It’s easy to see why Florida is a haven for retirees. Between the year-round warm weather, miles of coastline, and zero state income tax, the Sunshine State is already home to roughly 5 million people 65 and older.
However, relocating doesn’t guarantee a lower cost of living, even for those moving from high-cost northern states. Unforeseen expenses in Florida can easily derail an otherwise solid retirement budget.
“Florida is great because there is no income tax,” says Andy Smith, a certified financial planner at Edelman Financial Engines. “But people have to look at the total cost of living instead of focusing on one particular tax advantage.”
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From HOA fees to hefty insurance premiums, before you make the move, be sure to budget for these unexpected expenses.
1. Sky-high HOA fees
Whether you live in a condo or a community, homeowner’s association fees are a fact of life in many Florida communities, and that fee can get expensive.
Florida leads the U.S. with the most expensive HOA fees, with seven of its cities charging the highest HOA fees, according to Realtor.com. Take Miami, for one example. The owner of a $425,000 home in Miami pays $617 a month in HOA fees.
2. Surprise condo special assessment fees
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Ever since the 2021 collapse of the Surfside condo in Miami, Florida, associations with buildings three stories or higher are subject to mandatory structural inspections and must have fully funded reserves. When condo associations don’t, they can charge unit owners a one-time special assessment.
“Many of these buildings are quite old,” says John Gillet, CEO and founder of Gillet Agency. “You should thoroughly investigate the condo before making a financial move.”
If you can’t get a sense of how the condo association is run, what the financials look like and the structure of the building and the unit, you should hire a consultant to research before buying, Gillet said. An assessment fee, if ever required, can range from a few hundred dollars to tens of thousands of dollars.
3. Rising insurance premiums
Expect to pay more than the national average for insurance in Florida, whether it’s homeowners, health, or auto. That’s across the board in the state, and even higher in certain metro areas. “Insurance is very, very expensive,” says Michael Cabanas, a regional managing director at Fiduciary Trust and a longtime Miami resident. “If you live in a flood zone, flood insurance is required by law, and it’s not cheap.” The same goes for auto insurance. Florida is among the costliest states for auto insurance, according to a U.S. News & World Report ranking.
4. Year-round utility bills
Florida electricity rates are below the national average, but residents’ monthly utility bills are among the highest in the country. The reason? Year-round heat and the need to stay cool.
“Instead of two or three months, you pay for eleven months out of the year,” says Cabanas. “That’s an expense some northeasterners may not anticipate when they move down here.”
5. Lack of caregivers
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Supply and demand are on display in Florida when it comes to caregiving. As retirees flock to the state, demand for caregivers is rising, driving up the cost of care. In fact, Florida ranks last in caregivers, with just 17 personal care and home health aides per 1,000 adults aged 65 and older. That compares to the national average of 65 per 1,000, according to America’s Health Rankings.
6. Property tax resets
Florida caps annual property tax assessments for existing homeowners at 3%, but when a retiree buys a home, that number resets to the market rate. When they get their tax bill in year two, homeowners could be in for a big shock when their property taxes are double or triple what the previous owner paid.
Calculate everything before you make a move
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Just because there are unexpected costs associated with moving to Florida doesn’t mean you shouldn’t make the move. Every town, city and state has different costs that may offset tax breaks. The good news is that with a little research, you can figure out what they are ahead of time and determine if the Sunshine State still makes financial sense for your retirement.
