Where should you retire?

Where
should you retire?

Retirement
& Longevity

Hint:
It’s about more than the weather and scenery.

Dreaming of
a sunny retirement? Or one with a mountain view? Where you retire depends on
more than the weather and the scenery. Different states have different tax
considerations – and taxes can have a major effect on the quality of your
retirement. Among other financial factors, local taxes should be considered as
you decide where you’ll spend the next chapter of your life.

Tax
considerations

One way to
cut your tax bill is by moving to a state that doesn’t have an income tax.
There are seven U.S. states that do not have an income tax: Alaska, Florida,
Nevada, South Dakota, Tennessee, Texas and Wyoming. Washington state taxes
investment income and capital gains, but only for certain high earners, and New
Hampshire taxes investment and interest income but is phasing out those taxes.

Keep in mind
that wherever state taxes are lower or absent, state-funded programs may be
similarly lacking. If you expect you may one day depend on certain
government-supported services, you may find a state with higher taxes a smarter
move in the long term.

Avoiding
destinations with a state income tax isn’t a surefire way to minimize your tax
burden. WalletHub conducts an annual analysis of the total tax burden by state,
measuring the proportion of total personal income that residents pay toward
state and local taxes – including state income taxes, property taxes and sales
and excise taxes. There are a few additional states on WalletHub’s list that
keep their tax burden low, even while taxing residents’ income. According to
WalletHub, the 10 states with the lowest overall tax burden, lowest to highest,
are Alaska, Delaware, New Hampshire, Tennessee, Florida, Wyoming, South Dakota,
Montana, Missouri and Oklahoma.

Other
financial factors

A lower tax
bill shouldn’t be the only consideration when it comes to location-specific
expenses in retirement. The biggest expense in retirement is housing cost,
which fluctuates drastically by location. Even if you’ve paid off your
mortgage, other homeowners’ expenses like property taxes, insurance,
maintenance and repair costs are higher in some regions and cities than others.
Moving where housing costs are low – even if taxes are high – can help your
overall budget significantly.

If you plan
on working in retirement, you’ll want to take note of the second-act career
opportunities in some areas. (Of course, with remote working becoming widely
available, job location is not as important as it used to be.) Also important
is the accessibility of quality affordable healthcare where you plan to retire
– healthcare ranks third on the list of biggest expenses in retirement and may
be the most important consideration as you age.

While warm
weather and a gorgeous view are the makings of an ideal retirement, don’t
overlook taxes and other location-specific financial factors. Considering these
may ultimately lead to a higher-quality retirement.

Pendle Hill
Advisors is proud to contribute to the Montgomery County News with our weekly
curated financial news and topics. If you have any questions about the markets,
your financial plan, or anything, please feel free to reach out to our office
for a no cost initial consultation.

Kent Pendleton, AAMS®

Financial Advisor, RJFS

Pendle Hill Advisors LLC

14375 Liberty St, Ste 109 | Montgomery,
TX 77356

T 936-297-8267

Kent.Pendleton@raymondjames.com | www.raymondjames.com/pendlehilladvisors

Material
created by Raymond James for use by its advisors. Securities offered
through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment
advisory services are offered through Raymond James Financial Services
Advisors, Inc. Pendle Hill Advisors is not registered broker dealers and is
independent of Raymond James Financial Services.

Sources: investopedia.com; pods.com; finance.yahoo.com; wallethub.com; visionretirement.com