At a high level, our master plan goes something like this:
- Have enough assets to produce enough passive income to retire early and support lots of travel
- Quit our jobs (retire)
- Sell our house (and all the stuff in it)
- Relocate to a state that better aligns with our plans and preferences
- #BoatLife / #ValueCruising
As we near the end of #1 on the list above, we also need to mentally prepare and plan for #2-#5. Today I want to focus on our thought process for #4 (Relocate to a different state). By not having a physical property or a job chaining us to a geographical location, we will have the flexibility to go anywhere. The work involved in changing states isn’t that big of a deal but it does require some planning. In moving to a different state we’ll need to change our license, register to vote and file taxes from the new state and be able to prove that this is our intended home base from now on.
So which one do we choose when we have 50 options? Here’s our thought process for whittling down our options and ensuring we are optimizing our residency post FIRE:
Round 1: Taxes
For us, we wanted to first look at minimizing our tax exposure. When we FIRE, our income will be composed of dividends and capital gains. Due to this, an obvious starting place is with the states that do not tax dividends and capital gains. This would save us thousands of dollars every year. So let’s look at the candidates:
From fifty states down to just seven on the first try. Wow! Most states do have a separate tax on capital gains or dividends that you pay in addition to your federal tax. One of the primary drivers for a lot of traditional retirees to change states in retirement is for tax purposes. So why should that be different for someone in early retirement? Technically from a math standpoint, an early retiree has more theoretical tax years left in their life, so it should matter to them even more.
Round 2: Air Travel
Now that we got taxes out of the way, let’s examine how we plan to spend our time: travel. That means we want to be in a state with an large international airport with reasonable prices / direct flights.
Time to do some google flights research on the seven states left in the pool of options:
1 way to London: $454 (3 stops)
1 way to Rome: $750 (2 stops)
1 way to Paris: $800 (2 stops)
1 way to Hong Kong: $473 (2 stops)
1 way to Bangkok $556 (2 stops)
1 way to Sydney: $838 (2 stops)
1 way to London:$150 (1 stop)
1 way to Rome: $304 (1 stop)
1 way to Paris: $210 (1 stop)
1 way to Hong Kong: $451 (1 stop)
1 way to Bangkok: $588 ( 1 stop)
1 way to Sydney: $693 (2 stops)
Las Vegas, Nevada
1 way to London: $196 (nonstop)
1 way to Rome: $256 (1 stop)
1 way to Paris: $204 (1 stop)
1 way to Hong Kong: $357 (1 stop)
1 way to Bangkok: $488 (1 stop)
1 way to Sydney: $530 (1 stop)
Sioux Falls, South Dakota
1 way to London: $472 (3 stops)
1 way to Rome: $763 (1 stop)
1 way to Paris: $1,090 (2 stops)
1 way to Hong Kong: $533 (1 stop)
1 way to Bangkok: $485 (2 stops)
1 way to Sydney: $1,091 (2 stops)
1 way to London: $273 (1 stop)
1 way to Rome: $608 (2 stops)
1 way to Paris: $468 (2 stops)
1 way to Hong Kong: $588 (2 stops)
1 way to Bangkok: $557 (2 stops)
1 way to Sydney: $474 (1 stop)
1 way to London: $201 (nonstop)
1 way to Rome: $438 (2 stops)
1 way to Paris: $468 (2 stops)
1 way to Hong Kong: $436 (nonstop)
1 way to Bangkok: $446 (2 stops)
1 way to Sydney: $481 (1 stop)
1 way to London: $1,008 (2 stops)
1 way to Rome: $777 (1 stop)
1 way to Paris: $998 (2 stops)
1 way to Hong Kong: $660 (2 stops)
1 way to Bangkok: $557 (3 stops)
1 way to Sydney: $819 (2 stops)
Sorry Alaska, South Dakota and Wyoming! You’re cut from the team… We are going to be doing LOTS of travel when we FIRE and we don’t want to pay double just to have move stop overs.
Let’s update our map:
That leaves us with only 4 states: Washington, Nevada, Texas and Florida.
Round 3: Climate
We have dealt with snow all of our lives and are ready for a warmer climate. So let’s take a look at the annual snowfall totals for the states that are left:
- Seattle, Washington: 5 inches (12.7 cm)
- Las Vegas, Nevada: ZERO
- Houston, Texas: ZERO
- Miami, Florida: ZERO
I’m actually quite shocked Seattle only gets 5 inches per year for being that far north Well, we have to make cuts somehow so Washington… you’re out.
Round 4: Boat Life
We plan on doing a lot of Value Cruising
when we FIRE so we really want to be near a cruise port if at all possible. Nevada currently doesn’t have one with California in the way. Houston and Miami are both very active cruise ports.
So the choice is obvious here. Nevada is eliminated. We view gambling as voluntary taxes anyway, so its for the best.
We are down to the final round of eliminations and down to just two states: Texas and Florida. Both have their tax advantages, air/sea accessibility and no snow so let’s look at some other reasons we might choose these states before cutting one from the team:
- While both states are arguably too hot in the Summer, Texas has an edge in that “it’s a dry heat” when compared to the humidity in Florida.
- Cost of living is lower in Houston over Miami
- Disney (duh; you have to be a robot to not feel like a kid at Disney)
- It’s a purple state (our vote would MATTER for the first time in our lives)
- More favorable time zone for friends and family (more likely they will visit us here too)
So it’s close but after some deliberation, we are going to go with Florida. We are still a year away from having to commit to this decision, but its nice to feel like we have a checkbox next to this item from a planning perspective.
Anyone have insight to a blind spot in this analysis? Are there other states you would recommend we consider? Anyone have lessons learned you would be able to share?