According to recent estimates, Covid forced up to three million Americans to retire earlier than planned. This development pushed the percentage of people aged 55 and over who are retired to 50%, which is 2% higher than it was before the pandemic.
All things being equal, this means we’d expect to see a spike in the number of people who moved for retirement. But that didn’t happen. Quite to the contrary, the number of retirees who moved in 2021 dropped to 226,000—roughly 43% fewer than in the year before. (See Figure 1). It’s also the lowest number of American retirees in the last five years!
Why Were Fewer Retirees Moving?
The trend for retirees this year is clear. But what are the causes? There could be a few plausible reasons for this discrepancy.
1. Covid: It may seem like the pandemic is coming to an end, but it’s worth remembering that older Americans were the cohort hardest hit by the virus, with rates of infection, hospitalization and death the highest for folks over 65. It’s therefore conceivable that many would-be retirees had Covid, had to care for someone who had it or were otherwise affected by it. This may have undermined their willingness and ability to relocate.
2. The housing market: After a turbulent 2020, to say that the housing market rebounded this year would be a huge understatement. Prices continue to climb at a record pace, especially in the desirable quiet, quaint, low-on-crime, high-on-sunshine neighborhoods retirees tend to seek out. Meaning, despite the fact that most retirees downsize, they may be getting priced out of places where they’d like to retire.
3. The lack of retirement savings: Many Americans lacked retirement savings, which they had to spend to sustain themselves or to support their families even before the pandemic. This situation has arguably gotten worse in recent years, with one recent study finding that 14 million Americans stopped contributing to their pension plans.
Most Stayed Put, But Those Who Went, Went Far
Despite the dwindling numbers of retiring Americans deciding to relocate, those who did make the decision tended to travel a lot further than a typical person moving in 2021.
Americans moving for retirement were three times as likely to leave their state than those moving for work, family or any other reason (47% of those moved for retirement compared with 16% for those other reasons). (See Figure 2.)
This also reflects a 10% increase on last year’s figures, where only 38% of people relocating for retirement decided to move out of their home state.
Tennessee Ranked First For Retirement Moves
Last year it was Virginia, this year it’s Tennessee; the Volunteer State was chosen by 13% of Americans moving out of state for retirement, the highest percentage of all U.S. states. (See Figure 3.)
Tennessee is not only home to vibrant Nashville and Memphis, but it’s also the state with the lowest tax burden in the country, after Alaska. It’s also rated well on affordability.
Meanwhile, Florida, a staple in any list of top retirement destinations, wasn’t that far off the top spot—11% of retirees who left their home state relocated to the Sunshine State in 2021. Rounding out the top five were Pennsylvania (chosen by 10% of Americans), North Carolina (chosen by 10%) and South Carolina (chosen by 9.4%).
Curiously enough, Tennessee was even more popular among early retirees. As many as one in five Americans under 65 who left their state for retirement moved there.
