Considering a retirement move out of town/state

[BubbaChris]

I lived within an 30-mile circle from age 5 to 50. Our ‘retirement’ move out of state happened almost on a whim 10 years before retirement. We had been talking about researching/visiting 3 states, but had only vacationed in one of them in recent years. We also were in a position where neither of us was tied down to a well-paying job.

DW called me aside one day and proposed we move while we weren’t well anchored, live and work there some, and then decide if it was where we wanted to be in retirement. Our conversations started in October 2011, and we moved in March 2012. It was a huge leap of faith. The housing market was slow at the time, and that worked in our favor overall.

We ended up finding a spec home that was just 2-miles from DW’s target employer. Moving from a home we’d been in for 17-years allowed us to skip having a mortgage, and we even stashed some cash into our brokerage account at the same time.

It proved to be such a great lifestyle choice for us. DW got her target job, and my commutes ranged from 5-11 easy miles. About 2 years later we bought our first RV and discovered what a great jumping off spot we had picked. Plus in moving out of an HOA, we’ve been able to keep our RVs in our driveway.

The other really lucky aspect for us was discovering ACA coverage that was with the area’s dominant healthcare provider. That shift away from employer-provided coverage enabled us to RE in 2021.

Best regards,
Chris

 

[skyking1]

^ nice story Chris. Thanks for sharing it.

 

[Koolau]

Yes. I see lots of comments here about how the taxes are the same in every state - they just get it in different ways. Totally false.

Taxfoundation, amongst others, compares total state-local tax burden and there are huge differences. Effective state and local tax burdens vary from 7.0% in Wyoming to 14.1% in New York (ignoring Alaska as a special case). A 7% (2X) difference is a month of pre-tax living expenses every year. Pretty important for FIRE/4% rule folks.

https://taxfoundation.org/data/all/state/state-tax-burden-2019/

Now this doesn't account for various special tax treatments for pension, SS, etc. but rather represents the total tax burden on state residents - a pretty good proxy for the cost of state/local government. You need to model your specific tax situation for new and old states. But don't believe the folks that say it is all the same in the end.

Since I semi-retired in 2017 we've had a notion to move back to PA from MD to be closer to family, closer to the family summer house that we now own, and lower state and local taxes. MD to PA is particularly advantageous as MD gives almost no breaks for retirement income while PA basically taxes none of it. Both have estate taxes, but MD also has an inheritance tax. And ordinary income, like from my consulting gig, is taxed at around 8% marginal SALT in MD vs about 4% in PA.

Darker is better in the graphic here:

https://smartasset.com/retirement/retirement-taxes

The amount of work to downsize and move ourselves, local social relationships, and general inertia have put it off. I think we are in the OP's conundrum.

A state's specific rules on taxation can make a significant difference in what a resident actually pays. Here in Hawaii, a w*rking family is heavily taxed - easily exceeding 12 to 15% total. We as retirees (SS and Pension tax exempt) pay very little in state and local taxes. (Less than 5% "sales" tax and less than $2K in RE taxes and very little in state income taxes.) Car tags about $300. When we moved, we didn't know it was such a "tax haven" based on our mix of income, so YMMV.

 

[Koolau]

Oh, and back to OP's question for a moment:



We moved from the midwest at age 60. Neither of us had ever lived further than 10 miles from where we were born and moved 5000 miles to Hawaii. YMMV

 

[FindingForward]

A state's specific rules on taxation can make a significant difference in what a resident actually pays. Here in Hawaii, a w*rking family is heavily taxed - easily exceeding 12 to 15% total. We as retirees (SS and Pension tax exempt) pay very little in state and local taxes. (Less than 5% "sales" tax and less than $2K in RE taxes and very little in state income taxes.) Car tags about $300. When we moved, we didn't know it was such a "tax haven" based on our mix of income, so YMMV.

For retirees who didn't have access to pensions or 401k plans when working - which is many who worked for small businesses or were self employed before i401ks and other options - "Retiree-friendly" state taxes are anything but.

For retirees who live off a taxable nest egg, they often pay full freight, while fellow retirees on pensions and SS don't.

I think "retiree friendly" should be age based: not based upon WHERE your nest egg lives.

For that reason, I'll only live in a tax-free state or one that taxes all retirees a bit more equitably.

 

[Teacher Terry]

Nevada is one of the lowest taxed states in the country. I pay a year here the same amount that some of my friends in Wisconsin pay monthly for property taxes. 3 years ago when I got divorced I sold the house and bought a condo. We had to get rid of a ton of his stuff and only had a month to do it.

Because he was working for 2 of those weeks most of the work was done in 2 weeks. Because he had stuffed the basement, his office, garage and big shed full of junk it required 12 hours a day every single day. Luckily I had been disposing of junk he would bring home for years but he could collect it quickly. I was 66 at the time. When I packed my stuff I only needed 60 boxes not counting my clothes. Thankfully I had downsized my possessions years before.

 

[W2R]

We moved from the midwest at age 60. Neither of us had ever lived further than 10 miles from where we were born and moved 5000 miles to Hawaii. YMMV

I'm impressed! That was a courageous move. Glad it worked out so well for you.

 

[MC Rider]

Oh, and back to OP's question for a moment:



We moved from the midwest at age 60. Neither of us had ever lived further than 10 miles from where we were born and moved 5000 miles to Hawaii. YMMV

Sounds prize worthy. And having grown up in Chicago area, I'd say moving to Hawaii IS the prize. and I guess a huge culture shock.

 

[Koolau]

Sounds prize worthy. And having grown up in Chicago area, I'd say moving to Hawaii IS the prize. and I guess a huge culture shock.

Full disclosure: We DID spend 12 vacations there prior to moving so we were more or less prepared for the culture shock.

 

[Out of Steam]

I did whole house moves at 70 and 80 years of age. Once you throw out EVERYTHING you will never use again, it's refreshing!

My parents made two local moves in their 60s, and once done, my mother's opinion was that everyone should move every 10 years.

 

[Out of Steam]

I think "retiree friendly" should be age based: not based upon WHERE your nest egg lives.

For that reason, I'll only live in a tax-free state or one that taxes all retirees a bit more equitably.

Virginia taxes all retirement income except Social Security. It means that having moved from higher-tax Maryland, which would exclude a substantial part of my pension from state income tax, will save us very little once I turn 65.

 

[Koolau]

For retirees who didn't have access to pensions or 401k plans when working - which is many who worked for small businesses or were self employed before i401ks and other options - "Retiree-friendly" state taxes are anything but.

For retirees who live off a taxable nest egg, they often pay full freight, while fellow retirees on pensions and SS don't.

I think "retiree friendly" should be age based: not based upon WHERE your nest egg lives.

For that reason, I'll only live in a tax-free state or one that taxes all retirees a bit more equitably.

So sorry, but I've never heard anyone who believes taxes are "equitable" (whatever that is.)

Taxes are an important part of location planning but it's not the only one and for most people, it's not the most important one. We went into our move THINKING that our state taxes would be much higher. It turned out we were misinformed (like Richard Blane in Casablanca. He moved there for the "waters" but he was "misinformed.") Fortunately, our taxes were much less than we thought. YMMV

 

[Fermion]

on the "it is refreshing to throw everything out", while it is, we ended up buying a lot of that stuff again when our plans changed. I tossed a nice tool chest, air compressor, shelving, walnut kitchen table, on and on, and have had to repurchase most of those at our new house.

 

[Montecfo]

I agree taxes are not the only consideration but. Can be an important one.

Having said that it is difficult to get a clear picture of the tax situation in a state by looking at surveys etc
It requires some individual analysis.

Kiplinger has some pretty good stats by state info that includes real estate taxes, an important consideration.

 

[RetiredHappy]

We moved out of CA not because of income taxes but it is a nice bonus. On the back of the napkin, we currently save about $12K a year between CA income tax (MFJ) and property tax. I am not including other incidentals like gas, restaurant and food prices.

 

[Pellice]

New Jersey gets a bad rep as an expensive state, and I guess it deserves it, EXCEPT that there are good tax breaks for seniors who make under certain limits (this year, I think $125,000 and I think it rises to $150,000 next year). My property taxes have been frozen for several years, plus I got an additional rebate of $1800 last year. Income from IRAs and pensions is not taxed under certain limits as well. And there are some small credits from energy companies, etc. If one is in a sweet spot financially, NJ is a friendly place for retirees.

 

[FindingForward]

So sorry, but I've never heard anyone who believes taxes are "equitable" (whatever that is.)

Taxes are an important part of location planning but it's not the only one and for most people, it's not the most important one. We went into our move THINKING that our state taxes would be much higher. It turned out we were misinformed (like Richard Blane in Casablanca. He moved there for the "waters" but he was "misinformed.") Fortunately, our taxes were much less than we thought. YMMV

Good news on spending less than you thought. I do think some states are closer to equitable in terms of tax structure- aka everyone gets taxed lol. But that's ok: taxes aren't my sole criteria. But I will avoid moving to any state that taxes all my retirement income, but little to none of the income of fellow retirees. It would rub me the wrong way. Still leaves plenty of choices in the US, so all's good.

 

[Scuba]

When we retired, we lived in coastal So CA and never thought we would leave. But the area changed, we changed, and we moved to the Desert while keeping our beach condo as a rental. Thought the Desert would be our forever home. Transition was relatively easy and we were able to continue to see old friends regularly but also make many new friends.

Then just last year, we decided to move from CA to FL. Proximity to DH’s family was a big motivator, as well as leaving deteriorating conditions behind that were negatively impacting our quality of life. So far we’ve been happy with our move, but we haven’t established any deep connections yet. We’ve been so busy settling in and entertaining visitors that we haven’t invested much time yet in building new friendships. Hopefully we will find the time soon as I miss having more friends.

 

[street]

Oh, and back to OP's question for a moment:



We moved from the midwest at age 60. Neither of us had ever lived further than 10 miles from where we were born and moved 5000 miles to Hawaii. YMMV

My wife and I have both lived in the immediate area all of our lives also. We just won't ever move from Montana. The little bit of family we have combined are right here within an hour drive. The wintahs are rough and can make for a few long days but overall, we are at home and will breathe our last breaths here.
I know the grass would be greener on the other side of the fence including taxes, more services and the list goes on. I could never leave even though there might be a better state and more positives somewhere else.

 

[Ronstar]

Still living in Illinois, but hope to move out of state someday. I've done a lot of visits and research. Made a map of preferred/ not preferred states to move to. Red being most preferred. White least preferred.

 

[VanWinkle]

Still living in Illinois, but hope to move out of state someday. I've done a lot of visits and research. Made a map of preferred/ not preferred states to move to. Red being most preferred. White least preferred.

We moved from north central Illinois last summer to Eastern Tennessee and
couldn't be happier with the choice. We still have 4 seasons(just not as severe) and with the over 1000 ft elevation the summers are less oppressive. Taxes are a bonus as they are much better. I complained about Illinois for the last 5 years of my 68 years there, and doing something about it was a relief.

Good luck to you and I hope you find your happy place.

VW

 

[Ronstar]

We moved from north central Illinois last summer to Eastern Tennessee and
couldn't be happier with the choice. We still have 4 seasons(just not as severe) and with the over 1000 ft elevation the summers are less oppressive. Taxes are a bonus as they are much better. I complained about Illinois for the last 5 years of my 68 years there, and doing something about it was a relief.

Good luck to you and I hope you find your happy place.

VW

Thanks - I'm looking hard at Tennessee. Beautiful area, nice weather, little taxes, not crowded.

Glad you're enjoying it there!

 

[Surewhitey]

Thanks - I'm looking hard at Tennessee. Beautiful area, nice weather, little taxes, not crowded.

Glad you're enjoying it there!

Love East TN... Especially near the NC border. Aunt moved from Decatur to North AL and lives on top of the "mountain" and awesome views. I'd consider there for sure.

 

[FindingForward]

We moved from north central Illinois last summer to Eastern Tennessee and
couldn't be happier with the choice. We still have 4 seasons(just not as severe) and with the over 1000 ft elevation the summers are less oppressive. Taxes are a bonus as they are much better. I complained about Illinois for the last 5 years of my 68 years there, and doing something about it was a relief.

Good luck to you and I hope you find your happy place.

VW

How's the quality of medical care near tellico v? I've heard good and bad.

 

[VanWinkle]

How's the quality of medical care near tellico v? I've heard good and bad.

Tellico Village is about 30 minutes from Knoxville so the University of Tennessee Medical Center is easily accessed from here. The local healthcare is fine
for minor ailments, but Knoxville is the place to go for anything serious. Physical Therapy and doctors are available within 5 minutes.