Before we can even start looking at where we should have a family headquarters, we need to know what data is available.
What already exists?
There’s a nice blog post on moneycrashers.com that can serve as a similar starting point and gives 14 factors and then lists some other resources.
City-data.com has A LOT of data but doesn’t seem to be very searchable. You have to choose a city first and then scroll through a lot of information.
Livability.com has some lists and a little prettier information presentation than city-data.
Neighborhoodscout.com appears to be useful for drilling down deeper into certain neighborhoods of a city.
Time.com offers 100 best places to live each year. But again these are more of a list of ideas and descriptions than individual facts. They don’t give you access to have their numbers are generated. USNews offers a similar list.
AARP offers us a list for those who are “retired.” But remember, just because you have two million dollars doesn’t mean you can’t still work if you want. There are many others of these lists too, Kiplinger, Forbes, Senior Living, and WalletHub are a few.
Kiplinger offers a nice resource on tax information for retirees but can be useful for all.
Walk-score.com offers an API but is limited to a very specific factor.
Identifying our key factors
When you know what’s important, it’s a lot easier to ignore what’s not.
― Marie Forleo
There’s a lot of data to be consumed. The answers are in there somewhere, but you have to do work to find them. You also need to determine what’s important to you and your family. I’m going to list the most popular factors in determining where you should live, but you have to weight them yourself.
Please note, if you plan to snowbird, this factor may not weigh as heavily for you.
You need to understand the different types of climate that exist. There are 12 different types: Tropical wet, Tropical wet and dry, Semiarid, Desert (arid), Mediterranean, Humid subtropical, Marine West Coast, Humid continental, Subarctic, Tundra, Icecap, and Highland.
The names are fairly descriptive and we can reasonably eliminate some climates from consideration. But then you need to decide if you like it hot (or cold) all the time. If you like precipitation or not and if you like seasons. I personally enjoy the mildly warm weather, little rain, low humidity, no seasons and no extreme weather (that’s not too much to ask is it?) the Mediterranean and semi-arid climates would excite me most.
This is where teleport really fails. It might be because there’s really not many other cities like San Diego, but the site doesn’t make it easy.
Another thing to consider is “severe weather.” I know a lot of these are rare occurrences, but part of what I enjoy about Colorado is not having to worry about tornados, earthquakes, or hurricanes.
Finances are easy. You want your income to be greater than your expenses for the rest of your life. How you make that happen is the hard part.
I will focus on the United States here, as that is complicated enough. But if you are adventurous you might be interested in learning more about the Foreign Earned-Income Exclusion. Basically, if you are a US citizen and you spent 330 days outside of the US, then the first $104K of your income ($208K if you are married and both qualify) is excluded from your taxes. But please remember that whatever country you do reside in will tax you as they please. Check out this guide if you’re interested in learning more.
We’ll assume you’re an American looking to stay in America for now. You will have to pay federal income tax. You will also have to respect the laws around withdrawing from a retirement account. There are strategies for minimizing these taxes, but since you will experience this equally in any state, we will skip that (Go here if you think you may want to live in Puerto Rico).
Now we have 50 states and the District of Columbia that we need to analyze. Each has their own tax policy.
There are different pieces to this as well though. Are you going to be making an income in this state? Will it be active or passive? Do you intend on buying a property? Own a vehicle? WalletHub has a great article breaking these different rates down.
I’ll focus on real estate as I believe everyone should hold some form of real estate for a diversified asset portfolio. I would like to own a personal residence as well as at least one rental property. The Balance breaks down the top and bottom 10 states for real estate taxes here.
There’s one state jumps out here, Hawaii. I was shocked to see a state with amazing weather would have one of the lowest real estate tax rates. A million dollar house in Hawaii may cost you only $200/mo in taxes. While that same house in Illinois may cost you $1500/mo. This is a huge difference when you’re figuring out how much you need to live off each year. Using the 4% rule of thumb I may need to save up another $350k if I wanted to live the rest of my life in Hawaii versus Illinois. Now please remember that these tax rates vary by county in each state and most importantly this is only a piece of the tax puzzle.
I’m going to skip over vehicle taxes for now. These can go from 0% (Hawaii) to 2% (Rhode Island). This should be significantly less than real estate taxes for most. But if you plan on owning a cheap home or renting and heavily using an RV, this could be a factor.
We now move on to state income tax. There are five states that do not charge income tax: Florida, South Dakota, Texas, Wyoming, and Washington. Alaska and Tennessee are almost zero as well. The three highest states, Maryland, Oregon, and Kentucky all charge on average more than 4%.
Let’s not forget about sales tax. This is when you buy your Big League Chew at the local 7-11. Oregon, Montana, Delaware, New Hampshire, and Alaska are all under 2%. While Washington, Arkansas, Louisiana, and New Mexico are all over 6%.
Remember that each of these is variable based on your situation. Maybe you don’t bring home a lot of income, but spend a lot and rent a house. Or maybe you own your house, have a high income, and spend very little.
Another interesting possible situation… Living on the border of your state.
Here’s the hypothetical. You decide to live in Washington where there is no income tax, but they charge the highest sales tax rate at over 8%. Portland’s sales tax is 0%. So you move to a town like Vancouver, WA that is less than 5 minutes away from Portland, Oregon. You can now save 7% on sales tax each year. So if you’re spending $50k a year, that’s almost $4000 in savings if you can do all your shopping Oregon instead of Washington. Using the 4% rule of thumb, that’s $100k less you would have to save up.
Of course, also be aware of the “use tax.” Where if you buy something in one state but use it in another you should pay the appropriate sales tax of the state you use the item in.
Cost of Living
Different parts of the country have different costs for things, this will affect your spending per year. Remember that when you’re looking to achieve financial independence you only have to figure out how much you’re going to spend and how much you need to have saved to support that spending.
One of the biggest factors is housing. This can vary wildly by area in a state, so it’s very hard to give an exact number. We already figured out property tax, but now you need to know how much you expect to spend on housing. I would recommend buying so you have a fixed cost and an exact amount you know you need. Then you only have to worry about maintenance and property tax.
Prepare to have your mind blown. There are actual free government data that will give you access to estimated expenses by state/region: bea.gov. They use a statistic “Regional Price Parity” which gives each area a number based off of 100 being the average price. For example, Hawaii has an RPP for goods sold of 110.5 and Colorado has one of 99.8. This means that if I moved from Colorado to Hawaii I could expect to pay (110.5/99.8) = 10.7% more on goods. i.e. if I spent $40k a year in Colorado, then I should plan on paying $44,289 in Hawaii. There’s also this calculation for rents by region. You should split this out as maybe you plan on spending more in one area than another.
This is something that isn’t talked about a lot, but if you can pick anywhere and if you have even mild allergies, why suffer? Let’s try to find some data.
AAAAI – National Pollen count by region, but this seems to be current data only. We need historical or future predictions.
Pollen.com – Has 30-day historical data and a pretty map.
AAFA – Produced a ranking for spring allergies for 2018 and also has 2016 data. Some possible destinations are Denver, Portland, Seattle, San Diego, and Raleigh.
2011 Study with some city data and for different types of allergies.
There is some data out there on air quality. Air Compare has a pretty good mapping of different counties in the US. It’s similar to the allergy information where you get some daily pieces and some articles that are reporting on the best and worst cities. But these also vary. It does seem like California and the Southwest are generally areas with poor air quality. Think of smog and fires as possible contributing factors.
Hawaii, Wyoming and some parts of Colorado score well, while Alaska, California and Pennsylvania score poorly.
SKIN / SUN EXPOSURE
My wife has had skin cancer and I would like to reduce her and my risk to further incidents. This is something I’m trying to understand the causes of. Obviously being outside without protection is a major cause. But if you are outside in Hawaii are you more like to develop skin cancer than being outside in Santa Monica or Miami?
Fox News lists some top states in skin cancer incidents per 100,000. It does a good job of drawing a correlation with the number of white residents as they are significantly more likely to be affected.
We need to go towards since here and understand that there are three different types of ultraviolet radiation, UVA, UVB, and UVC. Less ozone increases the power of UVB and UVC. UVA strength is not affected by the atmosphere. So where is the ozone the weakest?
My wife has curly hair, she doesn’t want to be in humidity. I also don’t like running through a sea of moisture. Here are the top 101 cities for lowest humidity. Another win for west-coast-best-coast. The page also provides a nice distribution view showing that most cities are between 63 and 74% humidity. This is where most Hawaiian cities fall as well, unfortunately.
What if for 12 months, you went to your top 12 locations. By spending a month in each area, you would not be acting like tourists, but residents. Try to understand the local cultures and evaluate communities and real estate opportunities.