Retirement Planning for Wannabe Snowbirds

Alice Smith and Richard McCleod, ages 81 and 77, respectively, represent the two extremes of Florida retirement living.

Alice, who earned six-figures at the peak of a stellar corporate career, lives in a three bedroom home with cathedral ceilings and an in-ground pool out back. By her account, the colloquial characterization among retirees for the most sought after gated communities, preferably within walking distance of an upscale shopping plaza, is “walls and malls.”

Richard, on the other hand, never earned more than $24,000 as a dock worker. He lives in a toy-hauler—a type of mobile home with a built-in garage for toting motorcycles and quad wheelers. His bedroom wall hinges down to form a ramp and there’s a hint of gasoline in the air. He jokes that he “can take the house for a pack of cigarettes” and “let myself in with a can opener if I forget my keys.”

Until the realities of living without a regular paycheck hit, neither realized they’d end up in the Sunshine State. Different as they are, they’ve gotten to know each other in Port Charlotte, a Gulf Coast retirement community just south of Tampa/St. Pete.

Snowbird, Defined

Webster’s offers two definitions of “snowbird.” The first, as “any of several birds seen chiefly in winter” and the second being “one who travels to warm climes for the winter.” The entry for the term gives only one exemplar for usage that’s telling…

“Like many of the state’s snowbirds, they live in Florida from November through March.”

That’s indicative of the implicit cultural association between Florida and snowbirds. November through March coincides with peak tourist season in the state. It’s also prime time for snowbirds of the people variety, who migrate in pursuit of something more than a vacation getaway.

There are plenty of reasons why Florida has become the quintessential retirement destination. While the dream of living in a subtropical paradise has its appeal, the state offers monetary incentives for the wannabes.

Tax Advantages

First and foremost, Florida is one of seven states that don’t impose an income tax.

That was a major draw both for Alice and Richard. She hails from Pennsylvania, where the rate caps at 3.07%. He was born and bred in Connecticut, where the top rate is 6.7 percent.

After retiring in 1998 and losing his wife shortly thereafter, Richard came to the sobering conclusion that he could no longer afford to live in his hometown.

Alice and her husband Stan came to the same realization when they did the math back in 1994. A Disney vacation piqued their interest. They sold their home in Philadelphia and bought into a Port Charlotte development. They’d intended to work part-time for another decade or so, but Stan died a month after they moved in. She laments, “He only collected one retirement check.”

Retirement entails the intentional forfeiture of a regular salary, and that took considerable forethought. Formulating a contingency plan after the earlier than expected death of her spouse was traumatic. Her anticipated dual family income was reduced to that of a single wage earner.

So, it’s not just that the state policy of exemptions on any form of wages–be it salary, social security or pension payouts–means more money in their pockets for discretionary spending. By Alice and Richard’s account, an increasing number of friends in their age group simply can’t afford to live anywhere else these days.

Those who’ve obtained residency status are entitled to deduct $25,000 off the assessed value of their homes, and another $25,000 if they’re a widower. Richard’s wife died out-of-state, so he doesn’t qualify for that exemption. Alice qualifies in both categories, so her property tax is only $2,255 in 2015 on a house with a fair market value of $240,000, and an adjusted assessment of $190,000.

There’s also an incentive to pay early. “Taxes come out the first half of November and are due by the end of March,” she said. “If you pay by November 30th you get a 4% discount. Pay by the end of December and it’s 3%, January it’s 2% and February it’s 1%. That’s how it works.”

Though he’s also a resident, Richard’s got his own way of dodging property taxes. There’s a loophole, in that toy haulers, being trailers, are classified as vehicles and not houses. There’s no vehicle tax. Instead, car registration fees are tied to Blue Book values. The cost, however, is comparable to what he’d have to pay in Connecticut.

There’s also a confidence inspiring state statute that makes it illegal to repossess a primary residence in the event of bankruptcy or a lawsuit. “They can take your money, but they can’t take your home. That’s why O. J. and all those celebrities buy houses here,” said Alice.

Another perk of Florida retirement living is that when you die, there are no estate taxes or probate court fees. The national average for estate taxes caps out at 39 percent, which is the top rate in Connecticut if you neglected to shelter your assets. That resonated with Richard, as a self-declared TEA Party advocate, who’s determined to fork over as little as possible to the government in life and death.

Hidden Costs for the Non-Resident

“People think they will move to Florida and won’t have any income tax,” said Kathleen Thies, a noted state tax analyst. “They have to remember that every state is a business and they need to create revenue. So if they aren’t doing it through income tax they will get it some other way, such as sales or property taxes.”

Figure 1: National income tax rates.

For nearly 100 years, the state derived most of its income from levies on tourism. This funding was more than sufficient and obviated the need for an income tax. Unfortunately, a succession of weather disasters and the Crash of 2008 caused a series of multi-year revenue shortfalls.

As a consequence, Florida municipalities compensated by imposing a host of hidden fees.

“Property taxes vary considerably by town,” said Alice. “Florida is a big state—it’s over ten hours’ drive from top to bottom. You don’t see as much variation in smaller states.”

On average, the sticker prices on Gulf Coast properties are lower than comparables on the east side of the peninsula. You also get more bang for the buck, as the west coast is more suburban and rural. Building lots are parceled out in ¼ acre increments. That’s made Port Charlotte and regional municipalities a draw, and is driving up the housing market.

Vacationers pay the penalty. It’s likely that they’re already paying higher taxes on an out-of-state residence. Adding insult to injury, they’ll pay up to 50% more in taxes on a comparable second home than a bona fide resident.

Like all other Florida towns, there are other fees linked to property ownership in Port Charlotte, including law enforcement at 2.55 percent, lighting at 0.2387 percent, and school at 5.117 percent.

Florida’s sales tax is 6 percent on food or clothing, with exemptions for senior citizens on purchases under $50. Richard keeps the tally below that by hopscotching between stores so as not to incur the surcharge.

Establishing Residence

By IRS regulations, one has to live the “majority of the year” in any given state to be considered a full-time resident under the sole aegis of its tax codes. That translates to 6 months and a day. Anything less and you’re considered a part-time resident—subject to taxation in all states you visit for more than a month the remainder of the year.

Proving you’re a full-time resident entails more than just having your name on the deed to a house. You need bills indicating regular usage, and it helps to register for the vote. Being active in a local religious organization is proof in the pudding in the event of an audit.

“Audits go on more than you’d think,” said Richard. Most snowbirds are determined to wait-out the winter for 3 months in warmer climes, but not everyone wants to stick around another 3 months and a day to earn the benefits of Florida tax exemptions. Enough retirees make the false claim to warrant the establishment of departments in every Florida municipality whose sole purpose is to determine compliance with the “occupancy requirement.”

Richard and Alice concur that the expense of maintaining dual residences and the limitations of living on fixed income ultimately forces many snowbirds to settle in Florida full-time.

Richard is guilty of having attempted to perpetrate this very crime. He’d quid-claimed his house to his daughter under the pretense that he’d sneak up north and campout with family members in the milder seasons.

“That got expensive when gas prices shot up,” he said, ruefully. Moreover, as his life got more rooted in the south, he wasn’t as anxious to leave. “It got old for them too,” he recounts of the financial burden put upon his daughter’s family while they were struggling to cover their own bills. Alice concurs that, “your life gets more centered on where you live the longer you live [there].”

Ironically, conditioning to warmer weather has the inverse effect of decreasing an elderly person’s tolerance for cold climates. “I’ve become a Florida wimp,” said Alice. ”You can pick out the snowbirds because they’ll be wearing shorts on days when I’m wearing long pants and a hoodie.”

That alone accounts for a propensity among snowbirds to lose interest in migrating elsewhere.

Breaking residency can be equally complicated, reports Catey Hill in MarketWatch. Your home state may scrutinize your residency status as hard as your adopted state.

Social Enrichment

According to a survey published in the January 2014 edition of Tourism Management Perspectives, 78% of snowbirds cited social opportunities as keys to satisfaction and 63% considered outdoor activities important.

Thank Claude Pepper for winning appropriations for community centers, museums, parks, affordable public golf courses, medical facilities, universal beach-front access, and most of the tax incentives that seniors enjoy to this day. The long-time Florida congressman advocated on behalf of their constituency for over 50 years, and single-handedly made Florida retirement-friendly.

“There’s tons of free enrichment opportunities, exhibitions, and concerts published in the paper and TV and radio all the time,” she continued. The state also underwrites tuition at local colleges for senior citizens.

Alice is partial to gardening clubs and square dancing—though a recent hip replacement has precluded active participation.

Richard and his male friends comprise the self-proclaimed local chapter of the ROMEO Club (Retired Old Men Eating Out). They rendezvous at the local MacDonald’s, which draws a regular retirement-aged breakfast and lunch crowd. A cashier reports that the chain has become a draw for the senior set since corporate started converting stores to cafes, modeled after Starbucks. Here, they can get a cheap meal, coffee, the paper, TV and free WiFi.

Conversations revolve around hunting trips they plan to take and accounts of historic outings. They brag about past quarry. Richard forgets having admitted in a separate conversation to having “never bagged anything.”

The other popular topics revolve around aches, pains, ailments and prescriptions. Alice concurs, that these, ad nauseam, are the major preoccupations of the elderly.

September Romance

Florida sports innumerable opportunities for romance, but in Alice’s view most accounts are overrated.

Though he’s mostly a loner, Richard does have several girlfriends—whom he prefers to designate with emphasis as “friends who are girls.” There is verifiable evidence in the form of letters, postcards, greeting cards, photographs, and constant fawning phone calls.

He’s not overtly interested in women other than as travel companions, but will never turn down the offer of a home cooked meal. When his closest friend Lori-Ann was diagnosed with pancreatic cancer, he couldn’t bring himself to see her one last time. His daughters went in his stead, and apologized for his absence at the funeral.

Alice assesses Richard’s seeming lack of romantic proclivities as typical. Statistics are partly to blame. A recent study by the Institute for Health Metrics and Evaluation, aptly entitled “Ladies Last” reports that women live longer—81 years on average, 76 for men. The dating odds are increasingly stacked in men’s favor, but their stamina is conversely on the wane.

In Alice’s view, “If they’ve lasted that long and outlived their wives, odds are they’re not seeking involvement.”

She, however, got lucky 10 years ago. She met Dennis at the Apple Genius Bar, and he followed her home to fix her computer. He’s 11 years younger, and never left.

They’ve vowed to never legally marry, but recently exchanged infinity rings.


Rising healthcare expenses have had the greatest impact on the cost of living for most retirees. The U.S. Department of Health and Human Services predicts an 81% increase in these costs by 2020. Though they’re covered by Medicare, spending caps leave Richard and Alice 20% short on prescriptions and doctor’s office visits.

Richard’s knees are failing, and he’ll probably have to accept his daughters’ offer of nursing care up north when he elects the joint replacement surgery he’ll inevitably require. He also suffers from diabetes, doesn’t monitor his blood sugar as often as he should, nor take insulin without their badgering on the cell phone they provisioned. He exudes the tellingly sweet ketone scent of a diabetic. It’s pungent enough to be noticeable across the room.

When it comes to dental care, however, Richard and his compatriots have been quite resourceful. They charter seniors-only trips to Mexico, where legions of store front dental practices have popped up in towns that cater specifically to Canadians and Americans.

Amalgam fillings are $25 (they don’t do composites), X-rays are still done on film, and they only take payments in dollars, not pesos. Still, the treatment is adequate. The Mexicans have capitalized on the shortcomings of the Affordable Care Act.

Richard hates Obama. By his reckoning, universal health care already existed in the form of Medicare. He doesn’t understand why a new program had to be created that cut his benefits. He feared Obama so much, in fact, that he cut short a visit up north for an early flight to “Fort Liquordale” (his codename for “Fort Lauderdale “) to vote for John McCain back in 2008.

In contrast, Alice saved money and can afford supplemental insurance. She particularly recommends AARP’s Go Long plan, cosponsored with UnitedHealthcare Insurance. Her political viewpoints are more tempered than Richard’s, and she’s not unhappy with Obama.

Still, she grapples with the local health care system, and advises that “There’s a whole lot of doctors, good and bad down here that prey on a whole lot of older people.”

Job Opportunities

Through the booming ‘90s, Alice was able to supplement her income enough to fulfill her 10 year plan and quit by the early 2000s. In that time, her retirement accounts more than doubled in value.

Unfortunately, these days jobs are hard to come by, especially in downtrodden Florida. Retirees tend to earn 25 percent less than their pre-retirement income for the same work, if they can get it.

Richard, however, has been quite industrious. He’s had no problem finding odd jobs with so many old folks in town. This year he drove them between a parking lot and the beach in an air-conditioned van. The hourly wage was below minimum but the tips more than made up the difference. Another time he worked indoors at a travel trinket shop.

Still, with each passing year he’s losing out to inflation and finds it harder to get by. He’s compensated by eating less, but not as well, having a penchant for junk food.

For those still in the workforce, Florida’s combined local taxes in burgeoning areas such as Miami, Orlando and Fort Lauderdale, are among the highest in the nation. For better or worse, the renters in these communities pay the price.

Young people who are just starting out and transplants of pre-retirement age are disadvantaged in other ways. They lack all of the retirement write-offs that the burgeoning population of elders voted in favor of themselves.

That’s also why snowbirds find it hard to find help, be it grounds maintenance, housekeeping, or geriatric care. There just aren’t enough young people to take care of the old.

Future Concerns

Richard, with nodding agreement from Alice, claims “I’m not wasting away in Margaritaville.” Still, there’s a consensus that they can’t do as much as they used to, and future prospects on the mobility and self-sufficiency front are not bright.

“I remember what it’s like to be young,” she says. “Young people don’t know what it’s like to be old.” She relates this in defense of an observation that most of their friends sit around all day and sleep.

Alice can afford to be forgiving and perhaps sleeps more peacefully, because she planned prudently for her retirement and made critical adjustments when her husband died. Richard never got the financial education that she, conversely, took so much to heart.

Consider that a middle-class lifestyle in Florida costs an estimated minimum of $5,000 per month. Richard’s monthly income is $2,388.67—more than he ever made prior to retirement as a working class father of three. That leaves him short $2,611.33. In order to make up the difference, assuming he could still work part-time from retirement to age 90, he needed to have put away $783,399 by age 59½, and that doesn’t account for inflation.


Figure 2: Ladies outlive gentlemen

He’s not alone in this debacle. Sixty four percent of Americans have insufficient savings or equity to support even four years of retirement, according to research by the National Institute on Retirement Security. They’ve dubbed the estimated $14 trillion shortfall facing those aged 65 or older, “The Retirement Savings Crisis.”

Richard and his friends are already confronting these harsh realities in the one of the country’s purportedly most affordable retirement communities. They concur that the majority of Americans are consigning themselves to a subsistence-level lifestyle in their golden years, and will likely die in poverty.

Alice also anticipates having to down-size when her health declines. “Everyone who doesn’t drop dead instantly ends-up in assisted living,” she said, having outlived most of her contemporaries.

Everyone fantasizes about resort living in their youth. As Melvin Udall observed of his “gradual descent into decrepitude” in As Good as it Gets–riffing on an old Beatles song–at least they can resort to memories, longer than what’s left of the road ahead.

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