**Relocating to Maine: How a Calculated Move Enhanced My Retirement Finances and Quality of Life**
After hinting at an exciting development through various posts, I’m excited to announce to the ESI Money community that I have made the move to the stunning coastline of Maine. This choice not only allows me to relish in an awe-inspiring natural environment but also greatly improves my financial circumstances compared to living in Boston.
### The Way Life Should Be
Upon entering Maine, a friendly sign declares, “Maine, The Way Life Should Be.” Initially overlooked during my college days, this phrase now holds deeper meaning. Maine brings peace, scenic beauty, and a close-knit community where agreements can still be made with a handshake.
For anyone approaching retirement, one of the most significant choices is considering a move to a location that aligns with this new chapter of life, which can lead to reduced living costs. While my primary aim was to enhance my lifestyle, the financial perks of transitioning from a high-cost region to a more economical one are clear. Here’s why Maine might be an ideal choice for your retirement goals.
### Shifting from HCOL to MCOL
If you find your retirement budget restrictive, moving to a Medium Cost of Living (MCOL) region like Maine could substantially improve your financial situation, potentially allowing for an earlier retirement. My relocation is expected to increase my cash flow by approximately $20,000 each year. According to the 4% rule, this savings equates to having an additional $500,000 invested. Retirees can take advantage of such a move to achieve their retirement objectives sooner or significantly upgrade their current standard of living.
**Financial Gains Summary:**
– **Insurance:** Annual savings of $2,475
– Home insurance decreases from $1,800 to $275
– Umbrella policy drops from $1,200 to $250
– Car insurance remains at $1,250
– **Food:** Anticipating a rise of $1,300 in annual expenses due to the lack of Aldi, although they may soon arrive in Maine.
– **Real Estate Taxes:** Annual reduction of $2,400.
– **State Income Taxes:** A cut of $3,000 each year.
– **Homeowner Association (HOA) Fees:** Removed, resulting in an annual savings of $4,344. The initial investment in lawn maintenance equipment was a one-time cost of $2,200.
– **Mortgage Elimination:** Leading to a net annual saving of $11,800 after adjustments for the decrease in portfolio income used for housing.
– **Utilities and Other Costs:** While air conditioning isn’t necessary, heating expenses are uncertain. However, robust energy efficiency regulations are expected to achieve a 30% reduction in utility bills. Overall, prices for other necessities in Maine are roughly 20% lower than in Boston.
### Understanding Maine’s Pension Income Deduction for Tax Savings
While New Hampshire is often noted for having no state income taxes, Maine offers a compelling option for moderate-income early retirees with a $45,000 annual “pension income deduction.” This includes Social Security, IRA distributions, and pensions. By establishing a Specific Equal Periodic Payment (SEPP), early retirees can take full advantage of this deduction.
From age 54, I’ve arranged for a SEPP of $52,000 per year. Although initial withdrawals will incur some state tax, the indexed deduction is projected to comprehensively cover this amount over time. After my SEPP, I plan to finalize withdrawals to maximize the deduction fully, thus eliminating state income tax liabilities.
### The Visual Splendor of Maine
Beyond financial considerations, Maine stands out as one of the nation’s most beautiful states. From picturesque coastlines to majestic mountain paths, the natural charm reduces the necessity for air conditioning. I look forward to capturing the beauty of Maine through photography after settling in.
### Reasons for Relocation
Initially downsizing after college, my daughter’s return home for remote work highlighted the shortcomings of our condo. This arrangement proved unsustainable, prompting me to suggest a new opportunity: buy a house for her that covers her costs while I maintain ownership. This arrangement protects against market volatility and ensures she gains a stake in property ownership.
### Embracing Full-Time Travel
As my children complete their education, I intend to expand my travel schedule to over 11 months annually. A projected monthly budget of $5,000 will cover diverse travel destinations, expected to suffice based on my past experiences.
### Future Aspirations: Van Life and More
After a thorough itinerary of international travel, I aim to traverse North America extensively by van. The van will be of high quality, costing as much as a Midwest home, yet offering tremendous freedom and adventure.
### Looking Ahead
As I approach 59.5, reaching this milestone will either lead to continued travel or a more permanent habitation—flexibility and readiness are the pillars of my plan. With a fresh assessment of my finances, my withdrawal rate is now a favorable 3.15%, enhancing both my financial security and lifestyle improvements following the move.
In conclusion, do not let initial financial forecasts dissuade you from an early retirement.