I remember there were fears over the manufacturer possibly going out of business. People stopped buying cars. The service lane became a lot less busy. And people were getting fired. Including yours truly.
So a few months later, I packed my bags for greener (literally!) pastures and moved to Southwest Florida to start my life anew. That turned out to be one of the best decisions I’ve ever made.
But let’s back it up a bit.
Why Florida? I could have moved anywhere in the country at the time. I moved down here after finding a cheap room for rent on craigslist, but without a job in hand. So Florida was just as good as anywhere else. Right?
Well, maybe not.
I did a ton of research on different cities and states across the country and, after spending weeks with this, determined that Florida was the best place to start over, begin a new lifestyle, and flourish.
Now, some of the reasons I picked Southwest Florida are individualistic and qualitative. Where you live isn’t (and really shouldn’t be) all about money. If we all wanted to just live where it was cheapest, we’d all be living in Detroit or somewhere similar. But I’m going to do my best to narrow this down to five fairly objective reasons that anyone looking to chase after and achieve early retirement ought to at least consider Florida, and specifically Southwest Florida (my general experience and this article tilts toward the Tampa Bay area).
You’re Surrounded By People That Retired At A Normal Age
I hope this doesn’t come across as condescending, because that’s not my intention.
Florida is a popular retirement destination in general, largely due to the reasons I’m going to list in this article. And living in a county where, as of 2010, over 30% of the population is over the age of 65, I see a lot of people that retired at a more traditional age and are just now living life on their terms. But I also see a lot of people on an everyday basis that are physically and mentally in decline. This isn’t hyperbole. I write at a coffee shop within walking distance to our apartment and older people that have a hard time hearing/walking/communicating come in here frequently.
Well, I never wanted to be one of those people. I mean, look, we all become old one day, if we’re so fortunate enough to live a long, happy, healthy life. But who wants to wait until their capabilities are starting to dwindle to finally own their time, set their own schedule, and enjoy the best luxuries that are known to man?
I remember telling people when I first moved down here that I always wanted to spend more time around palm trees, beautiful sunsets, sandy beaches, and sunshine. Coming from Michigan, only some of those things were available, and certainly not in the quantity or quality that Florida offers. But I would also tell people that I didn’t want to wait until I was an old man to enjoy those things. Why suffer through 30 more years of brutal Michigan winters just to finally enjoy sunshine, palm trees, and beaches? Why wait? Why retire and move to Florida when I’m 60 or 70 years old? Why not enjoy my life now? Moreover, why wait so long to retire?
Well, I know of no better motivation than to see the alternative on a regular basis. I get to see firsthand what “real” retirement looks like – finally enjoying life when you’re used up and burned out. Sorry, but no. That’s not for me. Seeing what might happen if I don’t live below my means and invest intelligently so that I can buy my time about 30 years faster than most is all the motivation I need to keep going.
Sure, it gets hot in the summertime down here. But Florida’s “brutal” summers are overrated, and this is coming from someone who has experienced both Midwest summers and the worst Florida has to offer. The truth of the matter is this: It’s hot everywhere in the summer. As I type this article, it’s 81 degrees here in Sarasota. It’s 80 degrees in Washington D.C. It’s 85 degrees in Chicago. It’s 85 degrees in St. Louis (with the same humidity there as we have here right now). Meanwhile, it’s 105 degrees in Phoenix.
And, yes, the humidity is high in the summer. But, according to The Weather Channel, it “feels like” 85 in Chicago right now and it “feels like” 86 here in Sarasota at the same exact time. Think that’s just today? It’s supposed to be 97 degrees in St. Louis tomorrow – about 13 degrees warmer than what we’re expecting down here in “brutal” Florida.
I can say from personal experience the biggest difference between summers down here and what I used to experience back in the Midwest are threefold: it’s consistently hot for about four months straight, it stays hot even at night, and it rains in the afternoon (although, it generally quickly stops) far more often. But that’s really about it.
However, we more than make up for that with about eight months of glorious weather. The difference between Florida and most of the rest of the country during the summer might be a few degrees of “feels like” weather. But the difference between Florida and the rest of the country in the middle of say, January, is quite stark. Like 30 or 40 degrees stark. Try weather in the mid-70s to the low 80s with little rain (and lower humidity) for about eight months straight (including in the middle of winter), more or less.
What does that mean for us freedom fighters?
Well, it means you can live without a car fairly easily for the entire year. I’ve waited for the bus in the middle of an Ann Arbor, Michigan winter and that wasn’t fun. 20 degrees and snow up past my ankles. No, thanks.
Conversely, it’s a lot easier to wait for the bus when it’s sunny, the sky is blue, and it’s a comfortable temperature outside. Same goes for walking or biking. This makes it relatively painless to live without a car while simultaneously still maintaining your quality of life. I’ve also owned a few 49cc scooters down here as well. Easy and cheap to scoot around town, and you don’t need to garage it for six months per year.
And the weather also makes it easy to enjoy the outdoors all year long. One of the main advantages of being financially independent is that you own your own time, able to set your own schedule at will. You’re able to do what you want, when you want, and with whom you want. But that might not be such an advantage if it’s freezing outside and there’s six inches of snow on the ground (maybe you’re really into snowboarding, though). However, you can maximize an open schedule all year down here. Doesn’t matter if it’s January or July.
One last point is that we spend very little on utilities here. The most comfortable temperature for the human body is 72 degrees. Well, we spend a good portion of the year in that temperature range down here, minimizing the need for air conditioning (and we almost never turn on the furnace). A fan while you sleep is about as much you need for maybe five or six months, if that. We’ll use the air conditioning for a good four or five months per year, but even then it’s not pumping all the time. Not that difficult to cool it down to 77 degrees or so, even in the summer. Especially when living in an apartment where neighbors in adjoining units are keeping their apartments even cooler. Economies of scale, and I’m happy to suck up a little bit of their air conditioning.
No State Income Tax
This is a huge advantage to living here and one of the key reasons I moved here in the first place.
I pay zilch to the state of Florida in the form of state income tax. How amazing is that?
Well, imagine you’re earning $40,000 per year in dividend income. And let’s say you have a state that collects 6% of that (not totally uncommon). That’s $200 per month that you could otherwise use to pay for… well… anything. $200 per month is a lot of money. That currently covers my mobile phone, utilities, and even a few meals.
But here in Florida I keep everything I make from the perspective of state income tax. And I’ve already discussed before why dividend income is so attractive from the perspective of federal income taxation. Living in Florida means you might actually pay zero income tax on your dividend income, depending on your bracket. Death and taxes? Maybe we can knock one of the two out. I’ll see what I can come up with one on the other one.
Now, some like to point to state income tax and say there’s no free lunch – you’ll pay your fair share somehow. I’m not so sure about that.
For instance, I’ve always wanted to try out living in the Pacific Northwest, especially Portland (it was a place I considered back in 2009). Seems like an amazing city. Maybe I’ll even still live there one day. But Oregon has a state income tax that tops out at 9.9%. Even if you don’t earn a lot of money, you’ll still be sending in a hefty check since those making just a little more than $8,000 per year are already exposed to the 9% bracket.
Those who live over there are quick to point out there’s no sales tax in Oregon. Big whoop. If you’re living frugally enough to put yourself in this kind of a position in the first place, you’re likely not consuming much anyway. And I tend to find that groceries is always one of the biggest categories in my monthly budget that could possibly be exposed to sales tax, yet Florida doesn’t tax groceries.
Property taxes? I’ve never seen anything that shows that a piece of real estate in the Tampa Bay area of Florida has a higher property tax rate than that of similar real estate in a comparably large city in high-tax states like California, Oregon, or Hawaii. In fact, property in those states tends to be more expensive in general, so even a lower rate would still likely lead to a higher absolute bill, if we’re comparing apples to apples. But I don’t own, so property taxes is a moot point. However, I do find that rent here is similar (or less) to what I’d pay in comparable cities in states where income tax is present at all (along with a similar lifestyle), and certainly in states where the income tax is relatively high.
You can control your expenses to a degree. But if you owe the state a check, it is what it is. I find it preferable to live where I can rent an affordable apartment, not pay taxes on that which I consume the most, and not pay taxes on my income. If you can keep 100% of your dividend income and not have to pay the federal or state government a penny, that’s a pretty amazing position to be in.
I’ll quickly note, to be fair, that you might be able to land a job in a high-tax state that pays a high enough income to offset those higher taxes and expenses. But car dealerships didn’t pay a substantially higher income in other areas of the country (I looked), and definitely not enough to offset the higher expenses and taxes. The income didn’t scale well, so I took advantage of geographical arbitrage and moved to a place where I could create a large gap between income and expenses, and no state income tax helped dramatically toward that endeavor.
Mountains are beautiful. Don’t get me wrong. But I think there’s also something pretty magical about the coast. And you have access to the second-largest coastline in the US here in Florida, at over 1,300 miles.
Beautiful beaches like Siesta Key – it’s won numerous awards for “best beach” by various publications – dot the Southwestern coastline of Florida where you can literally walk right up to the beach, plop yourself down, and gaze out in amazement. Or play football. Or volleyball. Or sleep. Or jog. Or walk. Or do pretty much anything. Anything is better at the beach. I even sometimes think about rigging up a way to write out there occasionally. Wouldn’t that be something?
But what’s really fantastic about all the beaches and parks we have down here is that you can enjoy them for free and all year long. How frugally fantastic. It’s completely free to grab a towel and hit the beach for a few hours. Watch the sun set over the horizon and celebrate another day being alive. I can surely think of more expensive ways to spend an afternoon, and those more expensive ways probably won’t even be as much fun.
I remember when I first moved down here, I would spend hours at the beach. And I’d always tell people how amazing the beaches were. Imagine my surprise when they’d tell me that they rarely visited. They were too busy – surprise, surprise – working.
Affordable Cost Of Living
You think you’d have to pay a ton of money to live in a veritable paradise where the weather is gorgeous for eight months per year (and really not all that bad for the other four), you have access to beautiful beaches, there’s no state income tax, and the motivation to retire early is in your face all the time.
But it’s just not so.
We pay $925 per month for our two-bedroom condo. I haven’t looked at the specs in some time now, but it’s over 900 square feet. It’s a few miles away from the ocean. It’s located near multiple bus lines. We can walk to multiple stores, a grocery store, entertainment options, restaurants, and various businesses like the local veterinarian.
Groceries are similar to any other place. Gas as well. So is pretty much everything else. But you’ll be spending most of your money on housing, and I find housing (especially rent) in this area of Florida to be fairly cost effective for what you get in terms of actual housing and the lifestyle around that housing.
This lifestyle in many parts of the country is much more expensive. I know because I’ve looked. And it’s certainly more expensive in areas with comparable weather, like Southern California or Hawaii. I think the only other state that’s really comparable across the board is Texas. You’ve got no state income tax, pretty nice weather for much of the year (though, I understand it can get a lot hotter in the summer in many parts of the state), and comparable cost of living. But that state doesn’t have amazing beaches like we have here in Florida.
There are expensive areas of Florida, like Miami. However, those areas are easily avoided. Meanwhile, the Tampa Bay area of Florida offers a lot to like. You get a lot of the amenities that any other big city might offer, but at very affordable prices. The weather is absolutely amazing for most of the year, you’re not taxed by the state on any money you make, the beaches are nothing short of spectacular, and you’re encouraged to retire early by the very nature of the populace. If seeing someone in their 70s or 80s struggling to complete regular tasks like walking isn’t enough to motivate you to think about your future self, I don’t know what is.
If you’re looking to maximize your chances retiring early/becoming financially independent early in life, and then also maximize your life after you get there, the Tampa Bay area of Florida is one of the best options I know of.
I’m not saying Florida is the best state to live in. I’m not even saying I’ll always live here. But I think for intents and purposes of seeking out and achieving early retirement, Florida offers the right mix of benefits to make the journey and destination easier and more enjoyable, in my view.
And if I had to do 2009 all over again, there’s nowhere else I would have moved to. The income taxes I’ve saved over the last six years alone surely adds up to a tidy sum, and I’m very happy about that. More in my pocket and less in the state’s. In addition, I received a hefty pay raise (relative to what I was making in Michigan) once I landed a job down here. So I was saving money on my general cost of living as well as the 4%+ the state of Michigan charges for state income tax while simultaneously making more money and having more opportunities to save money. That growing delta between income and expenses helped get me to where I’m at now, and I’ll always be thankful for that.
What do you think? Is Florida a great place to seek out and achieve early retirement? Where do you think is best?
Thanks for reading.
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