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Best state for military retirees
Old 11-24-2018, 08:10 AM   #1
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Best state for military retirees

Looking to retire early soon with my wife. Most of our retirement income will come from our military pensions until we decide to start withdrawing from our investments in about 10 year. We have healthcare through the VA/Tricare and our standard of living is very modest. I'm not looking for specific numbers, but just wondering if any veterans on here can share their thoughts/recommendations on the most tax friendly state for military retirees, where our pensions can be stretched the furthest. We are currently working and living in South Carolina, but are looking at Tennessee/Kentucky area. Anyone with experience living there? Other recommendations?

Thanks in advance.
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Old 11-24-2018, 08:18 AM   #2
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We're happy in Kentucky. Retirement income is not taxed by the state and the cost of living is below average. Every kind of environment from medium size city to very rural. If you want to stay close to a military installation, Fort Knox and Fort Campbell are here.
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Old 11-24-2018, 08:39 AM   #3
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I live in NC. No tax breaks (moderate tax rates, not low for SE) . Not sure about TN taxes, but if you like the mountains, eastern TN is gorgeous. Also, agree with braumeister on KY. Low COL, sizable military bases, and also some very nice country.
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Old 11-24-2018, 09:17 AM   #4
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I live in East Tennessee near Knoxville, my father moved us here when he retired from the military.
There is no income tax except one called the Hall income tax on dividends and interest payments on over $1250 a year but it is being phased out going down 1% a year until it disappears in about 3 years I believe. You'd have to look it up to find the details on it as it doesn't affect me. Taxes are relatively low for property taxes, I pay about $2500 a year on a house that is appraised around $250k and would pay half of that if I lived outside of the city limits. Sales taxes are relatively high at 9.75% where I live, groceries are somewhere around 7%.
Overall I like living here, close to the mountains, the weather is nice most of the time, taxes are decent and there are numerous hospitals and doctors to choose from.
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Old 11-24-2018, 09:25 AM   #5
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Thanks for the info. I have family that lives in Knoxville/Seymour and my wife is from Eastern KY. It is definitely beautiful country and we'd like to eventually get closer. Just trying to figure out if KY or TN would be overall cheaper to live. I think we have narrowed it down to central/eastern KY or TN. We plan to live out in the country to raise some animals and put in a garden, so looking for a few acres that has at least 1-2 relatively flat acres around the home.
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Old 11-24-2018, 10:04 AM   #6
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Here's some info for Alabama. All Federal pensions (includes Military, Civil Service and Social Security) are exempt from state income tax. Cost of living is reasonable. North Alabama has mountains and rivers/lakes. If you want access to a military installation, Redstone Arsenal in Huntsville has extensive facilities. Enjoy your retirement.
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Old 11-24-2018, 10:36 AM   #7
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Originally Posted by HomesteadDreamer View Post
Looking to retire early soon with my wife. Most of our retirement income will come from our military pensions until we decide to start withdrawing from our investments in about 10 year. We have healthcare through the VA/Tricare and our standard of living is very modest. I'm not looking for specific numbers, but just wondering if any veterans on here can share their thoughts/recommendations on the most tax friendly state for military retirees, where our pensions can be stretched the furthest. We are currently working and living in South Carolina, but are looking at Tennessee/Kentucky area. Anyone with experience living there? Other recommendations?
Let me suggest that you want quality of life, not simply cost of life. There's a bell curve with some things that you're willing to pay for, and other things you don't want to pay for. Everyone has a different bell curve.

One site which tries to sort through all the factors (not just the finances) is TheEarthAwaits.com. It was developed by a member of the Mr. Money Mustache forums and beta-tested by a very critical crowd of frugal FI posters.

It'll help you narrow down the ZIP codes, and maybe even highlight a new country code.

In the community of personal-finance bloggers, we've noticed that a statistically significant number of them are moving to the vicinity of Franklin TN. I don't know whether that means you'd want to join them... or avoid them.

Of course another smart personal-finance blogger (and real estate expert) just moved to Maui. I think that's worth considering!
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Old 11-24-2018, 10:38 AM   #8
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Based on how many neighbors of mine that are retired veterans, Florida must be pretty good. No state income tax for sure. Also property tax discounts available. Disabled vets pay no property tax, at least in my county.

This article states Florida, Virginia and New Hampshire are top three for retired military.

https://www.aarp.org/retirement/plan...-retirees.html

Source used in above article:
https://wallethub.com/edu/best-state...retirees/3915/
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Old 11-24-2018, 11:05 AM   #9
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We live in WI, no State taxes on military retirements or SS. If you have 100% rating on disability property taxes are refund when you file income tax and they have a lot of state GI Bill benefits as well. Great hospital in Milwaukee.
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Old 11-24-2018, 11:20 AM   #10
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Originally Posted by braumeister View Post
We're happy in Kentucky. Retirement income is not taxed by the state and the cost of living is below average. Every kind of environment from medium size city to very rural. If you want to stay close to a military installation, Fort Knox and Fort Campbell are here.
I don't mean to bad mouth the lovely state of Kentucky. I have visited it several times and enjoyed the time I spent there. But.....

From what I hear Kentucky has a very bad public pension funding problem and it's going to take higher taxes and/or serious cutbacks in services to fix it. IIRC, only two states - Illinois and Connecticut are in worse shape.
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Old 11-25-2018, 09:06 AM   #11
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We are very happy living in Maine.

As a retiree, you have full access to every doctor office and hospital that exists in Maine. Leave the VA to the vets. We have access to much better healthcare in Maine.

Military pensions are not taxed in Maine.

The general cost-of-living is very low. As a retired E-6 my pension is well above most of our retired neighbors [living on SS].

My investment portfolio went to buying our farm and building a new house. Property taxes are amazing low here.

My pension affords us a very high quality of life here in rural Maine.

Maine has the oldest population of any state, with the highest percentage of retirees.

It is great if you are still active. Maine has over 3,000 miles of coastline and over 16,000 miles of groomed sled trails.
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Old 11-25-2018, 09:36 AM   #12
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Regarding KY and TN. Both have beautiful country and low cost of living. But KY is ranked in the bottom 5 for fiscal health while TN is in top 5.

We live in Lexington KY and really like it here. But when the pension shortfall death spiral begins, hello Tennessee. Ain't no place I'd rather be.

So glad that state exit taxes are unconstitutional.
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Old 11-25-2018, 01:46 PM   #13
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I think I would like Maine a lot and if there was an option to do so, I would definitely add it to our list of potential retirement spots. But, my wife and I both have parents that are getting older and most of our family is in the TN/KY area, so I think that is where we will probably end up. Not sure what you mean by leave the VA to the vets, since we are both vets, but it is good to have options.

Thanks.

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Originally Posted by Offgrid Organic Farmer View Post
We are very happy living in Maine.

As a retiree, you have full access to every doctor office and hospital that exists in Maine. Leave the VA to the vets. We have access to much better healthcare in Maine.

Military pensions are not taxed in Maine.

The general cost-of-living is very low. As a retired E-6 my pension is well above most of our retired neighbors [living on SS].

My investment portfolio went to buying our farm and building a new house. Property taxes are amazing low here.

My pension affords us a very high quality of life here in rural Maine.

Maine has the oldest population of any state, with the highest percentage of retirees.

It is great if you are still active. Maine has over 3,000 miles of coastline and over 16,000 miles of groomed sled trails.
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Old 11-25-2018, 02:05 PM   #14
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I think I would like Maine a lot and if there was an option to do so, I would definitely add it to our list of potential retirement spots. But, my wife and I both have parents that are getting older and most of our family is in the TN/KY area, so I think that is where we will probably end up. Not sure what you mean by leave the VA to the vets, since we are both vets, but it is good to have options.

Thanks.
I know a lot of vets. They all have their stories about driving 6 hours to get to the VA, and the waiting times, etc.

Whereas for us servicemembers, we can go into any hospital or any doctors office anywhere and be treated right away.

Often the vets only have the VA for their healthcare. As a retiree I see no benefit to further clogging the VA waiting lines, or in making the long commute to get to a VA hospital. Leave the VA to the vets.

As a retiree just go to a doctor.
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Old 11-25-2018, 02:12 PM   #15
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Some of our peers chose Beaufort SC as military retirees. I understand the MTF clinic is small/not great and they tax military pensions. Bc of this SC does not appeal to me. We chose San Antonio TX, home of military medicine and some of the best restaurants (too numerous to count). Prop taxes in the city can be very high (ex: 12k a year on a 400k house). Discounted or waived for disabled vets.
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Old 11-25-2018, 06:49 PM   #16
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no income tax in the virgin islands (a U.S. territory)
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Old 11-25-2018, 07:30 PM   #17
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I know a lot of vets. They all have their stories about driving 6 hours to get to the VA, and the waiting times, etc.



Whereas for us servicemembers, we can go into any hospital or any doctors office anywhere and be treated right away.



Often the vets only have the VA for their healthcare. As a retiree I see no benefit to further clogging the VA waiting lines, or in making the long commute to get to a VA hospital. Leave the VA to the vets.



As a retiree just go to a doctor.


I don’t use the VA but I could. As a retiree I just go to a provider off base. But if you just go to the va once a year that local clinic gets 2500 allocation for you visiting.
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