "It doesn't change much from our perspective as the clients' advisor. The relationship will generally go to a remote meeting format only, but that's typically how we meet with clients anyway."

And as several advisors pointed out, meeting with a client over Zoom — no matter which state they're in — is a lot easier than commuting.

"Honestly," Downing said, "we were doing Zoom sessions long before COVID simply so clients could avoid Miami traffic."