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Old 03-07-2008, 11:25 AM   #21
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Then you need to compare the cost of living in those areas. I noticed a few areas that scored well for retirees the cost of living is some of the highest in the nation. Still another useful tool in deciding where you would like to end up.
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Old 03-07-2008, 12:27 PM   #22
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I keep requesting the free trial offer of "Where to Retire" as it is such a great magazine...and I am too cheap to buy a subscription, I guess. Eventually they will catch on to me...
Anyway, they have an article this month talking about high tax States for retirees. Illinois (where I am now) and Texas being two. They go on to say that Texas is one of the hot retirement areas, but that the taxes (8.25% sales tax, high-high property tax) are not good for retirees. However, they also have a big, fat article with colored photos on The Woodlands section of Houston in this same issue. I guess they are encouraging us moving there--despite the high tax situation for retirees. Huh?
(Just to illustrate Notmuchlonger's point above.)
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Old 03-07-2008, 12:40 PM   #23
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Originally Posted by Orchidflower View Post
They go on to say that Texas is one of the hot retirement areas, but that the taxes (8.25% sales tax, high-high property tax) are not good for retirees. However, they also have a big, fat article with colored photos on The Woodlands section of Houston in this same issue. I guess they are encouraging us moving there--despite the high tax situation for retirees. Huh?
As I've said earlier, depending on your specific situation, Texas can either be a good state or an awful state for retirees.

Texas has a high sales tax and a borderline-punitive property tax, it is true. However, there is no state income tax. So one has to look at all factors of their own expected situation in retirement:

* How much taxable income one plans to generate each year
* How much taxable "stuff" you plan to buy
* How much house you plan to buy (keep in mind that a $200K home in TX could be a $400K home in a place with half the property taxes, making it a wash).

For a retiree that plans to trade down to a small, low-priced home and has an LBYM lifestyle with a significant income, the lack of a state income tax is FAR more important than the high sales and property tax, and Texas would be on a "short list" of potential destinations from strictly a tax standpoint (until REWahoo convinces you otherwise).

If, on the other hand, you are going to be house-rich and cash-poor, without a large income, and you want to spend your nest egg like there's no tomorrow, look elsewhere. And even then, while property tax RATES are high, property VALUES are much more affordable than in many other places, which at least partially cancels out the high rate.

That's the problem with lists like this which rank states in order of taxation. Taxation of individuals is a three-legged stool -- income, sales and property taxes -- but each leg is not equally important in all situations.
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Old 03-07-2008, 01:33 PM   #24
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Originally Posted by ziggy29 View Post
For a retiree that plans to trade down to a small, low-priced home and has an LBYM lifestyle with a significant income, the lack of a state income tax is FAR more important than the high sales and property tax, and Texas would be on a "short list" of potential destinations from strictly a tax standpoint (until REWahoo convinces you otherwise).
In case you aren't familiar with the state's geography and climate, here are a couple of photos to give you feeling for the seasons.

Those who truly understand LBYM seem to feel right at home here...

Winter in TX


Summer in TX
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