Does it really pay to move to a different state in retirement?

By Lee Sherman

For most people considering moving to a different state in retirement, they are doing so in order to save money. The cost of living might be lower while still providing you with good weather, both indoor and outdoor activities (golf, tennis, hiking, the symphony, opera, and theatre to name a few). If you don’t already own your home, you’ll likely pay less for a new one, taxes could be lower, and even things like meals in restaurants can cost much less outside the major metros.

But even if saving money remains your primary goal, the thought of moving to a different state can get your mind going with the different possibilities. If you’ve come to retirement age, you’ve probably been living and working in the same place for 30 years or more. Now’s the time to start dreaming of exotic beach locales or moving to a different country as an expat. Do you speak another language or want to immerse yourself in a particular culture? Some people want to put down permanent roots in the place they’ve been vacationing (perhaps you even own a vacation home in a spot such as Maui, Hawaii or Scottsdale, AZ). For others, it’s time to return to the hometown they grew up in. See here’s the thing: You can now live anywhere you want. You’ve earned it. Make it happen.

According to financial advisors, this decision shouldn’t be based on emotion alone. Rather it should be based on sound financial principles and the answers to a series of financial questions. Do you already own your own home or will you need to purchase another? What are your yearly expenses? Is your existing portfolio beating inflation?

Some states are more retirement friendly than others. For example, Georgia doesn’t consider Social Security benefits to be income. It’s also a better bet if you want to run a side hustle in your retirement since most other forms of retirement income aren’t considered taxable. It’s popular to consider moving to a state without sales tax such as Oregon. However, as much as this seems like you are moving to the wild frontier, it doesn’t pan out when considering the overall picture. Oregon’s home prices are low relative to say somewhere like San Francisco. But its estate tax affects estates worth as low as $1 million, considered a reasonable price for a home in Portland’s real estate market, compared to the Fed’s exemption on the first $5.43 million

While many of the tax requirements in individual states are similar to the Federal Government, as you’ll see if you follow state-wide elections, there are a lot of differences as to what kinds of things are considered taxable in different states and up to how much they are taxed. A particular place for debate is over estate taxes and /or inheritance taxes. Others have low property taxes, no sales tax or other lures, like senior-specific tax breaks.

Lee Sherman is a contributing writer to www.myperfectfinancialadvisor.com, the premier matchmaker between investors and advisors. Lee is an experienced journalist and editor with over 30 years of expertise with a significant history of writing in the personal finance and technology arenas.

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