What could sweets, alcohol, and deferring taxes have in common? Plenty. All three are fun…
I have seen many articles about great states to retire to and wondered how they developed their list. So, I decided to write my own article on the best states to retire.
The greatest benefit of financial independence is that it enables you to live anywhere you desire. The quality of that financial independence is dependent not only on how much annual income can be obtained, but also on the tax policies and cost of living of that location. A person living in New York City whose financial independence is generating $60,000 per year is very different than the same $60,000 per year in Greenville, SC. Often I am asked in retirement seminars how to turbo-charge retirement if you did not adequately prepare for retirement. The answer for clients here in the Baltimore-DC metro community is to move out of Maryland. The cost of living in this area is higher than the national average because of our proximity to Washington, DC. In addition, sales taxes and property taxes are not high, but clearly not low, and in Baltimore City or the District of Columbia, the property taxes are well above average. Lastly, Maryland’s income taxes along with the local taxes are 8.5% for anyone who makes gross income over $50,000. Economically speaking, the Baltimore-DC metro area is difficult to afford. Making $60,000 per year, living in Baltimore, and owning a home would cost about $10,000 in sales, property, and income taxes. That same income in Middletown, Delaware, about 60 miles away, would pay about $4,000 per year for those three forms of taxes. In addition, the home in Baltimore may bring a substantial price when sold and be replaced with a newer, same-size house for somewhat less, depending on the town in Delaware.
It’s All About Location for Retirement
So what states are cost-effective and tax-effective? Partly that depends on whether gross income is over or under $100,000. Those with an annual income under $100,000 should consider Delaware, South Carolina, Georgia, Mississippi, Nevada, Wyoming, and New Hampshire. Those whose income is over $100,000 should consider Tennessee, Florida, Wyoming, Nevada, Texas, New Hampshire, and South Dakota. These states all have low taxes and many geographic areas with a low cost of living index, with all the modern conveniences.
Try Overseas for Retirement Living
One of the hottest trends among seniors is to retire to an overseas emerging market like Costa Rica, Ireland, Vietnam, or Ecuador. Do not even consider this type of move without thorough due diligence and advice. Live and Invest Overseas, run by Kathleen Peddicord, is a great source of research and to get advice about each region you may be considering.
Where to live in retirement, though, first and foremost is dependent on your relationships. If your children and grandchildren are all here in Maryland, does it make sense to move to Florida? The answer is maybe. However, make sure you think out how to maintain the relationship. Also, what will you do as you age and need more support? Deep love and abiding relationships are powerful, so do not take lightly the benefits of those relationships versus warm weather. Many times, these quality relationships can be maintained from a distance, and if so, then moving for economics and weather is a win-win.
Financial Consulate aims to help lessen the worry and burden of wealth management and enhance financial wellness so our clients can pursue relationships and true fulfillment. Choose the professionals at Financial Consulate as your Certified Financial Planners™ (CFP®) to take advantage of our educational, ethical approach to financial planning. Our services are comprehensive, including tax planning, investment planning, retirement planning, estate planning, and more. We operate completely independently and offer fee-only services to keep your vision in line with our recommendations at all times. While we have offices in Hunt Valley, Maryland, Fernandina Beach, Florida, and Gettysburg, Pennsylvania, we serve clients across the nation. To begin your partnership with a trustworthy wealth advisor, please contact Financial Consulate today.