When you think about “traditional” retirement, you probably picture retiring at age 65 and moving to a place like Florida or Arizona. You’ll spend your time golfing, fishing, and relaxing in a hammock all day. This isn’t a terrible way to wind down your golden years, but with FIRE there are a lot more options.

FIRE (Financial Independence / Retiring Early) is definitely not your traditional retirement lifestyle. FIRE achievers are younger, more vibrant and adventurous, and open to a variety of different living scenarios.

When you FIRE, you have all kinds of options for where you want to live. You could spend your time in nature near the mountains or the ocean. You could enjoy city life close to cafes, restaurants, and museums. Or you could even live abroad in a beautiful country like New Zealand, Portugal, or Thailand. 

The sky’s the limit! The big question is how do you determine where is best for you?

 

Making a Plan

Before we FIRE’d in 2015, we had moved around quite a bit, buying and selling a number of times over the years. Our friends used to joke that they would write our address in pencil in their address book because they knew it wouldn’t last long. 

We eventually ended up using geographic arbitrage to purchase our current home in full, a condo near the waterfront in Oakland. We’ve been here for almost seven years now (a record). It’s a great location for us (COVID-19 notwithstanding) with near-perfect weather (despite the wildfires), amenities in our building, friendly neighbors, and lots to do.

Of course nothing in life lasts forever. While we have no immediate plans to move, we do want to think about the future. The beauty of the FIRE lifestyle is that you have the freedom to live where and how you want. 

Here are some things to consider... 

Where do you want to live? Factors to consider include climate, population, healthcare, cost of living, outdoor activities, culture, and more.

How do you want to live? What type of dwelling will you inhabit (a house, a condo, an apartment, an RV)? Should you own or rent? Would you be willing to try living a nomadic lifestyle?

 

Where to Live 

Let’s look at three important criteria for evaluating where to live when you FIRE: geographical, financial, and social. We can break them down like this...

 

Geographical Factors 

This would include climate, natural resources, and potential impact from global warming and natural disasters.

Climate: This is an important factor. Do you prefer warm weather year round, or do you like having the four seasons? We like it warm, but not blistering hot, so the Mediterranean climate of northern California suits us well.

Natural resources: Do you want to be near a body of water like the ocean, a lake, or a river? Would you like to live near the mountains? Some people want to be near big open spaces or close to forest land and parks. For us, we love being near water; ideally, we’d be close to the ocean, but living near a smaller body of water would also work. We also love having green space nearby with places to hike and enjoy nature.

Disasters: It’s important to assess potential risks, especially if you plan to purchase your home. With climate change accelerating and natural disasters increasing in frequency, do you want to be in a flood or disaster zone? These events can impact the value of your investment, your insurance costs, and most importantly your health and safety.

We love living in northern California, but it definitely has its risks. There is the potential for massive earthquakes, and the wildfire season is getting longer and much more disastrous in scope. This year we spent many days indoors, because the smoky air was too unhealthy to breathe outside.

 

Financial Factors

Next, we’ll look at financial factors like the cost of housing and other living expenses, healthcare, and taxes.

Housing: Whether you’ll be owning or renting, one of the biggest considerations is the cost of housing. This could be an opportunity to relocate to a lower cost of living area, especially if you were living in a high cost of living area for your work.

There are a number of tools you can use to research the cost of living, such as Redfin or Zillow. One site we like is Numbeo to compare the cost of living in thousands of cities around the world.

Other living expenses: While housing is probably your biggest expense, you may also want to consider other costs, such as food and transportation. If you plan on living someplace remote, like an island, the price of food, gas, and other household goods will be much higher. 

On the flip side, if you live someplace with plenty of resources, supermarkets, and discount stores like Costco, then you can keep those costs in check.

Healthcare: This is always a major factor for those leaving the workplace early (especially for those of us living in the U.S.). We would suggest evaluating the healthcare options ahead of time before relocating to another state or country. One good resource is eHealth, which can help you find healthcare options no matter what your situation might be.

If you decide to FIRE overseas, many countries offer healthcare coverage to residents living there, even if you’re not a citizen. For example, if you’re a permanent resident in Canada or New Zealand, you would qualify for their government-funded healthcare coverage.

Taxes: You should also look at tax considerations. For example, as of 2020, there are nine states with no income tax. This is attractive to many people; however, keep in mind that these states have to make up that revenue with other taxes or reduced services. 

Other taxes to research are property taxes, excise taxes (e.g. fuel, alcohol), and sales tax. This will give you an idea of the overall tax implications of where you may eventually live.

 

Social Factors

It’s also important to look at social factors. These include population statistics and how close you are to family and friends.

Population: There are a lot of population statistics that you can review, such as the size of the population, age, education attained, income levels, and ethnic diversity. 

In addition to total population, take a look at the population density. For example, Oakland has roughly half the population of San Francisco, but it has a quarter of the population density (because it’s twice as large geographically). This is important when determining how crowded a city will feel.

Wikipedia or the U.S. Census Bureau is a good source for much of this information.

Friends & family: One of the biggest considerations about where to live revolves around proximity to friends and family. If you have a strong social circle in your current area, it can be hard to leave that behind, even for greener pastures. 

We’ve been living in the San Francisco Bay Area now for over 24 years, so we’ve established some strong social ties. Of course, people come and go. We’ve had lots of friends leave the area over those years, and we’ve met many new people along the way.

Just remember you can always stay connected online, by phone, and by visiting in person. If you live in an interesting or desirable location, your friends and family will most likely want to come and visit you. And you can always meet new people wherever you live!

Urban vs. Rural: Another decision is how rural or urban you prefer. COVID-19 has changed the way many people feel about living in more urban and crowded areas. Will that still be the case in another year or two after we get a vaccine and get back to a sense of normalcy? 

Right now, the idea of living in a rural area with lots of space and nature may seem idyllic. But you should take into account what makes you happy and fulfilled. If you love being able to walk to your favorite cafe, new restaurant, art museum, or music venue, then living in an urban area may be in your future. 

 

Resources & Tools

If you want to FIRE in the U.S., but you’re not sure where, check out this interactive tool from Marketwatch: Where’s the Best Place for Me to Retire?

For those who would be interested or curious about FIRE’ing abroad, here are some good resources:

• International Living: Each year, they put out a report of the top countries for retirees based on information from scouts, experts, and expats from around the globe. Here are their 2020 results: The World’s Best Places to Retire in 2020.
• Global Retirement Index: French investment bank Natixis puts out a very detailed yearly report ranking the top 25 countries for retirement in the world (2020 report). The top five are Iceland, Switzerland, Norway, Ireland, and Netherlands. The U.S. comes in at #16.
• Nomadlist: This is a database compiled by international travelers working around the world. It’s geared a bit more toward a younger demographic (think digital nomads), but the info is still helpful for evaluating international locations to live.

Investopedia has a good resource to help plan for retiring abroad, with lots of tips, information, and helpful links.

 

Housing Options

In addition to determining which location to FIRE, you’ll want to think about your different housing options. 

Do you want to rent or own? What type of dwelling would you prefer: house, condo, apartment, RV, or sailboat? And are looking to put your roots down for a while, or does the nomadic lifestyle sound compelling?

 

Type of Dwelling 

How much space do you need? If you have a big family, a lot of stuff, a home business, etc, then you may need a large house to feel comfortable. On the other hand, if your household is one or two people and you don’t have a lot of belongings, you may just need a condo or apartment.

If you like the idea of downsizing, but you’re not sure if you’d like it, you could try renting a smaller home on Airbnb for a week. Allison and I did that on our recent two-week road trip. We rented out a tiny home, a cabin, and an RV. It was fun for a night, but we’re not ready to go that small full-time.

 

Rent or Own? 

Home ownership has traditionally been considered the best financial strategy. While owning your home (especially mortgage-free) has its benefits, it’s not always the right move.

It usually depends on how long you plan on living in your home. When I worked at an online mortgage brokerage many years ago (circa 1998), we looked at the “break-even point” for determining if a client should refinance their home loan. 

It was usually 5-7 years (depending on the interest rates). If you were planning to live in your home for longer than that timeframe, then it made sense to pay the various fees. Otherwise, it didn’t make sense.

You also want to take into account some of things we talked about before, such as whether the property is in an area with a high probability for natural disasters or climate change effects. If so, it might be better to rent in case something comes along to wipe out the property.

 

Nomadic Lifestyle 

Another option is to spend your time moving from one place to another every 3-6 months (or longer if you find a place you like). There are a few ways to do this:

• Airbnb: their sublet section offers places to stay from between 2 weeks and 6 months.
• House sitting: there are several sites where homeowners are looking for someone to watch their home and take care of their pets while they are away. Nomadic Matt has a good article about how to become a house sitter.
• Rentals: you could also do a traditional lease of an apartment, condo, or house. Apartments.com or Zillow are good sites to find exactly what you’re looking for (price, size, location, etc).

If you find places that are furnished, then you can sell your furniture and big items (or put them in storage). This could be a great way to downsize and get rid of stuff you don’t need.

 

Putting it All Together

There’s a lot of information, data, and factors to unpack here. I’d suggest making a spreadsheet with all the possible locations and the criteria that’s important to you.

For example, here’s a portion of a spreadsheet I started working on to evaluate world cities based on population, climate, and cost of living:

There are certainly other data points you could add, such as rankings from some of the reports we discussed earlier, crime stats, school data, walking scores, etc. You don’t want to overdo the data, but make sure to include the factors that are most important to you. 

From there, you can come up with a scoring system, which will help you rank all the locations.  One way to do this is rank each location by your top criteria, with #1 being best. Add up all those rankings into a score, and the lowest scores are the best.

Of course, a location to live is much more than a collection of data points. It has to feel right. The only way to make sure a place is right for you is to first visit, and then, if you’re serious, test it with a short term rental.

Whether you’re already FIRE or you’re still on the path, it’s never too early to think about how and where to spend your “golden” years. Hopefully, you’ll find just the right place (or collection of places) to enjoy your FIRE! 

Where are you planning to retire to? Drop a comment below and let us know. Maybe you’ll spur us to take a trip and check it out!