Money. We work hard for it and tend to spend it quickly, so when/if you retire, will you be able to control/manage your spending?
Fixed expenses are critical to understand as you head off into the land of retirement – regardless if you decide to stay home, shovel now and babysit your grandchildren or, head to the land of sun & fun. Historically, the largest part of your fixed expenses are the possibility of still having a mortgage. It’s safe to say that a good portion of the folks we work with are working hard to either eliminate and or seriously reduce their current mortgage so that they can be in a position to be debt free, thereby increasing their disposable income.
However, that scenario unfortunately isn’t in the cards for everyone.
Therefore, let’s take a look at a few major fixed expenses that you will more than likely face as you set sail for your Golden Years. In particular, we will be looking at average fixed costs if/when you live in North Carolina.
This author wishes not to get into the debate about moving to a State that has a State income tax vs a State that does not have one. Uncle Sam is not biased and will get what is due him from each of us, whether it is in no state income tax and higher property taxes or vice versa. Nobody is escaping the government.
In Brunswick County, which hosts Leland, Southport, Shallotte, Ocean Isle Beach, Sunset Beach and Calabash, everyone pays the county rate of .4425, which equates to $442.50 per $100,000 in value of your home. If you also live within one of our handful of towns that have their own tax, you could add on an additional .08 – .28 to your mil rate of .4425. For example, Shallotte town taxes are .28, so add that to .4425 and you have .7225, or $722.50 per $100,000 in assessed value. So if you owned a home in Shallotte with an assessed value of $300,000, your taxes would be approximately $2,167/year.
With the advent of storms like Katrina and Sandy, all coastal regions on the east coast have had to increase their insurance rates so as to stuff the coffers with sufficient funds just in case. Our insurance rates have had healthy jumps over the past few years however, unless you live on the beach, our rates are still quite fair. And please remember that 95% of the homes here in Brunswick County do not require flood insurance, as you typically have to be within sight of salt water or live near a fresh water creek that has the propensity to overflow during storms. If you do need and or opt for flood insurance here on the mainland, your annual cost is approximately $400.
A home with an assessed value of $300,000 on the mainland will pay approximately $1,600 – $2,500/year. If your home is on the beach, don’t be surprised if your total insurance costs are three times that of what folks on shore pay for their annual insurance. Please keep in mind that the majority of insurance claims after a coastal storms are from water damage due to flooding, and the overwhelming majority of Plantations to retire to are plenty far enough from the shorelines to have to worry about that type of damage.
Planned communities in the US typically have abundant amenities such as pools, fitness centers, walking trails, clubhouses, etc. Therefore, to pay for these on an annual basis, along with the maintenance on common grounds such as the entrance and along the roads, property owners form a Property Owners Association. The average costs here range from $800 – $1,200/year per home/property/condo. Basically, consider this your health club fee, for if you take advantage of it, you will never need to sign up to Gold’s Gym ever again!
If you live in a home here where you enjoy any of the following, these would be considering HOA (Home Owners Association) fees: Landscaping and grass cutting, group insurance rates on all the homes and exterior building maintenance.
So while you need to add these to your future fixed expenses, most of these fees are already probably part of your daily expenses, as many of you belong to health clubs, pay someone to cut the grass, pay insurance, etc.
If there ever was a wild card to this group, it would be health insurance. Many of you are currently working and at least one of you have coverage offered by your employer. But what is your plan once those benefits run out?
Recently I worked with a couple that did some ballpark calculations to the cost savings of moving south. What they said is that they will be losing their current insurance when they move and will have new expenses in order to maintain the level of medical coverage they have now however, with a property tax savings of nearly $7,000/year, that savings will more than cover their health insurance premiums and the additional home insurance plus, still have enough left over to take a 7 day Caribbean Cruise.
All told, there are financial advantages to moving south, so just be sure to spend time researching all your anticipated expenses against your income. Above are four major expenses to be concerned about but please keep in mind that moving south also means no more snow removal fees, no school board assessments, cheaper gas, way fewer potholes for your car to dodge, no need to purchase winter clothes, seriously reduced dry cleaning bills and, travel expenses to the beach will be drastically less since you live here!