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The hidden costs of spending winters in the sun mean most 'snowbirds' are wealthy retirees, but they aren't the only ones who can do it

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"Snowbird" retirees spend winters somewhere warm.
John Duarte/Getty Images

After years in Wisconsin, Lon Newman and his wife knew that they were ready for a change in retirement. 

"We have a place in northern Wisconsin, a modest, two-bedroom cabin in the woods on a lake," Newman, a former nonprofit administrator, told Business Insider. While they love it, it's not always ideal. "Six months of winter is a very long winter. In January, it will get down to 20 below, 30 below, 40 degrees below zero," Newman says. 

So they went south.

"We came to St. Croix and we kind of fell in love with this place," Newman says of the US Virgin Island where he bought a second home. "I'm a windsurfer, and I do a little scuba diving."

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Lon Newman spends summers in Wisconsin, volunteering and playing guitar.
Courtesy of Lon Newman
It's not a new concept, but Newman is a snowbird, a retiree who divides his time between summers up north, and winters in a warmer climate. Generally, these people own homes in both places. Newman splits his time between Minnesota and St. Croix, USVI, spending six months of the year in each place.

It's not cheap to spend your winters away

The people who are most likely to become snowbirds are high-income retirees, generally those bringing in $75,000 per year or more, according to data from real estate information company CoStar Group, reported by CNBC.

According to this data, retirees tend to stay in place. About 80% of 55-and-older residents who moved in the 10 years prior to the 2017 study moved within their county or state. But at the same time, cities like Myrtle Beach and Charleston, South Carolina are seeing their populations of wealthy seniors boom by more than 70%. 

Jeffrey Corliss, an executive director of RDM Financial Group at HighTower and a financial planner based in Connecticut, says the costs of snowbirding can add up quickly. "It's generally going to be more expensive than people think," he says. 

In Corliss' experience as a financial planner working with snowbird clients, he's found people tend to think it's cheaper than it is. It's not uncommon that people don't consider the costs of insuring two properties, forget to add up travel expenses to and from their home, or neglect to budget for owning two cars. And, he finds that people just generally spend more when they change locations every few months. 

"They're more social events or going out to dinner more," Corliss says. "Family or grandkids will come down, and the added cost of picking up the tab for that is expensive. Once you're down there, you tend to be the focal point of your kids and grandkids."

Just like owning any home, there are surprise expenses. But in this case, you have two homes to look after. "We've had people who've gone to their winter home, only to go back into their summer house and find that a pipe burst," Corliss says. "There's the question of: How do you prep your houses? Do you hire somebody that can look after your places or have someone as a caretaker?" There's a lot to consider. 

Being a snowbird means 'home' is in 2 different places

"I don't think we're wealthy, but we do live in the Caribbean in the winter," Newman says. 

They bought a Caribbean condo for about $200,000 in 2004. "We bought a property in St. Croix as a rental investment with the idea that if it didn't work out as a rental or resale, we would have a place in the Caribbean to retire to," he says. 

"Then, you get a two week tax-deductible trip to inspect and maintain your rental property, according to IRS code," he continues. "We came here and we would inspect and repair around the property, and we also got to know the island a little bit."

"Since the property was rented and was doing well, we bought a second property on the east end, where the windsurfing is good and we're by the water," Newman says. When he was ready to retire in 2015, they sold their rental property to free up extra cash. "That rental investment worked out okay. I didn't make money, but I didn't lose money," he says.

Overall, he's found it's much more convenient to have homes in both places than it would be to rent. It makes travel easier because they can transport fewer things, leaving belongings in each location. "My clothes are here when I get here, and my wife, her stuff is here, too," Newman says of arriving in St. Croix. "All my windsurfing gear is here, and my guitars are here. It's like you're living at home, it's just in two different places."

Start planning well before you take the leap

The Newmans have found that renting out their condo in St. Croix to long-term tenants can to help offset the costs, including high utility bills and an HOA fee of $1,000 per month. However, they had planned for the costs so they could afford their condo even if it wasn't rented out. 

To plan for snowbirding, Corliss says it's important to be realistic, and strike a balance between enjoying your money and making it last. "Our retirements now aren't like our parents' and our grandparents'. People are more active, and they've got to plan for a longer time."

For anyone who wants to become a snowbird in retirement, both Newman and Corliss agree that it's essential to start saving for retirement early. To plan for it, Corliss suggests working with a financial planner.

"We tell people to go online and look at Zillow to look at some homes to get a ballpark of what it's going to cost," he says. His go-to strategy is to work backwards from where they'd like to be, then account for inflation, and finally arrive at a number that's doable. "That's where a good financial adviser can help."  

Planning to spend winters down south in retirement? SmartAsset's free tool can help find a financial adviser to make your dream a reality »

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