The Big Move: My wife wants to move from Texas to California for a new job. Would this jeopardize our retirement?

My wife’s employer recently asked her to start working full time, but she declined. Instead, she’s been looking at jobs in several high-cost areas of the country. The primary one we are focusing on is San Jose, Calif., but we are also considering Portland, Ore. and Queens, N.Y.

We currently live in Houston, Texas, where a $4,300 per month mortgage payment buys a very nice three-bedroom house in a very well-located area. The cost of living in Northern California is significantly higher, and I would expect a similar house might cost double this.

We had a plan to pay off our current house in six to seven years. But with this change, that plan is out the window. So the question is: Are we currently on track to retire comfortably, and will a move to a more expensive area of the country put us in jeopardy of not saving enough?

Sincerely,

Not Sure about NorCal

‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at TheBigMove@marketwatch.com.

Dear Not Sure,

It’s good that you and your wife are clearly being deliberate when it comes to this major decision. Moving cross-country is not something to rush into, particularly when you’ve got kids and savings to consider.

I took your question to financial advisers to get their perspective as to how much of a deal-breaker the high cost of living in the broader San Francisco-Silicon Valley region should be, and many were surprised by the move your family is considering.

“This is the opposite of what many other folks are doing. They are moving out of the big cities and into the country,” said Thomas F. Scanlon, a certified financial planner and accountant based in Manchester, Conn. “Additionally, they are moving out of high-tax states like California into no-income-tax states like Texas.”

Scanlon made a solid point — though it’s likely one you’ve considered — that your wife, when looking for a new job, should explore what remote-working options she has. And admittedly, I find it a little curious that your family is considering uprooting your lives to relocate for her job.

You don’t say what her profession is, but you did mention her reticence to work full time, at least at her current job. So I imagine your family doesn’t explicitly rely on her income to make ends meet, otherwise I would have expected that she would have taken the full-time offer, even as she considered other opportunities.

As far retirement savings go, you’re definitely on solid footing, so far. Financial experts suggest that people in their 40s should be focusing on maximizing their earnings. Maybe your wife does find herself in a line of work where the most lucrative opportunities are outside of Texas. That would be good justification for moving then — though, keep in mind, that you should consider how any move would impact your career and earnings potential.

“We would want to assess the increased income expectation versus new taxes,” said Shon Anderson, president and chief wealth strategist at Anderson Financial Strategies in Dayton, Ohio. “It would have to be quite a bit since California has a very steep income tax as well as higher property taxes.”

Experts say that people in their 40s should be putting away between 8% and 15% of their salary, plus extra money when possible. So when considering if moving to somewhere like San Jose is worthwhile, start with that figure in mind. How much are you saving now, percentage-wise, and are you already meeting that goal?

Then, crunch the numbers. Reach out to an accountant located in the state you’re considering to ask them what your tax bill would look like. Study property values in the neighborhoods where you’d want to live to determine how much housing would cost. If you have connections to folks in that area already, ask them how much they spend annually on things like gas, food and entertainment.

Once you add everything up, figure out how much that would cut into your budget and whether it would put you behind when it comes to that retirement savings goal. And don’t forget, retirement savings are separate from what you’ll need to save for your emergency fund and for your kids’ college funds.

In considering a move, I would also recommend not going in assuming that you’ll buy a home. To say that homes are expensive across California would be an understatement. Many families in and around the San Francisco Bay area have relocated dozens of miles away to cities like Sacramento and suffer through hours-long commutes just to find an affordable home to buy.

Owning a home can be a worthwhile endeavor for many people in many places. But there are cases where it doesn’t make sense. Rents are very high in that part of California as well, but you might find that the monthly costs are lower than it would be if you owned your home. In many parts of the country, renting is the more financially-savvy move compared with buying — presuming you invest the savings wisely.

At the very least, renting in the short term could be a better option than buying a home right away. It would give you time to settle into the area and confirm that you like where you’re living before setting down more permanent roots.

Whatever decision you and your wife end up making, I want you to take to heart in the fact that you both have already made many financially prudent choices up to this point. So long as you take that same approach into this next phase of your life, I have every confidence that things will work out well for you both. Best of luck!

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