Which States to NOT retire in

[Moemg]

Here's our house, 22 miles outside of Houston in a river-front subdivision.

2600 sq ft, with a pool. Total property tax bill for 2009, (county, school, etc.) $2800. I don't consider that "outrageous."

(Best part...NO mortgage. Yeah, baby. )

Gorgeous house Sarah and I think $2800 in property tax is a bargain .

 

[W2R]

In 2009, I paid $3100 in property taxes for a 1200 sf (3 bedroom, 2 bath) 50-year old house in a solid but working class neighborhood of the San Francisco Bay Area. No pool. I've owned the house for almost 12 years so I have some benefit from Proposition 13. I'd pay about $5000 in property taxes if I bought the same house today.

Last year, I was seriously considering a job offer in Denver, where I grew up. I spent a lot of time looking into home prices in a nice suburban neighborhood. I could buy a house double the size of what I have now at 2/3 the cost and 2/3 the property taxes. Less income tax. Less sales tax. Since the taxes are so much lower, that must mean they don't have police, fire, and other essential services there.

You might like Denver! It all depends on your priorities and what makes a difference to you. As Rich points out, tax structure isn't the ONLY criterion in selecting a location in which to live or retire, but I believe that among others, this is one to consider.

 

[Rustic23]

When we were stationed in Germany, we got a briefing upon arriving at the base. The Sgt. told us that we would either have one of the best tour of duty ever or we would hate the place. It all depended on weather you played the game 'Ain't it Awful!'. He said if you walk around and think 'Ain't it awful they don't speak english! Ain't it awful a call home cost so much! Ain't it awful it snows so much! Ain't it awful it's so hot!' You get the pitch.

The bottom line if you look for the awful in a place you will find it, then if you dwell on it, you will soon be miserable. We always figured someone likes living here so lets find out what they like and see what it is like. When we got assigned to Mountain Home Idaho, we thought we were in for a long assignment. It is out in the middle of know where. It was one of our better times. We camped, fished, and learned to snow ski.

 

[freebird5825]

...It all depended on weather you played the game 'Ain't it Awful!'. He said if you walk around and think 'Ain't it awful they don't speak english! Ain't it awful a call home cost so much! Ain't it awful it snows so much! Ain't it awful it's so hot!' You get the pitch.

I've been playing that game in East Nowhere NY from November to March for almost 30 years.
However, you will not hear a single peep about "awful" out of me once the snow melts and I can garden, go to the lake and read and tan and boat and swim, yadda yadda. All solo activites right now, but I make do.
The good news is I have a guy friend who is retiring in late April.
We are already planning team fix-'er-upper projects at each others' houses, joint meals when our SOs come home from w*rk, and local outings for the Dynamic Duo's pure goof-off days.

 

[Shawn]

I don't know about the services in the Denver area, but living outside the city limits in Harris County TX means that we don't have city fire/police. We do have two county fire stations within 5 miles of our house, and a Sheriff's Dept. substation about 2 miles away. Our water, sewer, garbage, etc. are city services; no water wells or septic. I'm a bike-ride away from the county library branch.

I was being a little sarcastic with my comment, "Since the taxes are so much lower, that must mean they don't have police, fire, and other essential services there." I pay significant state and local taxes in California (9.55% marginal state income tax, 9.75% sales tax, 1% state SDI, $3K property taxes for a small home, etc). However, as far as I can tell, I don't receive anything more in the way of public services than what I'd receive if I lived in Colorado or Texas. On top of that, California is next to broke. There doesn't seem to be a strong correlation between tax rates and the services provided by the state and local governments. There are plenty of wonderful places to live with low tax rates.

 

[audreyh1]

It has been several years since we paid property taxes, but isn't it true that the state of Texas has neither income nor property taxes?

If memory serves, our property taxes were city, county, school, hospital district, and community college district. We sold our home and hit the road (or rather water) in 2004, and our property tax bill that year was more than $14K in Austin, for a 50 year old tract house not nearly as nice as SaraW's. When we bought the place in 1991 the taxes were about $2500.

A warning for those thinking of moving to Texas: check local taxes carefully.

Wow - I lived in a 1800 sq ft, 20 year old house on the outskirts of Austin which we sold in 2005. Had most of the city services. Our property taxes were 1/3 of yours! Our taxes were levied by the Round Rock School District and Williamson County.

Audrey

 

[Shawn]

...

Doing some hiking in the Alps, maybe $5000 with a guide and lodge.
Hiking in the North Cascades maybe $175 with freeze dried food, etc.

Hiking in High Sierra, maybe $650 with travel, etc.

...

Excellent post. There are many enjoyable activities that don't require much in the way of financial resources (your $1 for a McDouble while girl watching in Seattle is classic). The Alps and Rome may be nice places to visit, but there are plenty of great things to do and see within a short distance from each of our homes. And people living in Switzerland or Italy probably dream the $5000 trip to Washington or California.

Most of my activities are outdoor pursuits that have effectively no cost. It doesn't require much for me to hike or bicycle up in the local hills and mountains. I see everything from bob cats to tarantula's to eagles to road runners to incredible views. All for free. Still haven't seen a mountain lion (my friends have). Perhaps I will after I retire and spend more time in the outdoors.

 

[Shawn]

You might like Denver! It all depends on your priorities and what makes a difference to you. As Rich points out, tax structure isn't the ONLY criterion in selecting a location in which to live or retire, but I believe that among others, this is one to consider.

This is certainly true. Taxes are important but so are a host of other criteria. Each person is different and each needs to find what is best for him/her/them. But for many, it is possible to have the best of both worlds. There are many nice places to live that have relatively low tax rates.

 

[haha]

Still haven't seen a mountain lion (my friends have). Perhaps I will after I retire and spend more time in the outdoors.

They are very hard to see. Especially earlier in my life I spent hours every week in very wild country, and I have only seen 3. One from my car, two while hunting. OTOH, bears are a dime a dozen. I even spotted a Grizzley, when they were still very rare in WA.

Ha

 

[audreyh1]

Most of my activities are outdoor pursuits that have effectively no cost. It doesn't require much for me to hike or bicycle up in the local hills and mountains. I see everything from bob cats to tarantula's to eagles to road runners to incredible views. All for free. Still haven't seen a mountain lion (my friends have). Perhaps I will after I retire and spend more time in the outdoors.

Just goes to show you that if you really like those kinds of activities, it "pays" to live nearby. Otherwise you are looking at major travel bills to enjoy those kinds of activities often.

Audrey

 

[Orchidflower]

It is 8%, but that is 8% simple! Not Compound, so it is not as bad as you would think. It still amounts to who is going to spend your money, you or your kids.

8% is pretty high to me. I thought it was better than that.
Seems to me if you don't pay the property tax and opt to take the 8% simple tax deal--and are making only 4-6% on an investment you put your money into like stocks (instead of paying the property tax bill)--you are still the loser in this deal. I'm disappointed in Texas.

And I haven't heard of any State but Texas doing this property tax deferral either.

 

[audreyh1]

I think this bill was to help out seniors who own their home but don't have the money to pay their property taxes (which otherwise would force them to sell their home or lose it). So the bill doesn't come due until their estate is settled.

Audrey

 

[MasterBlaster]

I think this bill was to help out seniors who own their home but don't have the money to pay their property taxes (which otherwise would force them to sell their home or lose it). So the bill doesn't come due until their estate is settled.

Audrey

Death and Taxes....

One way or another the locals get their property taxes with interest.

 

[Rustic23]

Orchid,
It is the lack of compounding that makes the difference, and the fact that the legislation was enacted when 8% sounded like a real good deal. I ran a spread sheet and if you do this for 15 to 20 years you come out with about 4 to 5% total. I won't guarantee the accuracy of my spread sheet, and if you do it for one year, it is obvious you will pay 8% At 5% interest you will pay about $1,526 compounded and 8% simple $1,600. Someone will have to check that but I think it is right. If you live into your 90's it just gets better.

 

[JPatrick]

In our area of Texas, $7,000 of property tax buys you 3,000 sq ft, new home, on 1.2 acres of lake front property! At age 65 if the house is paid off you can defer your taxes until you and your spouse die. Admittedly your estate would have to pay the tax or loose the home, so you have to make up your mind how much estate do you want to pass to your kids, or weather you want to spend it.

.

Thinking back to my many years in the land of snakes and spiders, I recall that about yearly the local TV guys would do a story featuring a group of heirs, usually children, who had just gotten the word that Dad had gone for the "plan" years before his death, and that there would be no real estate inherited that day.
A bit shocking, and a little sad, but I managed to reach down and find at least a small smile.

 

[Rich_by_the_Bay]

So I too disagree. You can live where you want only if that fits your budget.

My observation is that between state income taxes (or lack thereof), sales tax, property tax, and all the rest, the differences among locations may not be as great as it seems.

Example: in Az we paid $5000 in property tax and maybe 6% in state income tax. Here in Tampa, the property taxes are double (aargh) but... no state income tax. If I had young kids home, they'd be going to private schools (aargh) but back in Wi (high everything tax), they proudly went to public schools right through graduate school, at very low in-state tuition.

So you can find exceptions to any rule, but for us the apparent differences from locale to locale (assuming comparable settings) were more apparent than real. If your life planning hinged on $1000 a year or so, maybe it would be a deciding factor.

 

[Rustic23]

It use to be you had 3 months to settle the account, I think it is 6 now, not sure. If you don't pay the taxes, then they become due with penalty. No loan shark ever charged a penalty like the state of Texas! I think it is close to 35%! You might as well give them the house!

 

[Rustic23]

If you defer property tax in Texas, you still have a 6.5% sales tax (excluding food, medical, and services), more in a city, with the exception of car registration, that is just about it. A 3 bedroom, 1,800 sq ft home in a country setting can be had for less than $100,000. Utilities, could be a killer, heat/air runs about $200 or more depending on size of home, location, and insulation.

 

[kyounge1956]

8% is pretty high to me. I thought it was better than that.
Seems to me if you don't pay the property tax and opt to take the 8% simple tax deal--and are making only 4-6% on an investment you put your money into like stocks (instead of paying the property tax bill)--you are still the loser in this deal. I'm disappointed in Texas.

And I haven't heard of any State but Texas doing this property tax deferral either.

It isn't only Texas. Low income/disabled seniors in King County WA (my current place of residence) can get a property tax exemption or deferral. Low income or disabled seniors in Gray's Harbor County (where I plan to retire) can get an exemption from special levies and possibly also from a portion of the regular property tax, depending on how low their income is. I wonder why GH Co has an exemption rather than a deferral. I would think it'd be better to get the money later than not at all, especially since they are economically depressed.

 

[Orchidflower]

If you defer property tax in Texas, you still have a 6.5% sales tax (excluding food, medical, and services), more in a city, with the exception of car registration, that is just about it. A 3 bedroom, 1,800 sq ft home in a country setting can be had for less than $100,000. Utilities, could be a killer, heat/air runs about $200 or more depending on size of home, location, and insulation.

I paid $200 a month for utilities in Bellaire/Houston, but that was not for every month at all. Only mid-June thru mid-September was it necessary to have a/c all the time.
Winter months like Jan-mid-Feb. or so could be costly, but the rest of the months from mid-Sept. to Jan. and mid-Feb. to mid-June were low cost utility months. At least that was my experience there. You do get a breather some months.
But God bless the inventor of ceiling fans when you live in Texas! I had 6 of them going almost all year around either pushing air down or pulling air up.

 

[SarahW]

I was being a little sarcastic with my comment, ...

Went by me like a bullet.

 

[SarahW]

Here's everything you ever wanted to know about Texas property taxes. Zzzzzzzz. Apparently there are additional tax exemptions beyond the homestead exemption to look forward to at age 65.

Texas Property Taxes: Taxpayers' Rights, Remedies & Responsibilities

 

[Kroeran]

I grew up in an extended family of City of Chicago employees. We were loyal (understatement!) Chicago Dems and absolutely devoted to oiling the machine. Even had a picture of Mayor Daley I (God rest his soul) on the living room wall!

But things seem to be changing here in Illinois....... Careless politicians unable to rake in payola and keep the machine on track while still delivering services and keeping a reasonably balanced budget. Some even winding up in jail!

No doubt our flat 3% state income tax is toast. Under funded past promises to gov't employees need to be met and current employees need generous raises and benefit improvements while being asked to do less.......

It's bad. I hope this Illinois thing, this deterioration in the ability to manage gov't and increased shenanigans, doesn't spread to the rest of the country. Then there won't be anyplace for retirees to hide.

I think Grand Bahama and other places south will start filling up

 

[Katsmeow]

Then again, if you want to be close to a lot of opportunities to spend money shopping, restaurants and culture, you'd have to be closer to the city, and for any reasonable nice urban or suburban area, the housing prices combined with more property taxes make it harder for the math to work.

There are sometimes opportunities. We were recently looking for our retirement home living in a house with high property taxes in Ft. Bend County (west of Houston).

We found an ideal house for us. It is costing a little under $200k (1900 SF), is unrestricted (important for us given our pets), and taxes are about $3200 a year. It has no MUD taxes (it is on well and septic).

However, it is les than 5 minutes away from a mall and a good hospital and a lot of shopping and restaurants and it is an island surrounded by a sea of very nice houses. And, it is in an excellent school district.

 

[metabasalt]

But things seem to be changing here in Illinois....... Careless politicians unable to rake in payola and keep the machine on track while still delivering services and keeping a reasonably balanced budget. Some even winding up in jail!

I grew up 60 miles south of Chicago and used to get my Cherry-Colas at the small neighborhood drug store owned by one of those imprisoned politicians. His brother, and co-owner and eventually Lt. Gov. I think, lived across the street. To me it was the epitome of small-town America, at least in my memory. Now I read that one of the friendly guys that ran the drug store is in jail. Hard to believe.

My wife and I are both from Illinois and will retire very soon. Neither of us are in a great hurry to move back to IL, though I'm sure that it would be much cheaper than here. But what always makes me write it off as a possibility: the flatness! I still shudder when I visit and see all that flatness. For some reason I just can't handle it! Though I do love seeing the full sky, something I rarely do in Philadelphia.