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Feb 23 2016

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Where Should You Retire? Here’s a Tool to Help You Decide, by Rob Evans

by Rob Evans

RobEvans

I often see folks posting questions about where to move when they retire.  They may be trying to decide between Costa Rica and Ecuador or between different cities in Costa Rica, not knowing which location is right for them or even how to begin to make the decision.  I appreciate the difficulty and had similar challenges deciding where to spend my retirement.  Fortunately, I have an understanding of decision theory that I used to break the impasse.

WorldInHandsThe essence of making a good decision is to take emotion out of the equation and to make a dispassionate, mathematical analysis of priorities and options. When making your analysis, do not overthink what you are doing. In other words, DO put some thought into the numbers when listing and ranking priorities, but DO NOT think ahead to where the analysis is leading. Otherwise, you may subconsciously skew the numbers to get the outcome you think you want or you think your spouse wants.  After the first pass, you may adjust some numbers to get the other results, but at least you will know what you are doing.

So, DO NOT read ahead.  Begin with step one and cover up the next steps, following them in order; otherwise, you will subconsciously manipulate the outcome.  I suggest partners first do this exercise individually, compare results, discuss what you learned, and then do the entire exercise together for the second pass.

Step 1: What is Important?

Make a list of all the things that are important to you.   Start by making the list 10 items long.  Here are some suggestions to get you started, though your list may vary greatly depending on your family status, wealth and age:

Step 1: What is important to you?

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Step 2: Assign a weight to each item.

After making your list, assign a weight number to indicate the relative importance of each item.  Those things of average importance might be assigned a 5, while the most important may have a weight of 7 or 8. You are not ranking them in order from 1-10; rather, you are assigning weight to their importance.  Some items may have the same weight, but do try to use the ends of the scale as much as possible and not make everything a 5.

Step 2: Assign a Weight

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Step 3: List the locations you are considering.

Step 3: List the locations you are considering

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List the locations you are considering.  They might be countries or cities.  It does not matter; just put them on a piece of paper or spreadsheet.  This might be the point at which your spouse says she will never move to Africa, no matter how exciting and cheap it would be, which would allow you to eliminate it from the list of potential retirement places.  Also, include where you live now  (Home) and your ideal (Utopia) as reference points because I find people often really love where they live now and simply need a vacation, not a change in residence.  I include Utopia, as the last column to keep me grounded on what perfection would look like.

Step 4: Visit your location choices and score each location on how well it meets your requirements.

Time for some fieldwork.  Visit each place you are considering with an open and observant eye.  Quickly, score each location on a scale of 1 to 10 (low to high) for each requirement on your list.  If your child’s education is on the list and the place you are considering has poor schools, you need to score it low (2 or 3).  If quick access to the US is on the list and the place has an international airport, you would give it a high score (8 or 9).  Again, do not think long and hard about this, just score things.  There is nothing permanent about the score that an eraser won’t fix.

Assign a score of 1-10 for each factor in each location.

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Step 5: Create a decision matrix.

Now, multiply the location score by the requirement weight and put it in the cell in the decision matrix.  In the example below, the person assigned a weight of 3 (not very important at this time) to “Proximity to family”.  Separately, he rated his present HOME as a 2 (a hard place to keep in contact with family).  He then multiplied the weight of the requirement  (3) times the score for the location (2) and gets a product of 6 for Home’s “Proximity to family.”

Create a decision matrix

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After you multiply all of the scores for each location by their requirement weights, completing the product matrix, the final step is to add up all the numbers for each location. Below you see Home gets a score of 184 and Utopia gets a score of 370.

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These numbers give you a measurable method to help you rank the various options you are considering.

Now that you have the results, you are going to be excited, surprised, sad, and bewildered.  You had your heart set on moving to Costa Rica but may have discovered that where you live now, next to your grandkids, is what makes you happy.  Maybe the right decision is to keep your current home and take the grandkids to Costa Rica for a vacation. I hope this gives you another tool to help you decide if moving to Costa Rica is right for you and your family.

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