When pondering retirement, you might contemplate relocating to a different state for various reasons, including lower living costs, tax benefits, or simply a more comfortable lifestyle. So, what’s the real price tag for retiring in the United States?
Factors to consider
- Cost of living
- This encompasses expenses like food, housing, utilities, transportation, healthcare, and miscellaneous goods and services.
- Mississippi offers the lowest cost of living at 82% of the national average, while Washington, D.C. and Hawaii top the scale at 149% and 139%, respectively.
- Tax burden
- Income tax is especially relevant for retirees since it impacts withdrawals from tax-deferred retirement accounts.
- States like Alaska and New Hampshire offer the lowest tax burdens, while New York and Hawaii impose the heaviest tax burdens.
- Resident age
- Your preference for social interactions with peers could hinge on the age demographic of your chosen retirement location.
- Maine, Florida, and West Virginia have the highest proportions of residents aged 65 and older.
Best states for retirement
According to the Investopedia Retirement Index, the top five states for retirement, considering these factors, are:
- Tennessee: Offers lower-than-average taxes, living costs, and an above-average elderly population.
- Florida: Features a tax-friendly environment, a decent cost of living, and a significant elderly population.
- Wyoming: Boasts no income tax, below-average living costs, and a slightly higher elderly population.
- South Dakota & Missouri: Both share low living costs, tax burdens, and above-average elderly populations.
- Alabama: Offers a below-average cost of living, low tax burden, and an above-average elderly population. Alabama also has the lowest property tax rate in the nation.
Retiring in the US vs. abroad
Some retirees are now opting to live abroad for cheaper housing, convenient healthcare, and a change in lifestyle. Deciding factors include visa requirements, residency establishment, taxes, personal healthcare needs, and proximity to family and friends. Weigh your personal needs and preferences to determine the best retirement destination for you.
In summary, your choice of where to retire should align with your financial situation, lifestyle, and priorities. Each state offers a unique blend of costs, taxes, and age demographics, so research thoroughly before making your decision.