Can former N.J. residents come back from Florida for retirement?

Micheal and Mary left New Jersey about eight years ago.

They both retired from their state jobs and headed to Florida to help Mary’s 92-year-old mother.

But they don’t want to stay in the state permanently — if they can afford it.

The couple, whose names have been changed, also wants to balance how to spend down their nest egg and still leave an inheritance to their daughter and granddaughter. For now, though, caring for an aging parent requires their immediate attention.

“There are major potential financial unknowns,” said Michael, 58.

The couple has $960,000 in IRAs, $700,000 in Certificates of Deposit and $100,000 among several checking and saving accounts. They’re also in the process of converting some IRA funds to Roth IRAs, so this has inflated their tax bills. asked Dawn Brown, a certified financial planner with Lassus Wherley, a subsidiary of Peapack-Gladstone Bank, in New Providence, to review the couple’s finances to see how they can accomplish their goals.

Brown said the couple’s expenses are far below their income, so they have a positive cash flow of more than $38,000 a year.

“With their low cost of living, they are not withdrawing any funds from their savings to fund their lifestyle in retirement,” Brown said.

Here’s what Brown’s analysis found:


One of the couple’s concerns is their pensions because of New Jersey’s underfunding of the pension system.

Brown said the pension issues have existed for many years and lawmakers will eventually have to make some tough decisions to be able to continue to provide current and future retirees with their future expected income.

The couple is right to be concerned.

Because the state pension is not a private pension, it does not have any protection from the Pension Benefit Guaranty Corporation.

“The state does have the option to increase the funding of the pension obligations using other methods such as increasing taxes, changing the eligibility age for future claimers or adjusting benefits currently being received,” Brown said. “It is not clear what action will be taken therefore it is a valid concern for Michael and Mary.”

It’s possible that in the future, lawmakers may choose to increase taxes or delay or reduce the benefits for new beneficiaries. Either way, the couple should stay on top of pension news, she said.


As for investments, Brown said Michael and Mary have done well in saving over the years with investment assets totaling about $1.760 million, Brown said.

The funds are currently invested in either CDs or fixed annuities.

“We like to see a more diversified portfolio that can help deal with inflation and provide growth and stability through retirement years,” she said.

She recommends they invest the CD funds in a more diversified portfolio of stocks and bonds over time because they don’t need to draw from these funds right now. The move would give the diversified portfolio the opportunity to grow over time and recover from volatility in the market.

They also have an additional $100,000 that’s easily accessible and covers close to two years of current expenses. If needed, they could access funds without selling investments.

Brown said the couple should review the annuities in their IRA accounts to determine if there is a surrender period charge and consider terminating them after that time.


Michael and Mary have have taken advantage of historically low income tax rates to convert IRAs into Roth IRAs, Brown said.

They have converted some IRAs to Roth accounts and will not be required to withdraw those funds as Required Minimum Distributions, she said.

“By continuing this strategy, they are incurring a temporary increase in their taxes but making the future growth of these funds tax free with no distributions required during their lifetimes,” she said. “Our understanding is that they plan to convert the balance of the IRA’s over the next two years.”

Prior to the conversion, Brown recommends they review their annuities to see if they can be terminated. If they can be terminated — without heavy surrender charges — and they can spread the Roth conversions spread over a few more years, they can probably be able to convert at lower tax brackets. That keeps more money in their pockets, Brown said.

“If these accounts are eventually inherited by their beneficiaries in future decades by investing in a diversified portfolio, they may be providing their heirs with a potentially larger inheritance,” she said.


Michael and Mary both have long-term care policies that would provide a daily benefit of $300 for five years.

“They are considering purchasing additional long-term care by converting one of their IRA annuity accounts into a lump sum policy via a 1035 exchange,” Brown said.

The new policy would provide a benefit of $6,000 a month for perpetuity.

Long-term care costs are astronomical, Brown said, noting a 2019 Genworth study that shows costs of about $144 per day for a home health aide or $315 per day for a private nursing home in St. Augustine, Florida.

If they move back to New Jersey, the cost will be even higher, with a home health aide currently costing about $163 per day and a private room costing about $387 per day.

“Their current daily benefit covers the cost on in-home care, but they will need to add to the cost of a private nursing home,” Brown said. “These costs will increase over time but prior to purchasing another policy they should check their policy to see if they have inflation riders that will increase their daily benefit.”

Brown said the couple should also think about how they would like care provided to them in a long-term care situation. If they think they will prefer care at home, their current policy may cover their needs, she said.


If the couple returns to New Jersey, they think they would buy a home in Mercer County for about $300,000. Their Florida home is worth about $255,000.

“Considering their current asset level, the additional cost of about $45,000 should be manageable,” Brown said. “They should plan to have those funds in cash at least one year prior to the purchase.”

And the cost of living in New Jersey will be higher, not to mention New Jersey state taxes. The additional $9,000 estimated increase in expenses can still be covered by their cash flow, so that’s good news.

Indeed, Brown ran projections on the couple’s financial situation through age 100 and it showed a high probability of them having assets through their retirement years.

But she also ran another scenario assuming that they lose their New Jersey pensions. Under this scenario, Michael and Mary would no longer have positive cash flow and they would need to tap their investment assets to help to cover their current living expenses.

But even that drastic event would not detail their golden years.

“This scenario also showed a high probability of having assets through their retirement years,” Brown said.

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  • Checking/Savings: $100,000
  • Certificates of Deposit: $700,000
  • IRA Annuities: $660,000
  • Annuity: $300,000
  • Primary Home: $255,000
  • Personal Property: $50,000
  • Autos: $20,000
Total Assets:
  • $2,085,000


  • $0
Total Liabilities:
  • $0


Total Net Worth:
  • $2,085,000


Annual Income:
  • Michael pension: $44,700
  • Mary pension: $36,000
Monthly Expenses:
  • Income Taxes: $3,583
  • Housing: $600
  • Utilities: $360
  • Food: $1,000
  • Personal Care: $200
  • Transportation: $340
  • Medical: $325
  • Entertainment: $100
  • Gifts: $200
  • Pet Care: $200