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Finance Tips and Hidden Costs For Snowbirds Thumbnail

Finance Tips and Hidden Costs For Snowbirds

The number of snowbirds migrating to enjoy warmer temperatures for the winter continues to grow. The most popular destinations for snowbirds are Texas, Florida, Arizona, and California. Whether you purchase a second home or decide to rent one for the season, a little planning makes the snowbird lifestyle more enjoyable and affordable.1

Planning your finances and investments can help you to live the lifestyle you choose. Achieving your lifestyle involves implementing the right strategies for your financial situation. Working with a financial advisor helps you make the right move at the right time.

Take a look at your current plan. Did you include the possibility of economic shifts that could affect your snowbird future? More critical, are the recovery solutions or alternatives included in the plan? If not, you need to revise the plan. If you haven’t even started planning, it’s time.

Planning a Snowbird Budget

No matter where you choose to spend the winter, the cost of living may have a few hidden surprises. If you have a particular lifestyle in mind, talking with a financial advisor will help you reach your goal. You can’t predict everything, but you can plan for the expected and have a good time in the sun. Start with doing some research on the area and the financial needs for a winter residency.

Your financial advisor can develop budget projections for maintaining both your primary residence and your winter retreat. Long-term financial strategies should include any anticipated economic changes each year.

To Purchase or Rent?

Here’s where meeting with your financial, legal, and tax advisors is essential. They can provide you with information about purchasing a second winter home or committing to a short-term rental. Remember, the reason you planned this move was to get away and enjoy a different lifestyle. Consider the following pros and cons for each:

  • Purchasing a snowbird home may come with tax thresholds, estate issues, and passive income if you rent the house after your winter departure.
  • Renting may be cheaper and more comfortable than maintaining a home.

Before you purchase your winter residence, spend some time in the chosen location and see if it meets your requirements. In some areas, snowbirds add a surge to the local economy, making it possible to get a part-time job as part of the community. The earned income helps pay for living expenses. There may be financial precautions for these earnings. Your income may be subject to the state’s tax regulations if you are a part-time resident.

Secondary Home Expenses

For some, this second home will be the final move when it’s time to downsize. If you’ve planned this decision and your retirement funds are sufficient to cover the day-to-day costs until that time, you have no worries.

As a homeowner, you already know the potential costs of owning residential property. Secondary homes come with a few more expenses and decisions. This investment can generate rental income, tenant expenses, and tax deductions, all helping to offset some of the taxes.

As an absent landlord, you will need to engage a property management service unless you’re ready to dedicate your own time to remotely managing the rental property. Either way, rental properties reveal hidden costs of maintaining the home. Are you financially and emotionally ready to handle these added expenses?

  • Property taxes
  • Property and tenant insurance
  • Management fees
  • Maintenance services

The purpose of planning for retirement is to maintain the lifestyle you want. There are rewards and risks to buying a snowbird home. Talking with your financial advisor helps you weigh the benefits of owning or renting a winter home. One thing is certain—it’s never too late to make changes for a better life.

As always, let us know if you have any questions.



CRA Investment Committee

Matt Reynolds CPA, CFP®

Tom Reynolds, CPA 

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP® 

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP® 

Phillip Tompkins, CFP®

  1. https://www.pacaso.com/blog/snowbird-destinations 

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