It’s fun to look at this top ten list from Kiplinger, which examines all 50 states and considers the most important factors for retirees. In “10 Best States for Retirement,” economics and the health of the state’s population are the leading indicators. These top ten are good starting points for a conversation about where you’ll want to live during your retirement years. If you have family—especially grandkids—in any of these states, you might want to seriously consider a move.
10. Idaho. The Gem State is rich in natural resources and scenic areas like Shoshone Falls in Twin Falls and Hells Canyon in Riggins. The state's affordability, especially regarding health care costs, makes it easy to stretch retirement savings. There's a statewide sales tax of 6% and a state income tax that goes as high as 7.4%, but Social Security benefits are not subject to state taxes. Also, Idaho doesn’t have an inheritance or estate tax.
9. Arizona. The Grand Canyon State is home to Prescott, 100 miles north of Phoenix. It has an abundant population of 65-and-older residents. While the state has slightly above-average living costs, Prescott is one of the cheapest places to retire. In addition, Arizona is one of Kiplinger's 10 most tax-friendly states for retirees. The state's income tax is modest, Social Security benefits and a portion of some other types of retirement income are exempt, and there's no inheritance or estate tax.
8. Florida. “More than 3.5 million older residents can't be wrong.” The Sunshine State doesn't tax Social Security or other retirement income. Also, Florida ranks fifth in the country for fiscal soundness, according to a recent report from George Mason University.
7. Washington. The Evergreen State gets an average of 36 inches of rain per year (the U.S. average is 37 inches), but Spokane sees just half that amount of rainfall.
6. South Carolina. In addition to well-below-average living costs, the tax situation is easy on a fixed income. South Carolina doesn't tax Social Security benefits, offers generous exemptions on other types of retirement income and has no inheritance or estate tax. Plus, property taxes tend to be very low.
5. Alabama. Retirees will love the warm weather, nice beaches, and lots of golf—all at a lower price than neighboring Florida. Health care is 4.5% less there for the average retired American couple. Income tax rates range from just 2% to 5%, and Social Security benefits are exempt.
4. Tennessee. The Volunteer State is a good choice considering every major metro area offers below-average living costs in almost every category of expenses—including health care and taxes. Plus, there's no state income tax. Tennessee ranks eighth of all states for fiscal soundness, according to the George Mason report.
3. Georgia. Warm weather and low living costs make Georgia a peachy retirement destination. Health care expenses are particularly affordable for retirees, ranking in the top 10 states for a retired couple. Plus, Georgia's favorable tax situation makes it one of the 10 best states for taxes on retirees.
2. Utah. The Beehive State has low living costs to offset some unfriendly state tax laws: Utah taxes Social Security benefits. But Utah ranks fifth in the U.S. for the overall health of its 65-plus population, according to the United Health Foundation.
And the top choice is:
1. South Dakota. This state was named number one because of its affordability. In addition to very low living expenses and health care costs, this state is the best when it comes to taxes for retirees. South Dakota also ranks third in the country when it comes to its own financial health, and the Milken Institute ranked Sioux Falls (2) and Rapid City (5) among the five best small metro areas for successful aging.
Before moving to a new state, make sure to visit more than a few times and consider how easy it would be to visit your family—or for them to visit you!
For more information on the importance of looking at estate taxes when planning, explore our website and contact us to schedule your consultation today!
Reference: Kiplinger (June 2016) “10 Best States for Retirement”