Retirement is a major lifestyle change for many people, often resulting in newfound hobbies, schedule adjustments, and even major relocations. Before making such a large change, there are several important considerations that should be factored in to any decision.
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Pension Taxes
Most pensions and retirement plans are set up tax-deferred.
The American Association of Retired Persons (AARP) recommends capitalizing on this in a state where pensions are either not taxed, or very tax-friendly.
Tax-friendly states include Florida, Georgia, Mississippi, Arizona, Nevada, and Alaska among many. Unfavorable states include New York, California, Oregon, New Jersey, and Connecticut,
according to Kiplinger.
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Cost of Travel
However,
Ed Slott of the Wall Street Journal recommends not considering only tax benefits when making this move. Many retirees may move to a tax-friendly state that is far from family. Think about cost and ease of travel, especially around busy holidays.
Health Care Options
While health may not be a concern at the time of the move, it’s always better to factor in proximity to health care facilities in the event of an oncoming issue, recommends Marc Agronin at the Wall Street Journal. Agronin shared he has seen retired couples move to rural areas to soon regret its distance from health care locations.
Dual Residency Issues
Slott also warns about residency conflicts that may arise if splitting time between two states. This requires careful tracking of time spent in each state in order to establish residency. Furthermore, some states will seek part-time resident statuses in order to raise revenue, Slott said.
Cost of Living
As retirees are living on saved money, it is important to factor in a location’s cost of living. If staple items like food and gas cost way more, leisure activities such as golfing may have to be reduced.
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