Planning for retirement takes more than savings accounts and stock portfolios. A successful retirement plan takes costs into consideration and works to reduce those costs wherever feasible. One option that can result in significant savings: the location you chose to retire.
Why does location matter?
The location you choose to retire will have an impact on the cost of retirement. In addition to the cost of property and other expenses, the location will also impact your tax obligations. Some states are just cheaper then others. Five examples of tax friendly states to take into consideration include:
- Delaware. Looking to stay in the Northeast? Delaware may be the right option for you. This state tops Business Insider’s list when it comes to tax affordability during retirement. Delaware can boast no sales tax and low income taxes.
- Wyoming. Looking to enjoy the outdoors? Wyoming can offer large plots of property at a minimum cost. The state also offers no income taxes, no inheritance or estate tax and low property taxes.
- Alabama. Those who prefer warm weather may want to consider a move to Alabama. Income taxes here are low, ranging from 2% to 5%.
- Tennessee. This state may be the right fit for retirees looking to stay on the eastern side of the country and interested in mountain life. The state has no income tax and only charges 2% for interest and dividends.
- Florida. A list of states to retire is not complete without mentioning Florida. The state has no income taxes, great weather and a thriving retirement community.
Other states to take into consideration for their low income and property tax benefits include Georgia, South Carolina and Nevada.
What else should retirees know?
Simply moving is not enough. State tax auditors may conduct an audit to establish if you truly left the state. Massachusetts state auditors, like those in most states, will review the amount of time spent in each state. Simply owning property in another state is not enough. If the state auditor determines the taxpayer spends more than 183 days in the state, they may be on the hook for a state tax bill.