LUXURY LIVING

Should you live in New Jersey after retirement?

Gina Columbus
@GinaColumbusAPP
Experts say it might not be the wisest decision to splurge on an upscale home after retiring.

Maybe you have dreams to retire down South and be a so-called "snow bird." Or indulge in life at the Jersey Shore with a more upscale property.

"With my clients, I really try to feel them out — many of them are looking to enjoy themselves," says Bill Skillender, owner of William Skillender Wealth Management in Brielle.

"To go out and get a luxury property, and then have a big added expense may not be the best thing. It depends on what they have and what they really want. There are some people where people do up-size; they hit the end of the rainbow and want to (enjoy it)."

The choice is yours, but Douglas Stives, accounting professor at Monmouth University, says to first pay off your mortgage.

"The biggest investment that most of us have is (a) house," Stives says. "I see people hang onto a home too long. Work actively to try and get rid of your mortgage. New Jersey property taxes just won't quit."

For couples selling their primary residence, as long as they owned and lived in it for at least two years, they can exclude the first $250,000 of their gain, Stives says.

For married couples, the residence gain exclusion is $500,000.

Though downsizing might be a smart move when retirees no longer have kids in the house, it also can have its obstacles.

"If the economy is right (move to a retirement community)," says Stives. "I've seen people do that foolishly, and they go in the community where the monthly maintenance is $2,000 a month. What is it going to cost you a month? If they can afford it, great."

Stive's property advice? Get out of New Jersey.

"The cost of living is outrageous," says Stives, mentioning the state estate tax. "If you die with (an estate worth) more than $675,000, the state takes a crack at your estate. Some people don't even know it exists."

For those who still want a taste of the Jersey lifestyle, make sure to live here less than 183 days out of the year.

"The plan for staying less than 183 days in New Jersey is to avoid New Jersey income and estate tax," Stives says. "If someone moves to Florida, when they die, they will not be subject to New Jersey estate tax as long as they are not present in New Jersey more than half the time (183 days)."

"What's happening is the rich people are leaving," Stives says. "You can have your big house on the Navesink River, as long as you don't spend half your time here."

Skillender adds there are a wide array of luxury retirement communities throughout the Jersey Shore.

"We live in the best place to live," says Skillender, mentioning nearby attractions Philadelphia and New York City. "There are so many things to do. People can never be bored and there are so many options. (Florida is called) 'God's waiting room' for a reason. It's so important to stay involved in life."

People should not feel guilty about spending money, Skillender advises. Wealth management and financial professionals can help guide people and "give them permission to live."

For every year that he works, Stives says that is one less year he has to provide for himself.

"If I expect to live to 100, if I quit now, I've got to have enough assets and enough money to last for 32 years," he says.

And even for those who have exceeded the 20 to 25 age bracket for early retirement planning, Skillender says it is never too late to start saving.

"You can do the numbers from age 45 to 65," Skillender says.

"You may not have millions per se, but even a small amount a month, (can lead to) a couple thousand a year over 20 years. It's never too late. Most times, as you get older, you can have more resources coming in and then catch up."