Relocating in retirement can bring you closer to family, hobbies, and better weather. But it’s not always kind to your wallet. To maintain your financial security after leaving the workforce, you need to understand how your move will affect your budget and your tax bill. Here are three of the most important financial factors to keep in mind if you plan to move to another state in retirement.

1. Cost of living

You’ll have to save more for retirement if you plan to move to an area with a higher cost of living. Conversely, you might be able to retire on a smaller nest egg if you choose a more affordable state.

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In case you were wondering, here are the 10 cheapest and 10 most expensive states for retirees:

Source: Missouri Economic Research and Information Center.

But a lot depends on where you live within these states. It’s a good idea to compare how the cost of living in your current hometown stacks up to your desired retirement city when estimating how much you need to save for retirement. You may want to repeat this exercise more than once over the years, as costs in some places rise faster than others.

2. Tax rates

Where you retire determines which types of taxes you’ll owe and how much you’ll pay annually. Some states, like Florida, don’t have state income taxes. This could save you quite a bit compared to living in a state that taxes its residents’ income.

Social Security benefit taxes are another thing to watch out for. Currently, only 10 states have them, and they only apply to certain residents — usually those with high incomes or large annual Social Security benefits. If you move to a state that has these taxes, check its rules to learn if you’d actually owe anything. If you do, budget for this when estimating your annual retirement expenses.

Other taxes to keep on your radar include:

• Property taxes: This can have a huge effect on retired homeowners, though it shouldn’t bother you if you plan to rent in retirement.
• Estate or inheritance taxes: This may not concern you directly, but if you hope to pass as much of your wealth on to your heirs as possible, you might prefer a state that doesn’t have these taxes.
• Sales tax: You still need to buy things in retirement, and state sales tax rates have a big effect on how much your everyday goods will cost you.

If you have any questions about how state tax laws could affect your retirement plan, you may want to consult with a tax professional based in the state you hope to retire in.

3. Travel costs

Though less significant than the two factors mentioned above, travel costs are still important to think about when planning your retirement budget. If moving to another state takes you away from friends and family, you’ll probably want to return for visits once in a while. This might involve taking a flight and renting a car and a place to stay for some. That could easily amount to thousands of dollars per trip.

You’ll have your initial moving costs too. This is a one-time expense, but it could be pretty substantial, especially if you have to buy new furniture or appliances for your new home in retirement.

It can be difficult to estimate how much these things might cost you, since travel expenses can change significantly over just a few days. But you can use today’s costs as a baseline and build in a cushion to be extra safe.

Taking the above steps now can give you an idea of what your retirement savings target should be. But update this as necessary as you get closer to retirement. Your plans for the future could change, and so can the average cost of living and state tax laws.

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