There are a variety of reasons people consider a move to a new area, and they often boil down to three main motivations: to be closer to family, to have a better quality of life, or to relocate for work. The process of moving is stressful and disorienting, but there are often unexpected benefits and excitement as well. Planning ahead helps minimize the hassles and gives you a chance to adjust and choose a path that will be rewarding for you and your family. The first step in this process is understanding your reasons for making a move, and then balancing the financial realities of such a big change.
Understanding Your Why
My family made the move to Washington state last year, motivated by a desire to bring family together and experience a slower pace of life. During the process, we did a lot of reflecting, communicating, and planning, but I can attest that moving is a major event even when you prepare well.
It has been a positive transition, though it has included challenges that we only understood after living here. For instance, you have to be here day-in and day-out to understand what an hour less of daylight and frequent rain during the winter actually feels like. New friends recommended we break out the sun lamps and embrace the Hygge perspective of enjoying the coziness inside much more often than we did during Bay Area winters, and that has made a real difference.1 Another surprise has been the fact that two-lane traffic circles are abundantly placed around town, rather than four-way stop signs. Learning the new traffic circle signage has been, at times, humorous. Throughout this transition, our new life here has given us confidence that we made the right choice for our family.
What’s your why? A move to a different place might be spurred by the desire to be closer to family, especially when adult children move away, and grandchildren appear on the scene. We’ve also seen the option of remote work allow more people to consider new locations and engage with possibilities they hadn’t previously thought possible. For those leaving areas with a higher cost of living, such as the Bay Area, there can be an opportunity to shift to a larger home in a more affordable area or an apartment in an international city. Retirement is another transition that may provide the freedom to pull up stakes and envision a life somewhere else, with the possibility of a lower cost of living or greater flexibility to travel extensively.
Financial Considerations in a Move
A variety of logistical and financial concerns need attention in the midst of wondering whether the new place will live up to your expectations. Addressing these concerns, and getting clarity on the cost of living in your new area, can help you focus on the excitement of the change even as you have to handle the discomfort of saying goodbye to a familiar place. Below are thoughts on a few additional issues that are worth understanding — some of which can be easy to miss ahead of time.
Factor in moving costs: If you are moving a significant distance, whether interstate or even internationally, you should expect higher moving costs and more complex logistics. Choosing to hire a moving company to assist with packing or transportation can greatly simplify the process. If you go this route, insurance coverage may be a good option to protect against items being broken, damaged, or lost in a move — which happens more often than you would think. Most moving companies often suggest “bare bones” policies that don’t fully compensate for these things, or you can opt for the more robust and costly full-value protection. There are many expenses like this to consider, which highlights the importance of planning ahead and determining your budget for the moving process.
Understanding the tax landscape: When you sell your home, especially after living in one place for many years, one of the largest costs to consider may be the capital gains that have accumulated since you purchased the house. Creating a plan ahead of time with your advisor and tax preparer allows you to factor in these costs, providing clearer expectations for net sale proceeds as well as what price range you can target when purchasing your new home.
As we highlighted in our recent article, Broadening the View on Taxes, having to pay taxes on a transaction is not necessarily a reason to avoid or delay the decision. Being aware of the tradeoffs, including the intangible benefits you hope to gain from the move, prepares you to incorporate tax expenses into your overall financial picture.
Other ongoing taxes are also important to include in your planning. If you are moving to a state without income tax, your earnings or pension will stretch farther and may allow for a more comfortable lifestyle. That said, be aware of the sales tax and property tax rates that can be higher than expected, and how these may adjust annually. Talking with a local realtor or doing research on county assessor websites can help you understand the new landscape.
Updating your estate planning: This is an area that often gets overlooked in the moving process, but is important to update in many cases. If you are married, you’ll want to investigate whether you are moving to a community property state and confirm how to title your new house. Your existing trust may need to be reviewed to confirm that your named agents — whether successor trustees or healthcare POA — are still the appropriate people now that you live in a new place. Updating your estate plan may also require seeking out a new local attorney that is familiar with your new state’s laws.
Acclimating Takes Time
Be mindful that it will take time to adjust. Your favorite bakery may no longer be around the corner, but you will eventually find one. Rebuilding your personal network may take time, but finding an aligned community that shares your hobbies and interests may ease the transition. For families, it is important to get to know the local school environment, which may also provide instant community.
At North Berkeley, we are often privileged to be part of these conversations with our clients. When we’re able to start from a shared understanding of their “why” for a major move, we can more effectively develop a plan that helps blend their financial and personal considerations. There will always be unknowns when embarking on something as big as moving to a new state or country, but it will be smoother — and more exciting — when you take the time to plan in advance.
 What do we mean by “hygge”? https://denmark.dk/people-and-culture/hygge
Disclaimer: This commentary on this website reflects the personal opinions, viewpoints, and analyses of the North Berkeley Wealth Management (“North Berkeley”) employees providing such comments, and should not be regarded as a description of advisory services provided by North Berkeley or performance returns of any North Berkeley client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. North Berkeley manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.