Of course, relocating to save money isn't the right prescription for everybody. Kacy Gott, a principal at the financial advisory firm of Kochis Fitz in San Francisco, says that a few years ago a number of the firm's clients expressed interest in leaving California to avoid the state's 9.3% tax rate. Nevada and Washington were tops on the list for possible relocation because they don't have state income taxes. But financial analysis showed that the tax savings weren't enough to motivate people to move, and so none of their clients did.

"Perhaps three or four years ago they had enough resources to maintain their living standards here in California," says Gott. Given the lousy equity market performance since then, his firm is encouraging clients to update their financial goals. "It will be interesting to see how people will react now to the idea of relocation," he says, adding that early indications are that cost-of-living considerations still don't matter much with his clients because few of them have lost their jobs. "The plan now is to maybe work longer than they originally hoped."

Still, tax situations in different states can go a long way in shaping one's finances both now and later. Traphagen, the New Jersey advisor, had one client who sold his $250,000 condo in New Jersey and relocated to an $80,000 condo in Florida. He took the additional $170,000 and put it in government securities. The client saved a bundle on housing, and Florida was easier on his roughly $1 million estate.

For starters, Florida doesn't tax IRA distributions or income from U.S. government securities. The client can withdraw $50,000 annually from his IRA tax-free, but he would have paid a $1,270 tax in New Jersey. Regarding his estate, the man has no immediate family and plans to leave his money to friends and to a charity. Because New Jersey doesn't recognize the $1 million federal exemption on estate taxes (it still limits exemptions at $675,000), combined estate and inheritance taxes would take a $48,000 bite out of his fortune.

Florida abides by the federal standard, so moving there means his heirs won't pay a cent in taxes after he dies. But Florida has a high probate tax based on a sliding scale of 6%, while New Jersey probate costs total $110 for a $1 million estate. By switching to a living will, Traphagen's client won't pay any probate fees in Florida.

A move across state lines is one thing, but a move across the Canadian border is a different can of enchiladas. The similarities between the United States and English-speaking Canada lull many people into thinking that relocating from New Hampshire to Newfoundland is as easy, financially speaking, as moving to New Mexico. Such insouciance also exists north of the border when Canadians move to the States.

The currency in both nations is the dollar, but that's where the similarities end. For instance, the weak Canadian dollar means that CDN$100,000 is worth only about U.S.$62,000, a fact that unsettles some people when they get salary offers in the United States.

"Educating people about currency exchange is sometimes a monumental task," says Brian Wruk, founder of Transitional Financial Advisors, a Gilbert, Ariz., firm specializing in trans-border relocations between the two countries. "If a Canadian makes $60,000 up there and is offered a job in the U.S. for $60,000 in American dollars, I tell them to grab it because the cost of living and taxes are generally less here, and their new salary puts them ahead of the game from the get-go."

There's also the matter of different taxation policies between the United States and Canada. When a Canadian moves here, he or she can sever ties with Canada and avoid that country's higher tax rate because taxation there is based on residency. But U.S. taxes are based on citizenship, so Americans who move to Canada and retain their citizenship are subject to double taxation.

When it comes to retirement, Wruk emphatically states that retirees are hands down better off in the United States, especially if they qualify for free U.S. Medicare Part A when they turn 65. Canadians have two government pensions that are roughly equivalent to U.S. Social Security. Both pensions are 100% taxable at certain levels, with the trigger at one of the pensions at just CDN$53,000.