'Snowbirding' in Retirement: 10 Tax and Planning Facts to Know

As co-director of the Center for Retirement Income at The American College, Steve Parrish spends a lot of time going over the latest research in the field.

As Parrish recently told ThinkAdvisor, it has been gratifying to see how his own work and the work of high-profile peers focused on retirement income is gaining traction among the broader wealth management community.

It’s only natural to see a renewed interest in income-planning research, he explains, given the groundswell of baby boomers entering retirement and seeking new insights about how to best transition from accumulation to the spending phase.

Among the topics he has seen covered well are Social Security claiming techniques, achieving tax efficiency in retirement distributions and creating more capable “safe withdrawal” frameworks to guide spending.

One topic that has not seen as much analysis, he suggests, is the financial impact of “snowbirding” in retirement, which he defines as the strategic use of two homes during the retirement period. That’s why he put together a detailed white paper exploring snowbirding, in equal parts to illuminate the topic and to encourage others to apply their expertise to the issue.

As Parrish explains, snowbirding is a strategy and lifestyle available to Americans of far more modest means that one might think.

“Think about the family cabin or the small second place that a mass-affluent couple has owned for a long time,” Parrish said. “Others may buy an RV. This isn’t just something for millionaires and the ultra-wealthy.”

That said, there are some big financial planning implications and opportunities to save on taxes and expenses associated with snowbirding — and some potential pitfalls to avoid.

See the accompanying slideshow for a review of critical tax concerns and other financial considerations for retirees who aim to live the snowbird lifestyle. By minding these matters, Parrish says, clients can be sure to enjoy their intended lifestyle while also avoiding unintended financial complications.