Best Rretirement States
When it comes time to retire, many senior citizens prefer to live in states that have warmer climates such as Texas, California and Florida however, it is important to consider the cost of living in whichever state you decide to retire in. Many retirees judge the suitability of a state based simply on whether or not it has an income tax. This is an oversimplified way to judge the tax burden of a state, and can lead to paying very high amounts each year in taxes. With a little investigation you will find that states that do not impose income taxes upon their citizens, will find other ways to make up for it in other taxes.
Retirees want to save as much of their money each year as possible, and many are drawn to states like Pennsylvania, where there is no tax charged on retirement income. Although this is an understandable reaction, failure to look closer can cost these seniors a great deal of money. Pennsylvania is one of the more expensive states for people to live in the continental United States. The average property tax in Harrisburg, PA, is around $6,551, however, in April 2008 homeowners began to see an average property tax cut of $169 per household. Combine that with $840 on average in sales tax, and Pennsylvania residents are typically paying around $7,391 in taxes per year, depending on their annual income.
Surprisingly, states like Arkansas and Delaware are actually the most cost effective for seniors. Living in Dover, DE, costs on average around $543 per year in taxes with the minimum tax is $75.00 and a maximum tax of $165,000.00. Another place to find good retirement locations that is more friendly in taxes would be the state of Kentucky, the average resident senior pays around $1,000 in taxes per year. This is much less than supposedly tax friendly states such as Pennsylvania and Florida. Residents of Florida pay around $3,424 per year.
Although income tax is a major component of the overall tax burden, it is very important to take other factors into account. Be sure to research the cost of homes, as well as the general cost of living. States with higher mortgages due to property taxes can be a long financial burden many are not able to bear. One way to avoid this is to research the states you are considering, by looking at the state laws on sales and property taxes.
An effective tool to help in researching the information you need is by using your favorite internet search engine and look for financial management tools such as Kiplinger.com. Taking both state taxes and cost of living expenses will help you determine which will be the most suitable place for you to live. Now that you have some good starting tips to help you make a good choice for a retirement location, you may want to enjoy a few of my favorite retirement quotes: “Retirement: That’s when you return from work one day and say, “Hi, Honey, I’m home – forever” – Gene Perret. Retirement is like a long vacation in Las Vegas but the goal is to enjoy it the fullest, but not so fully that you run out of money (Jonathan Clements).