retirement tax strategy and where to live

[perinova]

Whereas I fully agree on "not going somewhere solely because of taxes". Local Tax do make a difference
In fact State&Local Taxes are on average and in many states about 8-10% but can vary from about 6.5% in AK to about 13% in NY!!! Counting all taxes sales, property and income. The differenc eon $60K is not shortchange it is close to $4000 each year or an extra $100,000 in assets.
http://moneycentral.msn.com/content/...sh/P111507.asp

I will have to dig data further but I should mention here also that the % above varies by the relative wealth of each State so this is only an indication of the overall population Tax drag not necessarily yours. The average income in the US varies from ~$33000 in WV/AR/MT/MS/LA/NM/OK to ~$55000 in MD/NJ/CT/NH/MN/AK and the average is about $44000. And many States have a progressive income tax, not a flat one.
http://www.taxadmin.org/fta/rate/ind_inc.html

sales tax
http://www.taxadmin.org/fta/rate/sales.html

[Brat]

Somewhere in life I learned that 'nothing comes from nothing'. In so many words, for a given level of services the state must get the money from somewhere. Back up this thread you will see a comment about Washington communities just north of Portland. Washington has no income tax, Oregon no sales tax. A lot of Washington residents shop in oregon to avoid the Washington sales tax. The sales tax revenue is shared by the state and the community that generates the sales tax. As a result those communities have had to raise property taxes.

Retirees don't spend much on taxable stuff, we can choose to live in modest homes - thus avoiding a lot of state taxes. Each of us needs to determine what we value in a lifestyle and how much we are willing to pay for it.

[youbet]

Originally Posted by Brat

Each of us needs to determine what we value in a lifestyle and how much we are willing to pay for it.

Exactly.

Another example would be Arkansas. I've looked at northern Arkansas for retirement due to low housing costs and outdoor opportunities. Real estate taxes are very reasonable. I could easily upgrade to a larger home with more amenities and much lower property taxes by selling my Illinois home and reinvesting there. But Arkansas state income taxes are very high. They're progressive and get up to 7% at only $28K of income. Illinois is a flat 3%. So......... you pay your money and you take your chance...... In Illinois, income tax is reasonable. In Arkansas, real estate taxes are reasonable.

[perinova]

OK
Here is the data for main cities across the US compiled for $75000 income..
This includes all taxes including property. (2003, data compiled by DC)

Now of course it doesn't mean you shouldn't go to CT just don't won property there. . And as was mentioned earlier you don't get anything for nothing so I would have to imagine what WY is like: minimal state services? Unless they are using red ink at this time.

Does someone have a summary chart of state finances?

************************************************** ***

Income Property Sales Auto Total %of75k-Income
1 Bridgeport CT $2,665 $8,605 $1,112 $890 $13,272 17.70%
2 Newark NJ $1,041 $8,581 $971 $296 $10,889 14.50%
3 New York City NY $5,020 $3,928 $1,265 $277 $10,490 14.00%
4 Philadelphia PA $5,242 $3,197 $977 $341 $9,757 13.00%
5 Providence RI $1,613 $6,144 $1,052 $918 $9,727 13.00%
6 Portland OR $4,842 $4,145 $0 $287 $9,273 12.40%
7 Baltimore MD $3,870 $3,598 $1,144 $311 $8,923 11.90%
8 Milwaukee WI $2,993 $3,948 $1,096 $403 $8,439 11.30%
9 Atlanta GA $2,521 $4,029 $1,328 $383 $8,261 11.00%
10 Detroit MI $4,292 $2,570 $1,006 $389 $8,257 11.00%
11 Louisville KY $4,826 $1,713 $1,047 $367 $7,954 10.60%
12 Boston MA $3,318 $3,448 $597 $516 $7,878 10.50%
13 Chicago IL $2,010 $3,574 $1,584 $622 $7,790 10.40%
14 Portland ME $3,083 $3,258 $888 $560 $7,789 10.40%
15 Washington DC $3,913 $2,157 $1,131 $392 $7,594 10.10%
16 Los Angeles CA $1,345 $4,426 $1,180 $536 $7,488 10.00%
17 Columbus OH $3,936 $2,038 $1,128 $333 $7,434 9.90%
18 Des Moines IA $2,978 $2,617 $1,197 $470 $7,262 9.70%
19 Salt Lake City UT $3,348 $1,904 $1,341 $561 $7,153 9.50%
20 Omaha NE $2,517 $2,823 $1,309 $489 $7,138 9.50%
21 Charlotte NC $3,314 $2,021 $1,207 $519 $7,061 9.40%
22 Boise ID $3,298 $2,176 $1,170 $399 $7,043 9.40%
23 Minneapolis MN $2,936 $2,582 $997 $447 $6,962 9.30%
24 Indianapolis IN $2,788 $2,856 $1,073 $209 $6,925 9.20%
25 Burlington VT $1,640 $3,971 $890 $305 $6,807 9.10%
26 Kansas City MO $3,368 $1,595 $1,325 $517 $6,805 9.10%
27 New Orleans LA $2,518 $2,231 $1,668 $382 $6,798 9.10%
AVERAGE $2,845 $2,836 $1,194 $440 $6,832 9.10%
MEDIAN $2,901 $2,501 $1,144 $398 $6,805 9.10%
28 Columbia SC $2,986 $2,214 $968 $601 $6,769 9.00%
29 Little Rock AR $2,953 $1,648 $1,529 $464 $6,594 8.80%
30 Oklahoma City OK $3,178 $1,538 $1,533 $345 $6,593 8.80%
31 Virginia Beach VA $2,901 $1,918 $1,136 $456 $6,411 8.50%
32 Honolulu HI $3,399 $1,781 $824 $388 $6,393 8.50%
33 Albuquerque NM $2,172 $2,517 $1,415 $265 $6,369 8.50%
34 Charleston WV $3,232 $1,395 $1,141 $577 $6,344 8.50%
35 Jackson MS $2,060 $1,971 $1,421 $745 $6,197 8.30%
36 Birmingham AL $3,453 $988 $1,344 $396 $6,181 8.20%
37 Wilmington DE $3,153 $2,416 $0 $276 $5,845 7.80%
38 Wichita KS $2,556 $1,309 $1,221 $597 $5,683 7.60%
39 Billings MT $3,118 $1,864 $0 $628 $5,610 7.50%
40 Denver CO $2,354 $1,362 $1,215 $604 $5,535 7.40%
41 Fargo ND $995 $3,111 $996 $314 $5,416 7.20%
42 Manchester NH $0 $4,399 $461 $398 $5,259 7.00%
43 Seattle WA $0 $3,114 $1,415 $348 $4,876 6.50%
44 Phoenix AZ $1,454 $1,248 $1,652 $429 $4,782 6.40%
45 Memphis TN $0 $2,501 $1,830 $376 $4,708 6.30%
46 Houston TX $0 $2,861 $1,426 $325 $4,612 6.10%
47 Sioux Falls SD $0 $2,228 $1,406 $296 $3,930 5.20%
48 Las Vegas NV $0 $2,225 $1,026 $551 $3,802 5.10%
49 Jacksonville FL $0 $1,744 $1,158 $333 $3,235 4.30%
50 Anchorage AK $0 $3,058 $0 $150 $3,209 4.30%
51 Cheyenne WY $0 $1,108 $1,340 $451 $2,899 3.90%

[perinova]

Another thought about low tax states. I kind of remember that WY is getting revenue from Mining interests in the state. Some money may be coming from the US government or business taxes.

[youbet]

Thanks perinova!

I was facinated to see Minneapolis below Chicago. Everyone always talks about Minnesota having high taxes......... Guess I need to recalibrate.

Also, the Chicago - Littlerock data confirmed my believes about what would happen to my tax picture if I moved to Arkansas from Illinois......higher income taxes, much lower property taxes.

Income taxes were calculated at the $75K level. Folks should bear in mind that if you will have a higher income than that in retirement, some states have graduated income tax rates which could result in you paying a lot more than shown here.

I also note that sometimes the differences aren't so great that you could justify living someplace just because of taxes. Live someplace I wouldn't like to save a kilobuck or two a year.......I don't think so!

[Brat]

Anchorage weather is much milder than anyplace in Wyoming, and it has a major airport. I wouldn't scratch it from my list of places to live if taxes are a concern.

Declining home prices in low-tax cities Phoenix and Las Vegas may open up opportunities for those liking hot, dry weather.

Yes, Wyoming taxes oil and minerials extracted - which is why they have a low tax rate. I love Jackson, but it is too cold in the winter and over-run by tourists in the summer. There are corners in that county tourists haven't found, but winter is inescapable.

[MasterBlaster]

I haven't spent a year in Anchorage but I play a man that did in my new TV role !

Anchorage from what I gather is great in the summer. lots of sunlight and time to do stuff. But in the winter the reverse is true - lots of darkness, little sunlight.

Those long dark winters aren't for everyone.

I hear that women get the pick of the litter in Alaska. As they say... The odds are real good but the goods are real odd !

[Brat]

My parents wintered in HNL, along with a lot of folks from BC and Alaska. Not a bad lifestyle.

Parents, if Alaksa is an option for you keep in mind that they get in-state tuition at many colleges and universities.

[AltaRed]

Originally Posted by MasterBlaster

Anchorage from what I gather is great in the summer. lots of sunlight and time to do stuff. But in the winter the reverse is true - lots of darkness, little sunlight.

Those long dark winters aren't for everyone.

I hear that women get the pick of the litter in Alaska. As they say... The odds are real good but the goods are real odd !

I spent about 1.5 years living and working in Anchorage and the biggest challenge is the long dark winters. Even the natives have to get out for 2-3 weeks at a time in January - March time frame to avoid going strange. Consolation is that Hawaii is almost as close as Seattle. The women do get the pick of the litter...but I agree most of the goods are not worth picking! Alcoholism seems to be a bigger problem there than elsewhere as well although I have no hard facts to back that up.

Taxes are low in AK although Anchorage has a city sales tax. Cost of living is pretty high as virtually everything must be 'imported'. But seafood (halibut and salmon) is to die for. It is also a small city of ~300,000 and despite being fairly temperate due to being on tidewater, Anchorage still has a ton of snow in the winter and it does get below zero some winter days. It also rarely gets to 70-75F in the summertime. Swimming outdoors is not a viable past time at any time of year.

Personally, I would never retire in AK and very few people do. You don't find a lto of senior citizens on the streets of Anchorage.

[Gumby]

How about Juneau? It seemed quite nice when we were there (although it was in July).

[Brat]

It has been about 12 years since I visited - business trip.

Juneau is cute, IMHO, but I hear housing can be quite expensive. I think it would be a great place if you like boating. Maybe find a cabin with a secure tie-up - call it home. Spend the summer around the inside passage on the boat, sail south to Baja before the seas get rough. While in Baja arrange for any boatyard service you think you'll need.

If I weren't a boater or didn't have family or business there I would get bored quickly.

[neo]

Originally Posted by perinova

Here is the data for main cities across the US compiled for $75000 income..
This includes all taxes including property. (2003, data compiled by DC)

Interesting numbers - by "DC" do you mean the fed gov? What agency/report, and do you have a link?

[perinova]

The data is collected by the Government of the District of Columbia
http://cfo.dc.gov/cfo/cwp/view,a,1324,q,612643.asp

[Brat]

At the "Lucia" forum I sat next to a guy who lives in Olympia WA, has lived all over the US, moving there from TX. I asked him how his living expenses compared. He said that living in Olympia. WA beat them all when you considered utilities, taxes et all. He paid more for his home, but he consumed little for heating or cooling. Local taxes reasonable. For what it is worth... and PLEASE, don't everyone move to WA.

[neo]

Originally Posted by Brat

At the "Lucia" forum I sat next to a guy who lives in Olympia WA, has lived all over the US, moving there from TX. I asked him how his living expenses compared. He said that living in Olympia. WA beat them all when you considered utilities, taxes et all. He paid more for his home, but he consumed little for heating or cooling. Local taxes reasonable. For what it is worth... and PLEASE, don't everyone move to WA.

Having just moved out of WA (east of Seattle area) after 15 years, I'd have to disagree slightly with a couple of points - I don't know how anyone could get by with "little" heating bills (cooling yes) unless they just like 40 deg. damp for 8 months. And r.e. taxes may seem "reasonable" compared to TX (as would most other places), but not reasonable by my definition. A King county judge recently overturned a prop. tax limitation ballot initiatiive that had been passed overwhelmingl several years ago (2001 I think). (It's very common for King county judges come up with a technicality so they can throw out ballot measures that have been passed by large margins, especially measures that would limit taxes in some way. And lets not even mention how the mostly Dem. judges of the state supreme court ruled to allow the votes in the last gubernatorial election to be repeatedly re-counted until the Dem. candidate could somehow come up with a tiny majority.)

[2B]

I went to junior/senior high school in Des Moines and college at UW. The living remnants of my family are spread out between there and Bellingham except for me, the lone Texan. Knowing their approximate incomes makes me believe the overall cost of living can't be too high. They all seem to be doing fine on their much less than my income but I know they aren't saving anything for retirement let alone ER.

DW and I have discussed retiring there. I think the Olympia area is beautiful. It's even more temperate than Seattle and it's frequently referred to as the "banana belt." I can't imagine anyone retiring in Seattle.

[Brat]

The NW has lots of micro-climates. I live on a small island where the south end is warmer and sunnier than the north. There are 'cuts' in the Coast Range. Those who live east of those cuts get hosed in the winter.

[unclemick]

hmmm

Born and raised - 26 yrs, toss in the relatives - Kalama, Kelso/longview, Everett, Seattle, Kent, Auburn, Whidbey(Oak Harbor) and possibly a few I've missed.

Kansas City for me - at least for yr 13/14 of ER.

Washington State is a great place - to be from and visit in summer.

May get back to the old sod when I get 'old' - my sister is talking it up now that they're back (from Kentucky).

heh heh heh heh heh