Hawaii, obviously?
America is amazing because we’re free to relocate anywhere in the country that suits our desires. A lot of people scoff at the idea of just moving because of family and job responsibilities. But when you can take a plane anywhere in the continental US in under six hours, telecommute from home, and FaceTime with people you care about, why wouldn’t you at least give moving to a nicer place a shot? There are even plenty of flexible job opportunities by the sharing economy that can help pay the bills during a transition.
The best states to live in have a combination of low taxes and incredible weather. California is awesome, but our taxes are horrendous and we’ve still got a budget deficit! Hawaii is also amazing, but food and housing are also costly. At least Hawaii’s sales tax is only 4-4.5% and pensions are state tax-free.
I’ve been to a large majority of the 50 States and spent 10 years on the East Coast before moving out West in 2001. I’m totally biased for California and Hawaii so I enlisted FS reader, Steve from Green Diet to help me put together an unbiased assessment of our country based on cost of living to see which states are best for retirement.
TAXES IN AMERICA
Steve: As per Sam’s previous post about the biggest factors in cost of living, we typically think of 1) Housing (rent or mortgage), 2) Car (loan payments and interest),and 3) Education and Child Care (student loans or child schooling), but in actuality, taxes are our numero uno expense.
Let’s take a look at the Federal Income Tax brackets for 2019:
2019 Federal Income Tax Rates
STATE INCOME TAX RATES
From a previous post regarding our polled incomes (2,400+ votes), the vast majority of readers here are going to be taxed at the 25%-33% rate federally. After Uncle Sam gets his cut, we need to take a look at individual states and the associated income tax.
As we can see the grey states represent those with no state income tax and the lighter the purple, the less overall income tax for the top brackets. However, we also need to take into account that some states with no income taxes are going to make it up at the gas pump or via higher property taxes i.e. Washington State, Texas, and New Hampshire.
Overall, the cost of living tends to be a lot more in cities where people would like to live and be by the coasts. We also need to consider our #1 largest expense aside from taxes, which is housing. Median home prices vary significantly from state to state.
Cheapest And Most Expensive States For Home Prices
The bottom 10 range from $125k-155k and include (cheapest to most expensive): Ohio, Michigan, West Virginia, Tennessee, Kentucky, Arkansas, Nebraska, Oklahoma Georgia and Iowa.
The top 10 range from $237k-471k and include (cheapest to most expensive): Oregon, Maryland, Colorado, Washington, New Jersey, Virginia, New York, California, Hawaii, and Washington D.C.
The following chart below is the median household income by state.
Money is basically made on the coasts with lots of it coming in from San Francisco, NYC, Boston and D.C. Therefore, it costs an arm and a leg to live around these metros. A median house in SF is going for around $1.1 Million, for example. It would be damn hard to make a living and reside in the SF Metro if one isn’t making $200,000 or more.
I really like the $200k figure, as it also represents roughly the current median household price in America. The American dream is pretty much about home ownership, freedom, and comfortable living. We want to be able to work hard and be free with a roof over our heads that we own. So with that said, let’s delve into some states really worth exploring if our income isn’t specific to a geographic region.
Average house price by state 2017
THE MOST ATTRACTIVE STATES FOR RETIREES
It’s Sam here again, and I’ve decided to create my own charts to provide more analysis for you guys. Let’s first take a look at the states with the lowest tax burden for residents according to the US Census Bureau.
Source: US Census Bureau compiled by FinancialSamurai.com
Florida – No income tax, low cost of living, and warm weather.
Arizona – Low state income tax, low cost of living, and warm weather.
Nevada – No income tax, low cost of living, and warm weather.
Texas – No income tax, super low cost of living, and warm weather.
Wyoming – Wyoming is unique in that it doesn’t tax any income, including retirement and social security. Sales tax is a mere 4%, there is low cost of living and wide open spaces.
South Dakota – If freezing temperatures and being in the middle of the U.S. don’t bother you, in similar fashion to Wyoming, this is one of the best states for retirement.
Alaska – Also has no income tax, but it’s far away from the mainland, cold, dark, and not cheap due to the importation of goods.
Now let’s look at the states where there are the most millionaires. Millionaires should be more mobile than others, all else being equal. Therefore, it is logical to conclude that millionaires would move to the states that provide the best lifestyles and not stay stuck in hell. No surprise, Hawaii has the most number of millionaires per 1,000 household in the country.
Source: US Census Bureau compiled by FinancialSamurai.com
The final result is to compile the highest ranked states on both charts to come up with the best states for retirees!
Analysis by FinancialSamurai.com
WHY NOT LIVE IN A NICER STATE?
Steve: My parents are just over 50 and currently reside in Connecticut. Not for long, however, as they can retire comfortably now with a simple relocation. Here in Connecticut they have taxes for everything: state income tax, corporate tax, unemployment tax, property tax, car tax, sales tax, etc. In fact, we are ranked the 3rd highest in the nation for the amount we are taxed. My folks both have 401(k)s which they have steadily contributed to over the years and my father has a modest pension from working with a utility company.
They made the decision to sell their $300k home to move into a newer, nicer, and just a tad smaller house in Port St. Lucie, Florida. They paid $120,000 cash. They were astonished how cheap the housing is in Florida. Not only that but the cost of goods are significantly lower in Florida, alongside no state income tax and my father’s pension will not be taxed as well.
It really was a no brainer for them. They could continue to work another 10-15 years if they wanted to stay in Connecticut or retire comfortably now in a warm area, in a newer and nicer home with a pool. They are both very happy with their decision and the quality of their lives will go up exponentially by getting out of the hustle and bustle of trying to make a living in Connecticut.
Related: The Real Estate Investment Rule To Follow: Buy Utility, Rent Luxury
RETIREMENT RECOMMENDATION
Forecast Your Retirement Future! Sign up for Personal Capital for free and link all your accounts in order to calculate your financial health. They recently launched the best Retirement Planning Calculator around, using your real data to run thousands of algorithms to see what your probability is for retirement success. Once you register, simply click the Investing tab on the top right and then click Retirement Planner. There’s no better free tool online to help you track your net worth, minimize investment expenses, and manage your wealth. Why gamble with your future?
Is your retirement plan on track? Find out for free after you link your accounts.
Updated for 2019 and beyond
We relocated from New Jersey to South Florida in 2012. I was 57 and my husband 59. We loved the mild winters in Fl! However, we had a four bathroom, four bed (two of which were suites) and a full finished basement with inground pool just 10 minutes from the Jersey Shore when we bought a beautiful new concrete block home just 10 minutes from Florida beaches. The Florida home cost more than what we sold our NJ home for a lot smaller house and property with no pool. Property taxes ran about the same, give or take a few bucks. At that time, gas was about a quarter less in Florida but not any more since NJ increased their tax rate on gasoline. Overall, we didn’t see much difference other than the fact that we didn’t have the bitter cold winters and that was what made our decision. Any tax benefits didn’t really affect us. Unfortunately, between the ridiculous out of control home owner’s associations in the state of Florida and the hurricanes, we felt we needed a break and again relocated to the Carolinas. Although we were, indeed warned about the homeowner’s associations, we were still blindsided by egos so I would definitely warn potential buyers to do their homework with 1) what is the capital contribution, 2) is it corporate managed or homeowners who manage (I would personally suggest corporate management), 3) has a reserve fund been established and if so, how much $ is there, 4) who is responsible for street lights, storm drains and roads, 5) is it gated, staffed or unstaffed and if so is their a wall going around the community to prevent people simply walking into the development to rob you? 6) Is it deed restricted, 7) Ask to see and review the annual budget so you can physically see the monthly expenses that the HOA has and how much it will cost you out of your monthly budget. Remember the realtors and sales people are there not to necessarily be honest but simply sell you a house. Example…the saleswoman was working hard to sell us an inventory home on a pond (Florida calls them lakes). We explained that we weren’t interested and when asked why, I responded that I was not interested in alligators in our backyard. Her response was and I quote, “there aren’t any alligators in this water”! Please know alligators are in Florida and in all the waterways. They move through those waterways constantly. Anyway these are just a few questions that should be asked to lessen the surprises. Our HOA fee was $2,800 a year and the community had no pool or clubhouse! It covered the cost of lawn care, building a reserve fund, maintaining the so called “lakes”, the unstaffed gate that was constantly breaking and the preserve along with the roads, storm drains and street lights. Do you get a tax waiver since these things are not maintained by the city through property taxes. The answer is no.
What do you think of southern utah for retirees? We’re looking at Ivins and it looks new and better than Henderson for the price.
Lived in southern Utah for 16 years. The only problem is a series of new progressive tax overhaul is coming for 2020. Lots of poverty in southern Utah and guess who has to pay for it all?
You should make an update 3 years later.
This is a great article you wrote then.
Even more relevant since you want to go more passive and a little closer to passive retirement.
Interested how your son would impact the location.
All I care about is financial well-being. Weather is irrelevant. We live in the modern age and your home can be as warm or cold as you want it to be. So can the interior of your automobile.
All I require, outside of financial benefits, is extremely fast internet and as many delivery-services (food, groceries, etc) as possible. Having grown up in Portland, started my career in San Francisco, and spending the past decade in Denver — Wyoming sounds entirely reasonable. I think that may be the direction for me to go… unless the internet is totally screwed up there.
You never go outside?
Sam,
Your poll has Texas twice.
Anyway, I’m hearing the new Florida is Tennessee…
One friend moved from Tennessee to Florida and another friend just recently moved from Florida to Nashville so to each their own.
No more transplants to Nashville please! The conditions are horrible here. As a native, we are struggling to find jobs and our roads are unbearable. No parking and there is no train for an alternative. It’s ungodly expensive and just not worth it. I’m getting out as fast as possible! Don’t move here.
Just an FYI: Illinois currently has a 3.75% flat income tax and does not tax pensions or social security.
Also, some of these so-called “low tax” states have very high sales tax and property tax (and all kinds of crazy fees, etc.).
Lower taxes are important, but again, other things are maybe more important when it comes to quality of life…..
Would you actually want to retire in Illinois though? The weather is horrendous for half the year. As I get older, I realize the importance of warm weather for my joints.
Well…. Many retired people do live in Illinois. I don’t see Wyoming (which BTW, never takes down their snow fences) as such as a wonderful climate. And Texas is nasty hot (and comes with very high property taxes!).
But that’s not my point. What I’m saying is people need to really research a place carefully and not just with what limited data is on the Internet. You need to spend time in your planned future retirement area long before you actually retire. You may end up being less than happy in your new retirement home.
I wonder whether it’s due to a lack of funds why they retire in Illinois though?
It is true that there is no free lunch. Hence, a good strategy is to retire in one of the no income tax states and RENT in order to avoid paying property taxes.
I don’t know about renting to save on property tax? My assumption is that is included in the rent.
But anyway, renting might be a good idea. That would certainly increase your flexibility to relocate in the case of your retirement home not working out. It could also provide a retiree with some needed liquidity; avoiding sinking so much cash into a house.
AGREED!!!
Ace, I know this is a older post but I had to add to you comment. As a lifelong Illinois residence, in some ways I have to agree with what you said. Now, through the years I have done my fair share of b..ing about this state’s issues however after searching for a place to retire in the southwest, it not so cut and dry after all. My wife and I have visiting Colorado, Wyoming, Arizona and Nevada and even Northern CA for a retirement location on a yearly basis and there is no total clear winners. In Illinois, you get a nicer larger home with something wonderful called a BASEMENT for less money. Yes property taxes are high but Illinois is rather tax friendly to retirees. We also have in my opinion the best food and shopping and it’s got green grass unlike may southwest towns that are brown. On our visit to Grand Junction last year, the locals pointed us to their best pizza joint in town. After out first bite we realized if they ever got a Lou Malnati’s, they’d think they’d died and went to heaven. All in all, we still plan on moving and Nevada is high on our list. It’s just not as cut and dry as people may think.
Illinois…tax-friendly? I’m a lifelong resident too, and I can’t wrap my head around how you can POSSIBLY call Illinois ‘tax-friendly’. People are literally leaving the state in droves, not to mention businesses as well…because of TAXES, and uncontrolled/misappropriated state spending.
I actually like Pittsburgh, PA as a retirement destination (I know, not a state). PA has just a 3% income tax, but the city of Pittsburgh has no income tax on capital gains (to my understanding). Pittsburgh has a rediculuously low housing cost, and they have big city cultural venue (performance arts, great museums, universities, and a great plant conservatory)! This is a top potential pick for my partner and I when we are ready to pull the ripcord.
But… it’s…. Pittsburgh :( Have you been to San Francisco or Honolulu yet? There is no comparison. Trust me man!
I’m ashamed my native state of Nebraska treats retirees so poorly. Not only are the taxes high but there’s really no incentive for anyone to retire here.
Why do you think Nebraska treats older people so badly? Do you guys have some nice income stream going on that allows you guys to provide less incentives?
Egh, I feel like these tax lists are not always fair and balanced.
Is NYC super expensive? Yes. But my city tax covers sanitation, subsidized public transportation, etc.
Also, I work part time in sales (health care) and I would make probably 50% less if I moved to Florida, North Carolina, etc etc.
But I guess if we are talking about “Full retirement”, then yes, it makes sense to leave NY, NJ, and California. Of course, raising kids changes everything…
How about 6 months in Tampa, Fl and 6 months in NYC, that would be interesting : )
I’d still go with Washington with it’s fairly low cost of living, great recreation opportunities, no income tax and still cheap housing if you know where to look. It really makes sense to rent here since rent is still so low and you avoid the higher property tax.
The higher sales tax is easily offset by not buying so much crap. Same with fuel tax since it’s super easy to get around on transit. Seattle is basically a much cheaper San Francisco
Not anymore
We’re currently located in Houston and like it quite a bit (as well as Austin). Property taxes are higher than average, but that’s about the only thing that’s generally expensive. If you don’t mind the climate, I think most people would really enjoy it here. The secret about the weather is the summers may be a bit nasty, but winters cruise largely between mid 50’s and low 70’s, which is really pleasant.
I imagine we would keep our home base here or Austin, unless we wanted to move back to be close to family in Arkansas.
Colorado , North Carolina, and Florida (in that order) are my dream locations. Lower cost of living, lower taxes, nice weather, and plenty to do!
nice list!
consider west michigan for easy access to large amounts of fresh water. Might be more of a commodity in 30 years.
Also, miles and miles of beautiful beaches, and awesome autumn colors!
This article is very comprehensive–really great info you pulled. Thanks for sharing. I wouldn’t have expected NJ and Hawaii to top the list of most millionaires per 1,000 households.
If you’re not set on one state, one option that many people choose is to buy a house in a state with no income tax, live there 183 days a year, and then have another house in a different state. That way, you can avoid state income taxes while not tying yourself down to one area.
Is Hawaii really a surprise? Hawaii is AMAZING! So many wealthy people i know retire there or buy second homes.
NJ is kinda surprising b/c NJ has huge property taxes, and isn’t perceived to be a beautiful place to live, especially with the whether.
Good call on splitting living. I plan to do that.
NJ shouldn’t be surprising. It’s close to NYC and has a lot of good schools. You can get a lot more house for your money by living in NJ or Connecticut.
I lived in NJ and the property taxes are a killer. A lot of people left, including me!
We like Portland and will probably stay here at least part time after we both retire. It would be nice to have no state income tax, though. For that I like Florida and Washington.
Seattle area is nice, but it’s getting really expensive and busy just like California. Traffic is horrendous from what I hear. I’d probably choose someplace near the Oregon border.
Florida sounds good too. I’ll have to visit and research the communities more.
Traffic is horrendous in the larger cities of CA. That’s why I moved more west to Golden Gate Heights. Much more open and relaxing.
Does living so close to Washington with zero state taxes irk you a little? If I was that close, I’d move. Nevada’s closest drive for me is Reno, 4.5 hours away, so I’ve got to pass. But then, there’s the Nevada side of Lake Tahoe as well.
Re: Oregon/Washington taxes.
You asked why Oregon residents in Portland don’t live in Washington. Here are a few factors as to why:
1) Most of the jobs are in Portland. You work in Oregon and you pay Oregon income tax regardless of if your residence is in Washington.
2) The commute to/from Vancouver to Oregon is absolute hell. Only 2 river crossings from Oregon to Washington and traffic is horrendous.
3) Vancouver (Washington) has a reputation, deserved or not, for being Portland’s white-trashy stepchild. Tonya Harding is from Vancouver. :-) Living in Vancouver is probably like living in a lot of suburbs but it doesn’t offer the same things Portland does. It’s like comparing living in Morgan Hill to living in SF.
That said, Vancouver is not a bad option for retirees that occasionally want to venture into Portland during non commuting hours.
Brilliant response. Thanks for the insights Brent!
Did you see the Tonya Harding ESPN 30 for 30 special? Insightful! There’s a softer side to her we didn’t see.
Boy do I know how crazy California is with taxes. I love living here, but doubt I’ll still be here in 30 years. It’s too expensive. I really like the last table you made on best states for retirees based on both low taxes and great lifestyle. I’d choose Washington and Nevada as my top two from that list. I haven’t been to Washington before, but I’ve heard great things about it. People say Seattle is similar to San Francisco, although I imagine it’s a lot more peaceful than SF now since SF is becoming too crowded.
Nevada is great. My only issue would be the cold winters, but I guess it depends where in Nevada you are. Vegas gets cold at night during the winter, but the day time temps are very similar to SF. I’m not sure I’d actually want to live near Vegas (summers are so hot!), but I like the idea of moving somewhere with mild winters like we have in SF.
I’m very happy earning in low-cost and generally good weather Arizona. It’s working for us for now.
Long term, I think taxes will not be as big of a concern for us in early retirement due to our strategy, which involves us looking like very meager earners on paper. Regardless of state, I assume state taxes will be only a modest cost. States like Washington and Oregon appeal to us, but the real estate in desirable areas is a real concern…probably a bigger one than tax rates.
I would be hesitant to suggest that people use the top marginal tax rates to base their retirement decision on. For instance, while Vermont has a top marginal tax rate of 8.95% it is for incomes above $411,500. I’m thinking there aren’t too many retiree’s with retirement INCOME of over $400K. If your retirement income is under $62,600 for a couple the tax rate in Vermont is 3.55%. This is lower than many of the other states and given the average retirement income is under $30,000, I can only imagine that most households will only be paying 3.55%, not 8.95%. I’m sure there are other states where the same analysis proves a very different result than the generalist approach the Tax Foundation takes.
Thanks a good point, but a lot of people are pretty delusional. Just check out this post: Disadvantages of a Roth IRA: Not All Is What It Seems.
Hundreds of commenters believe they will make MORE in retirement than they will while working to justify paying taxes now! It’s like the government has brainwashed the middle class into paying them more tax dollars now.
The Roth IRA is not a result of brainwashing when you’re in the 15% tax bracket now. And its not as if you can’t change to a Trad IRA when you reach a higher bracket.
For retirement? Texas and Florida should be neck and neck.
Sexy latinas, minimal taxes and nice weather.
San Francisco/california in general = *ground zero* for feminists, is already out unless you’re into girls with short hair, green hair, flip flops, tattoos and a sarcastic sense of “humor”.
gross.
Should be close between Texas and Florida. Texas may actually win. Why? Florida does have its crime issues and serious delinquents living there.
When you’re retired, you should not be paying 10%+ races that’s just crazy!
Now if we are talking about making money and geting ahead (not retired) you are pretty much forced into the hubs.
SF/NYC/Boston/Austin/Houston/LA
In that case nyc is the most fun.
Oh please enlighten me how an uneducated and unemployed hill billy could *get ahead* by moving to NYC/SF/Boston/Austin/Houston/LA.
Sexy latinas, Now your talking.
I’d never want to live in any of those states unfortunately– especially not Florida.
Then which one?
Southern Utah or S.E. Florida are great for retirees.
Sam, call me crazy but I would stay in CA after retirement.
Here is my plan so feel free to let me know if my strategy is incorrect
1) Prop 13 will ensure my bay area house taxes are capped.
2) I would not have large income in retirement (my current spending is low) so I can stay under the draconian tax radar by spending just $40K annually
3) Slowly Convert Traditional IRA (my former 401Ks) to Roth IRA
Once you begin your early retirement, you will likely have less taxable income than you did when you were working. IRA conversions count as ordinary income so to obtain completely tax-free conversions, I would convert an amount equal to my deductions and exemptions (assuming I have no other ordinary income). During this time, I can live off off my long-term capital gains and dividends, which will be taxed at 0% if I am in the 10% or 15% tax bracket.
Thoughts?
Well, I did it for 1.5 years, and it wasn’t bad on 75% less income until I get restless.
Depends how big your property tax bill is. Mine are several, and unfortunately in the tens of thousands of dollars a year (see other post about which type of real estate to buy).
I would TRY one of the seven no income tax states for an extended vacation and see how you like it.
The main reason to leave CA is for a lower cost of living. Taxes aren’t much of an issue if you have had your property for a long time, because of Prop. 13. People are surprised when they move to other states like Texas that the property tax rates are more than double CA and they aren’t capped, so if someone trades a $500k prop. in CA for one in Texas, the taxes could even be something like 5 times higher if they have had their CA property for a long time. Income taxes don’t get too high until you get over $175k or so in CA, because the bottom bracket starts at 1%
I can’t believe you just compared a 500k property in California to a 500k in Texas, then complained about the property taxes being higher. I’d argue that the property taxes are comparable in that a 500k house in California (probably a decent Townhome) is around a 150K house in Texas.
You have to believe that house prices will appreciate like they always have in history to take full advantage of prop 13. Buying at today’s prices with stagnating wages isn’t exactly a slam dunk. It took one income to buy houses then, now its imperative to have two incomes. Should we get ready for the 3rd income stream for gains in the future? Wages must go up or prop 13 will only benefit the homeowners who bought before housing bubble 1.0
I bought my property in 1998 when CA was seen as being done for by most of the national media. My property taxes now are less than half than some of my neighbors. Even if I bought a house in Texas that only cost a third of my home’s current value, my property taxes would still go up.
If property prices go up more than 2% a year, you get a benefit from Prop 13 that starts compounding. 2% inflation isn’t really that much. Some people think inflation is understated by the government and it really has been higher than 2%.
John, I don’t think you’re crazy. Your reasoning is sound. I moved from CA to Reno, NV ten months ago. Note: I believe dividends and cap gains are taxed as regular income in CA, so that may impact your ROTH conversion with regard to CA income tax.
CA history: my average CA income tax (as % of AGI) ~3%; however, sales tax where I lived was 10% [Sold the CA house, renting it would mean filing CA taxes annually…no thanks!]
Moved to Reno, NV ‘cuz driving 3 hours to ski was getting OLD! (Kinda like me.)
NV: House cost ~50% of Calif house; my property tax in NV is half of CA property tax (YMMV due to Prop 13); homeowners ins ~35% of CA, auto ins ~65% of CA; Sales tax in Reno 7.75%; gas & electric ~2x higher than CA; Water ~10% higher than CA
I’ve tracked my “income/AGI/deductions/taxable income/taxes paid” and calculated % tax to fed & state since 1989. It’s interesting to see paying a lower % of my AGI in taxes in the 2000s vs the higher % & lower income in the 90s.
I second Northern Nevada too (Reno, Sparks, etc.). !!
No state income tax. Easy drive over the hill to Bay Area. International airport.
45 minutes to sking
Since I plan to ski into my 90s like my grandparents and hopefully my parents as well, WY would be a perfect home base. Jackson Hole is about as good of skiing as you can get in the U.S., and Targhee next door is pretty sweet, too. Plus, it is absolutely gorgeous there in the summer for mountain biking, hiking, fishing, horse riding, etc. And with all the money you save on taxes, you can fly to Hawaii as much as you want to warm up and get an ocean fix.
JH sounds great, but isn’t real estate there outrageous since all the mega millionaires and billionaires buy there as a tax shelter?
Yes, therein lies the challenge! For a lower cost option, Ogden, UT. Snowbasin has the nicest ski lodge I’ve ever seen, and next door is Powder mountain, which is a blast. For $300,000, you can still by a very nice mountain home in the vicinity. Condo as close to Hanalei Bay as is affordable. That’s plan B.
Property taxes rates are generally much more important than income taxes for retirees, especially since social security taxes are not taxed by most states, that is unless you are a retiree with $200k in income.
In my case, I plan to downsize to half of the footage of our current house. I agree with Sam’s point that 500 sqft per person (if I remember it correctly) is enough. Mine now is 2000 sqft per person. What a waste! With a much smaller house, the propertx tax should be much less, even in FL.
Wow, 2,000sqft per person is kinda massive man. I think 700-1,000 sqft per person is pretty perfect.
Try Virginia, it’s a nice place to live, but the most expensive place to own a vehicle! Some people pay upwards of $1,000 just to own a car (doesn’t matter how old it is). Car dealerships don’t do to well here lol and people ride around in old beat up cars because of the property tax on cars.
The state tax rates above don’t tell everything affecting retirees. In New York, for example, social security benefits are not taxed and neither are the first $20,000 of withdrawals from a pension or IRA. “Seniors” (I hate the term but will take the benefits) get other little perks, like half-price rides on the very expensive Long Island Railroad and half-price on NYC subways and busses.
As a recent retiree I still live in New York, about 50 miles east of the city, because it remains one of the most exciting locations in the country. (I’ve spent time in Florida. It was warm but I was bored.)
That is interesting Larry, I definitely didn’t know that. As a CT native I just assume CT and NY are pretty expensive to live. However, like you mentioned if you have some social security and pension/IRA benefits that makes it a bit more palatable :)
You can look up 50 websites and find 50 different rankings of best states to retire, with all kinds of criteria (not just taxes and climate – but crime, medical care, and others). And while NY may have a high marginal tax rate, not everyone has the kind of income that would trigger that rate (as I’ve shown, retirees with modest incomes can actually pay relatively little state tax).
NY’s climate may not be the greatest, but it’s hardly as bad as that of Chicago, Minneapolis, or Milwaukee. Not many places have the wealth of cultural opportunities as NY, and close proximity to Boston, Philadelphia, Baltimore, and DC doesn’t hurt either.
Florida is a great state to lived, been here 35 years, however, South Florida is very expensive will recommend south west florida, Naples and the sourading.
Without a doubt I think Florida is a great place to retire, for all the reasons you mentioned. I also think it is a great place for the remote employee or self-employed who can be remote. I currently reside in Manhattan and get hit with NY state income tax and NYC residency tax. I actually parlayed the move to Manhattan with an increased savings rate due to the fact I received a pay increase, sold my car, and can walk to work. No commuting costs for me! And I share an apartment with two friends to cut down on our Manhattan rent. This move to NYC has definitely sped up my accumulation phase of my wealth building, but it is by no means a permanent move. I will not retire here, that’s for sure!
I’m surprised New Hampshire didn’t make the top 6 list of best places to retire. With the low taxes and active lifestyle I definitely think it would be top 10.
NH? Too cold. Not too much going on either. No major international airport close by.
At what age do you stop living with roommates? There is this tech bro phenomena where guys have this frat mentality in SF and live together until as late as 32.
Alaska is #2 on the list above and is colder and more in the middle of nowhere than NH. At least New Hampshire is near Logan airport in Boston (as long as you aren’t that far north).
As for the roommates – pretty soon. I’ll be getting my own place in 206 when I’m 28.
But in Alaska, you make money from the state with an annual oil credit! Meanwhile, the wilderness is beautiful. I had an amazing time fishing and hiking Mt. McKinely years ago.
I moved from LA to Fort Lauderdale and my expenses didn’t change much. Property taxes are very high, my car insurance went up, home owners insurance doubled and utilities were much higher.
I think if I didn’t own a home I could avoid a lot of the added expenses.
But, are you happier overall?
Fort Lauderdale is not the part of Florida to move to if saving money is your goal. Anything from Palm Beach south along the Eastern coast is going to be the priciest spot in the state.
I vote for Nevada for many of the reasons described here, specifically Henderson, NV, a suburb of Las Vegas. I plan to move there from California in 5-7 years once I build my financial nut. Here are my reasons: 1. Nevada has no state income tax. This as you point out is a huge plus for a retiree. Additionally suburban real estate is cheap ($175k-250k for a 3 bedroom 2 bath house) and cost of goods are reasonable. 2. A warm climate (and a cool but not cold winter as a respite from the summer’s intense heat). Growing up in the Midwest, I’d rather suffer an indoor summer over an indoor winter any day. At least summer mornings (early) are somewhat manageable. 3. A great airport given the size of Las Vegas. You could do better at an LAX, JFK, SFO, ORD, but you can still catch nonstop domestic flights to every major, most mid-level, and many minor US cities. Many nonstop international flights are available to East Asian and European hubs. This is great if you plan on incorporating some short consulting gigs or want to live internationally for part of the year (sweaty summer for example). 4. Amenities. Vegas is not comparable to New York, LA, SF … let’s just say that right away. But you still have world class restaurants, all of the LV strip amenities, world class shows etc. Henderson NV however keeps you away from the tourists, and significantly drops the price of real estate and has very low crime. 5. Availability of outdoor activity. The mountains around Vegas provide tons of great local hiking opportunities. Lake Mead is 45 minutes away for boating and being on the water (at least for now until it dries up!!). The Grand Canyon is a few hours away, as are ski resorts in Flagstaff. 6. Proximity to the West Coast. LA is a short 5 hour drive, as is San Diego. So whatever amenities you lack in Vegas are a long weekend away. Hey you’re retired … you can endure a 5 hour drive … time is your friend! If they ever build high speed rail from LA to Vegas you’ll have that too. 7. Friends and family will come to you to visit Vegas. At least every third or fourth year your friends and family will want to experience a Vegas long weekend. They’ll spend a night or two with you, a night or two on the strip. Train them not to expect you to join them in the casinos. 8. I *believe* rentals are more productive (in terms of rental price to purchase price ratio, rather than appreciation) than on the coasts. Just my two cents. Would love to hear some cons for planning purposes.
I concur with you on Henderson. A friend bought 3 houses there in 2012 and is probably killing it. Wish I did the same!
Fin Samurai,
So you’re saying Ohio isn’t on this list? haha joking, not a shocker there. I am actually in the midst of thinking of life from all angles and am strongly considering: Better cost of living, tax impact and better state/lifestyle, i.e. Florida potentially. Further, it would be a great vacation spot for family and friends from home, plus I could keep more of my income and enjoy things that I love, all year round – being outside, running, the beach,etc..
Samurai – how many different places have you lived and what are your thoughts with it?
-Lanny
You living in Ohio? The good thing is you’ve got a lot of lifestyle upside just by moving!
I’ve lived in Taipei, Lasaka, KL, Osaka, Manila, Beijing, DC, NYC, SF for the most part and traveled to about 40 other countries. I really like SF for the work life balance and the weather. Our taxes are just bad though. But now that I don’t work a day job, it feels much better!
I really love Kuala Lumpur, Malaysia. Fantastic food. Low prices. Great culture. Nice beaches. But, hard to get rich unless you are a local entrepreneur, hence an internet business! I plan to go back this year, maybe next monthly hopefully.
Hey FS – Man I miss KL too! Haven’t been back for 3 years, in Calgary now… brrr
I understand that the Malaysian government is currently giving out some incentives for global entrepreneurs to have a startup based there. Something you might want to consider, or perhaps you already know hence the trip… :)
Selamat Jalan & Jumpa Lagi :)
Good heads up! Roti canai, chicken satay, and nasi lemak for life! I will look into that.
Why did you leave KL to go to Calgary?! Good health care?
If you recall we were in communication a while back over email – it’s a long story but the main reason is to provide a fair and level playing field for our little daughter to grow up in – we’re in our mid 30s, she is 5 mths old. You probably know of the social issues/challenges in Malaysia since you spent some time there.
Since moving here I’m beginning to feel that there is no perfect place – you always win some and lose some with each location. Learning to treasure the simple things in life and to be happy by choice :)
Please share about your trip later if you can – be interested to hear of your experience.
Yes missing all that and Hokkien Fried Noodles!! Bring on the lard!!
As far as the tax argument, you’d do well to factor in that offer income tax exemptions for retirement income.
Also, I don’t think looking at less desirable or more desirable states makes sense per se. Quite a few states that may seem undesirable on the surface have one or two trendy cities that could make a desirable home for a retiree.
*states… meant to say states that offer income tax exemptions for retirees.
Feel free to share your methodology and ranking of which states are best to retire. Thx
Tax laws vary greatly state to state, but I’ll use North Dakota as an example (based on information I believe to be accurate). North Dakota, a low tax state, taxes both social security and pension.
On the other hand, you have middling to high tax states like Maine, Kentucky, and South Carolina that do not tax social security. Additionally, they offer either exemptions or credits for pensions and/or 401(k)s.
As for cities–depending on the type of lifestyle is desired–places like Coeur d’Alene, Asheville, Louisville, and Columbus are a few places that could be appealing to a retiree’s lifestyle. However, when thinking of states to retire, I doubt that Idaho, North Carolina, Kentucky, or Ohio are the first states that come to mind for most people.
We used to have almonds in the office as one of the grab-and-go free snack choices. Now we don’t. Too expensive. If a SoCal drought worsens, I would anticipate a significant exodus.
Austin is already a significant choice for outflowing Southern Californians. It’s reasonable to assume that there could be knock on effects in particular real estate markets within Texas, Florida and certain parts of Nevada.
I am personally considering purchasing an urban condo as a rental in anticipation of this, a retiree tidal wave and because I think it might be a heck of a lot better than shoveling money into 529’s.
The Californians are coming. It’s getting pricey out here. We’re buying in Seattle, Portland, Lake Tahoe, Reno, Vegas, Texas and Florida.