With California heading towards the abyss and taxes rocketing to the moon, I've toyed with the idea of moving to Nevada. Here's an article in the San Francisco Chronicle highlighting homeless 24 year olds and rising unemployment even in a rich suburb such as Marin County.
From this other article, we learn that from the first stimulus package alone, the gov't has borrowed $10,000 from each individual so far, and it is doubtful that the majority of people have felt a return on their $10,000 loan yet.
At any rate, it's clear that taxes are going up in California and perhaps NYC, and we residents in troubled states should think long and hard about whether to stay or go.
Move To Nevada Or A No-Income Tax State
Did you know that seven states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming? Two others, New Hampshire and Tennessee, tax only dividend and interest income. Alaskan residents even get an annual oil credit for goodness sakes.
If you're earning $100,000 a year, you'll automatically save $10,000 bucks just by setting up shop in another state. Multiply this by 20 years, and bake in a 4% annual return, you'll come out with $310,000 more in the bank!
Even 10 years provides you with about $125,000. Hey, who wouldn't want an extra $125,000 laying around. I could finally buy that Porsche 911 Turbo I've always wanted! Must resist temptation.
Obviously relocating to save money is easier said than done. Hence, another strategy should be to simply set up residency in one of the 7 states after one retires. This is one of the key benefits of retiring early.
Amass the financial nut and save 10%/annum on your interest income every year for the rest of your life. In this low interest rate environment, you may want to first grow your net worth to 5 million dollars or even 10 million dollars.
Setting up residency is easy. Just buy a place, or rent some cheap studio. Maybe even a habitable closet and call it home. The more money you make, the more you should consider moving.
Seattle, Incline Village in Lake Tahoe would be my top two choices. I'll just get in trouble in Vegas!
Track Your Net Worth For Free
The other action item wealthy people do is track their net worth. You can only truly optimize your wealth if you know where all your money is going! Sign up for Personal Capital, the web's #1 free wealth management tool to get a better handle on your finances.
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After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Input various expense and income variables to see how you stand. Your goal should be to get to a 90% probability of achieving your goal. Try it out yourself for free.
Your future is too important not to take it seriously. You don't want to end up old and not have enough money because there is no rewind button!
Sam, Financial Samurai – “Slicing Through Money's Mysteries”