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Finance Tips and Hidden Costs For Snowbirds

The number of snowbirds migrating to warmer temperatures for the winter continues to grow. Whether you purchase a second home or rent one for the season, a little planning makes the lifestyle more enjoyable and affordable.

Florida and Arizona continue to be two of the most popular destinations for snowbirds. Yet, over the years, snowbirds have expanded their winter relocations to several southwest states.

Planning your finances and investments allows you to live the lifestyle you choose. Achieving your lifestyle involves implementing the right strategies for your financial situation. Working with a financial advisor helps you make the right move at the right time.

Take a look at your current plan. Did you include the possibilities of economic shifts that could affect your snowbird's future? More critically, are the recovery solutions or alternatives included in the plan? If not, you need to revise the plan. If you haven’t even started planning, it’s time.

happy retired couple camping

Planning a Snowbird Budget

No matter where you spend the winter, the cost of living may have a few hidden surprises. Talking with a financial advisor will help you reach your goal if you have a particular lifestyle. You can’t predict everything, but you can plan for the expected and have a good time in the sun. Start by researching the area and the financial needs for a winter residency. 

Your financial advisor can develop budget projections to maintain your primary residence and winter retreat. Your long-term financial strategies should also include any anticipated economic changes each year.

To Purchase or Rent Is the Question

Meeting with your financial, legal, and tax advisor is essential here. They can provide you with information to purchase a second winter home or commit to a short-term rental. Remember, you planned this move to get away and enjoy a different lifestyle. Consider the following pros and cons for each:

  • If you rent the house after your winter departure, purchasing a snowbird home may come with tax thresholds, estate issues, and passive income.

  • Renting may be cheaper and more comfortable compared to the cost of maintaining a home. 

Before you purchase your winter residence, spend some time at the chosen location and see if it meets your requirements. In some areas, snowbirds surge the local economy, making it possible to get a part-time job as part of the community. The earned income helps pay for living expenses. There may be financial precautions for these earnings. The income may be subject to the state’s tax regulation as a part-time resident.

Secondary Home Expenses

For some, this second home will be the final move when it’s time to downsize. If you’ve planned this decision and your retirement funds are sufficient to cover the day-to-day cost until that time – you have no worries. 

As a homeowner, you know the potential cost of residential property. Secondary homes come with a few more expenses and decisions. This investment can generate rental income, tenant expenses, and tax deductions. All helping to offset some of the taxes. 

As an absent landlord, you must engage a property management service unless you’re ready to dedicate your time to remotely managing the rental property. Either way, rental properties instigate hidden costs of maintaining the home. Are you financially and emotionally ready to handle these added expenses?

  • Property taxes

  • Property and tenant insurance

  • Management fees

  • Maintenance services

Planning for retirement is about maintaining the lifestyle you want. Buying a snowbird home has rewards and risks. Talking with your financial advisor can help you weigh the benefits of owning or renting a winter home. One thing is certain—it’s never too late to make changes for a better life.

Invest In a Life You Love,

Donovan Carson - founder of Carson Capital



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