The Best Places to Retire, and Play It Safer Before Retirement

0:04Where are the best places to retire and all the stock turmoil under the market surface? You're listening to the Saturday Personal Finance edition of Motley Fool Money.

0:21I'm Robert Brokamp, and this week I invite fellow podcast regular Matt Frankel on the show to discuss a report published by The Motley Fool that asked people which factors make for a good place to retire and then identified the counties that are more likely to have those factors. But first, a few headlines that jumped out to me from this past week. As I'm sure you've seen, it's been a volatile year for the stock market. Or has it? As of this taping on Thursday morning, the S &P 500 is down around 3 % for the year. But if you look under the hood, you can see why it feels like a market of extremes.

0:52As highlighted in a March 13th Axios article by Emily Peck, 57 stocks in the S &P 500 are up by at least 20%, and 47 stocks are down by at least 20%, based on data published by the Bespoke Investment Group. Five of the 11 major market sectors are down for the year so far, with the worst being financials, down 10 % partially on fears about the private credit market. And in a reversal of what we've seen for much of the past few years, the stocks of many tech-oriented companies have been foundering the iShares Expanded Tech Software Sector ETF, ETF, ticker IGV, has dropped 20 % so far in 2026. Of the six sectors that are in positive territory this year, the clear winner is energy, which is up 30%.

1:35What's an investor do? Well, one step is to make sure you're sufficiently diversified. I've mentioned on the show before that we at The Motley Fool believe you should own at least 25 stocks, but in his recent quarterly call with premium members, Motley Fool co-founder and CEO Tom Gardner suggested that numbers should be moved up to 50 stocks. Tom pointed out that the market is still richly valued, and an internal tool we've created suggests that the S &P 500 will provide slightly below average returns over the next decade, but perhaps with higher levels of volatility. Diversification could help you ride out the bumps and, in Tom's words, commit to being a lifelong investor.

2:10Of course, diversification isn't just about stocks. It's also about holding some cash and bonds, especially if you're getting closer to your goals. This brings us to our next item, which is an article on the ThinkAdvisor website written by David Blanchett, Michael Finca, and Wade Pfau, three of the nation's leading retirement experts who have each been guests on this show in the past. The title of the article is Exploring the Retirement Risk Zone, which is a time period several years before and several years after retirement when a bear market can significantly change your retirement plans. For the article, they analyzed how annual portfolio returns for the 20 years before and the 20 years after retirement are correlated with retirement spending outcomes.

2:49The result, quote, returns immediately before retirement have the greatest impact on retirement spending, and as an individual approaches retirement, the importance increases each year. Returns immediately after are also important, but the impact of returns falls more rapidly such that the return five years after retirement matters about as much as the return 10 years before retirement, end of quote. The takeaway is that once you're within a decade of retirement, it might be time to start playing it safer with a portion of your portfolio, especially if you've already saved enough to beat your goals.

3:24What does that mean from an asset allocation perspective? The article didn't say, but I recently calculated the average allocations of the target date funds offered by the five biggest providers, American Funds, BlackRock, Fidelity, T. Rowe Price, and Vanguard. For the 2030 funds, the average allocation was 50 % stocks, 43 % cash and bonds. And for the 2035 funds, it was 67 % stocks, 33 % cash and bonds. Keep in mind that target date funds are meant for investors with a moderate risk tolerance, which might be too tame for many Motley Fool podcast listeners. But for those in the retirement risk zone, it might make sense to dial back your appetite for risk just a bit so that you can still retire when and how you want.

4:06And speaking of bonds, let's get to the number of the week, which is 4.32%. That's the yield on the 10-year treasury as of Thursday morning, up from 3.97 % on February 27th, the day before the start of the war in Iran. Now, this might be surprising. Geopolitical events often cause a flight to safety, with investors rushing into treasuries and causing yields to drop. Why not this time? Well, it could be because inflation, which was already creeping up, will be driven even higher due to skyrocketing oil prices. Inflation is one of the biggest nemeses to bond investors, so perhaps they're now requiring a higher yield to compensate for the greater risk.

4:44And we may not get as much relief from the Federal Reserve as experts were expecting earlier in the year. On Wednesday of this week, the Fed concluded its latest meeting and kept rates where they are. According to Bloomberg's Jonathan authors, Fed futures were predicting three rate cuts on the eve of the war, but now it's down to one. And higher rates are a worldwide phenomenon. As authors wrote, quote, the Fed is a global outlier as it's still expected to cut. Each of the nine other largest developed market central banks is now forecast to hike. End of quote. Higher rates will not only affect our portfolios, but also our borrowing costs.

5:19The rate on a 30-year mortgage has risen from 5.99 % on February 27th to 6.36%, according to Mortgage News Daily. You might be considering a mortgage if you plan to move in retirement. Where are the best places to retire? That's the topic of our next discussion when Motley Fool Money continues. These days, I'm all about quality over quantity, especially in my closet. If it's not well-made and versatile, it's just not worth it. That's honestly why I love Quince. The fabrics feel elevated, the cuts are thoughtful, and the pricing actually makes sense. Quince makes high-quality wardrobe staples using premium fabrics like 100 % European linen, silk, and organic cotton poplin.

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6:33That's a full year to wear it and love it, and you will. Now available in Canada, too. Don't keep settling for clothes that don't last. Go to quince.com slash motley for free shipping and 365-day returns. quince.com slash motley. The number one investing goal of most Americans is retirement. And a key determinant of happiness in retirement is where you live. Which factors are most important and where are the places that have those factors? To answer those questions, we at The Motley Fool surveyed Americans ages 55 and older, and here to help discuss the results is fellow certified financial planner and real estate expert, Matt Frankel.

7:12Thanks for joining us, Matt. Yeah, thanks for having me. It's always great to talk about this kind of stuff. So there are two aspects of the report that I think are interesting. First, I think it partially answers the question of what makes for a good retirement in general. And secondly, it suggests places where that can be found. So let's get into the methodology a little bit. So based on the survey results, we, and by we, I mean some of our colleagues at The Motley Fool, not specifically Matt and me, but we identified seven key retirement factors and weighted each according to the preferences of the survey participants.

7:41So coming in, number one was quality of life, had a 31 % weighting. Next was healthcare access and quality, 15 % weighting. Housing affordability, 13%. Crime and safety, 12%. Weather and climate, 12%. State and local taxes, 11%. And non-housing affordability, 6%. So that biggest weighted factor was quality of life being more than twice as important as any other factor. But what did the study find were important components of quality of life? Well, based on the survey results, we considered features such as restaurant options, walkability, access to outdoor recreation, proximity to airports, and availability of arts and entertainment.

8:18So that's what's behind the study. Matt, what's your take on what the report found as being important about a location when it comes to retirement happiness? Now, obviously, different factors are important to different people. For example, my wife can't stand to be cold, period. So climate and weather would definitely play a role even over things like housing affordability in a lot of cases for us. But, you know, I totally understand where the methodology came from. Quality of life, for example, totally makes sense. That's number one. The number one retirement killer is boredom, right? Everyone, you know, that's been well documented that, you know, people want things to do when they leave the workforce.

8:58So that makes a lot of sense. Healthcare access obviously makes sense. You use health care several times more after you're retired than you do when you're still working. But it is very personal specific. And there are other factors that matter to a lot of people. For example, proximity to your family and friends. My parents wouldn't move to one of these top counties if it was free because their grandchildren are here. You know, there's a lot of different moving parts here, which is why we gave 50 different locations instead of just naming one for everybody. Right. When you lump all the financial factors together, which were housing affordability, non-housing affordability, and taxes, they add up to 30%.

9:34So put together, they're close to the same weighting as quality of life. And, you know, for some people, that might be more important, especially if they're retired, but they don't have, you know, a huge margin of error in terms of their net worth and their income. Or if they just want financial peace of mind in retirement, like that affordability issue is going to be one of the more bigger aspects for them. And I'll say, as someone who takes a walk every day, I love that walkability was number two on the quality of life factor. So that's great. Okay, so based on the survey results, we determined the factors that indicated locations would be a good place to retire.

10:04We then used various sources of info to see which counties had those factors. But first, they had to meet certain criteria. So for example, we excluded counties with less than 40 ,000 people and those that rated poorly on factors such as affordability. In the report, as Matt mentioned, we highlight the top 50 places to retire. But for this podcast, we'll just list the top 10. And again, we looked at county level info, but for the most part, each county owes its attractiveness to its most prominent city. So we'll list that too. We're going to do the top 10 here going in reverse, David Letterman style.

10:38So number 10, Armstrong County, Pennsylvania, which is not too far from Pittsburgh. Number nine, Miami-Dade County, Florida. Number eight, Milwaukee County, Wisconsin. Number seven, Ramsey County, Minnesota, home of St. Paul. Number six, Philadelphia County, Pennsylvania. Number five, Pulaski County, Arkansas, home to Little Rock. Four, Cuyahoga County in Ohio, home to Cleveland. Number three, Gadsden County, Florida with Quincy. Number two, St. John's County, Florida with St. Augustine. And number one of the best place to retire is Broward County, Florida, home of Fort Lauderdale. Matt, your thoughts on the rankings?

11:15There were a few surprises to me. So I'm going to name my top four surprises here. So number one is that there was nothing from South Carolina where I live, not just because I live here, obviously, but because it did rank number one in net migration in the United States recently. Half of my neighborhood is retired people from somewhere else. We have great weather, great costs of living. It's still relatively affordable to buy a house. So I was surprised to see nothing from South Carolina. There was one county from North Carolina on the list, way down the list, So that was a surprise to me. I was surprised to see Baltimore on the list, just because I personally don't normally think of it as a retirement destination, but it makes a lot of sense.

11:54And, you know, that's a great example of there's many different sides to some of these cities. There are parts of Fort Lauderdale, which was number one, that I would never live if I was a retiree. And there are parts that I could see myself having a great retirement. So within some of these cities, there's a lot of different varieties. So that's surprise number two. Number three, I am not surprised that Florida dominated the top of the list. You know, no state income tax, so you can't really game for that. Retiree-friendly property tax structure is something that doesn't get quite as much attention.

12:25Obviously, it's warm in Florida. And there are some surprisingly low-cost areas. Florida's thought of as an expensive place to live. You know, that's true in downtown Miami and downtown Fort Lauderdale. But, you know, on the outskirts where a lot of retirees live, that's not the case. It's still relatively affordable. A little surprise Miami-Dade made the top 10 just for the affordability factor alone. And number four, I'm surprised to see my home city where I grew up of Philadelphia toward the top of the list. But when you think about it, it makes a lot of sense. A lot of retirees want to be away from cities, but a lot of them like being in cities.

12:58And it can be a very affordable alternative for city lovers compared to the, you know, the two closest cities to Philadelphia are New York City and DC. Philadelphia is a much more affordable place to live than either of those. Yeah, I live in Northern Virginia now, but I grew up in Florida. outside of Tampa, Pinellas County, and Hillsborough County, home of Tampa. Both of them made the top 25, so I'm not surprised of that. St. Augustine, my favorite city in Florida. I'm not surprised to see that as number two. What was interesting, though, is St. Augustine had the second highest quality of life score, but a really low healthcare score, which I was not aware of because I've never had to go to a hospital in St.

13:33Augustine. But I think that's an important part of evaluating places. You may like the place because it has a low cost of living, or you like the museums or being close to the water. But if you've got health issues, you got to make sure that it's going to have a good healthcare system. Related to your Philadelphia comment, I was not surprised to see so many locations in Pennsylvania. Pennsylvania, I think, is a very underrated state. Lots of good locations. Love Pittsburgh. Love Philadelphia. Some parts of Philadelphia, expensive and high crime, so you have to be careful. But I think what's important about the report is it did look at the county level.

14:06So it's probably more thinking in terms of more the suburbs of Philadelphia. And I did notice that there were other places like Miami that are not cheap. So it's clear that there are other aspects, their healthcare, quality of life are high enough to outweigh the cost there. Let's move on to talking about relocating in retirement. So according to Transamerica, 38 % of Americans move after they retire. What do you think people should consider when deciding to move in retirement? If you ask all of my older relatives, they consider where I live. That was their number one factor. They all came to me.

14:39They wanted to be near their grandkids and things like that. But that is something to consider. But there are some other things as well. You mentioned access to health care. If that is a big deal for you, that should definitely be toward the top of the list. My wife and I met in Key West, Florida. So we lived in Florida. There's almost no access to health care without driving four hours to Miami. So that would be a limiting factor for us. It's not just that there's no access to health It's just inconvenient access to health care. Your personal financial situation. Obviously, places like the Keys wouldn't make sense if you are on a budget.

15:10We mentioned tax friendliness is a factor in the financial situation. That can vary by income level. Some states are much more tax friendly to lower income brackets than others. Some are really high tax states, but only for people toward the top of the spectrum. So that's definitely something to think about. And also the practicality of your current situation. A lot of people, I don't have the exact statistic in front of me, but aging in places has been a big trend in the United States for a while. You know, keeping your current home, the same house where you raised your kids, things like that.

15:39If you get to age 70 and you can't climb stairs, that could be a limiting factor. Does your current home and your current location, walkability, drivability, you know, within a close proximity of your doctor's office, for example, it might meet your needs when you're in your mid-60s. Will that meet your needs when you're 75, when you're 85? So I would say have a much longer time horizon when you're considering all of the factors that we discussed earlier? Yeah, when you look at the rankings of most stressful life events, both moving and retirement often make the lists. Yesterday, I read an article about job transitions, and someone put in the comments that he had recently retired, and he wrote, quote, to my surprise, the emotional aspect of this change has knocked me off my feet.

16:19So, you know, both retiring and moving at the same time might be a big change. So I would say that's something to consider. I think it's probably a good idea to do a test run by maybe renting an Airbnb in a new area, you know, for a few weeks, maybe a few months, maybe at different seasons. So you understand sort of basically the true feel of the location, whether you'll be happy there. You mentioned the social stuff, and I think that's always important, right? Do you want to leave your friends? Surprisingly, perhaps, the research on whether moving closer to grandchildren is mixed. I have found studies that found, like, the happiest retirees are those who live within two to three hours of grandkids.

16:55Other studies have found that people who move closer to grandkids end up being dissatisfied because they basically thought they were going to be a bigger part of their kids' lives and they ended up not really happening. You know, their kids had their own schedules, their own things going on. The grandparents left their own social circles to move closer to kids and didn't quite turn out the way they thought. So put a little thought into that and your family structure and how close you are before you pick up and move for the grandkids. And then the final thing I think is important to point out is that, you know, if you're downsizing or moving from a higher cost area to a lower cost area, you could significantly boost your retirement security by moving in retirement, right?

17:30You not only could realize some home equity, boost your portfolio a little bit, the lower cost area is lower cost in many ways. It might have lower utility costs, lower taxes, lower upkeep costs. And that could result in a retirement that either moves up the timeline, you could retire a couple of years sooner, or maybe have higher income while you're in retirement. All right, Matt, let's go to the final question here. So some people may think that where to live in retirement isn't an either or question, right? They could keep their home in their current state, but then get a place in Florida or wherever and rent it out when they're not using it.

18:04And while you're not retired, this is something you've been doing, right? So you have your home in South Carolina, but you do have a home in Florida that you use for vacations and you rent out. So give us your general take on maintaining more than one home and being a landlord. Well, yeah. So like I said, so all of our older relatives, my wife's and my own, all moved to be near us where the grandkids are. So I couldn't in good conscience get away with moving to Florida right now. But we did the next best thing and we bought a vacation home in Florida. You know, we're those weird adults that like Disney World still.

18:34So ours is right near the Disney parks. It's in Osceola County, which is where Kissimmee is. It's definitely a big part of our retirement strategy to probably eventually move down there. But that could be a great retirement strategy, too, especially with modern options. If you ask for retirement advice on how to do this 20 years ago, things like Airbnb didn't really exist to you as an option. You know, short term vacation rental managers used to take about 50 percent of the rent. I pay 15 percent of the rent. A lot more technology in the industry has made it a lot more affordable and practical to have a second home, especially if you're not that worried about making money.

19:08If you just generally want to be able to afford to have two places, there's a lot of things that are practical now that weren't practical 20 years ago. So that is it's definitely not necessarily an either or. Or alternatively, you can have an Airbnb that's near your grandkids and live where you really, really want to live. That's another possibility. You know, if my kids end up in South Carolina where we are now, I could definitely see my wife and I living in the Florida house and keeping the one we have now just, you know, and renting it out when we're not here. There's a lot of flexibility in that.

19:37And like I said, the options have definitely evolved considerably. And just how easy it is to manage a vacation rental from far away has evolved considerably over the past couple of decades. So it's a real possibility. I'm not at retirement age yet, but I can't see us not doing this if we're still loving the house. That was great to hear. Thank you for joining us, Matt. And if you, dear podcast listener, want to read our entire report about the best places to retire, visit fool.com forward slash research forward slash best dash places dash to dash retire. Thanks, Matt. Thanks for having me. Have you been sleeping on your mattress a little too long like I have?

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21:30I consider this good news because the evidence is clear that healthier people are wealthier and vice versa. The causes and effects go both ways. Healthier people are more productive and spend less money on medical bills. And wealthier people can afford better health care and, well, memberships to spas and gyms. But you don't need to pay for a membership to get healthier. Even a daily walk can do wonders. According to a 2023 study, walking briskly for 30 minutes, five days a week, decreases the risk and severity of various health outcomes such as cardiovascular disease, type 2 diabetes, cognitive impairment, and dementia, while also improving mental well-being, sleep, and longevity.

22:09Plus, with spring around the corner, it's a great time to get out for a run or a bike ride. I find it helps to commit to doing an event that you have to train for, such as maybe a 5K or 10K run in the summer. If you enjoy biking and really want a challenge, consider RAGBRAI, sponsored by the Des Moines Register. RAGBRAI stands for the Register's Annual Great Bicycle Ride Across Iowa, and it's the world's oldest, largest, and longest recreational bike touring event. You'll spend seven days cycling 400 miles along with 20 ,000 of your new friends. If you do it, keep an eye out for me. I'll be the goofball pedaling a recumbent trike up and down those hills, because believe me, Iowa is not flat.

22:48And that, my Foolish friends, is the show. Thanks for spending part of your weekend with us. And thanks, as always, to Bart Shannon, the engineer for this episode. People on the program may have interest in the investments they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy or sell investments based solely on what you hear. While personal finance content follows Motley Fool editorial standards, it is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes.