Best States to Retire
Retirement is all about living life on your own terms. And one of the decisions that will make a lasting impact on both your quality of life and your bank account is the state you choose to retire in.
There are three main areas to pay attention to when trying to decide which state to retire in: your perceived quality of life, the cost of living, and the health care available to you.
Many different elements come into play in the quality of life criteria. Are you looking for a location with the best entertainment, restaurants, or museums? Or the best view of nature when you look out your window? The expected crime rate in an area is another factor to consider. And, of course, the weather you can expect to encounter daily may be a heavily weighted element.
When considering the best state to retire in, your personal preferences will trump any list or writer’s recommendation. But one thing that no one can argue with when it comes to retirement is placing a high value on how far your dollar will go in a particular state.
Taxes, of course, play a significant role in determining the best states to retire in. While people often look at income tax, property tax, and state sales tax, taxes on social security benefits are often overlooked. For many, social security benefits will become a large percentage of your income in retirement.
Before we get into the best states to retire, here are states with no income tax that do not appear on this list:
- South Dakota
As the most tax-friendly state in the country, Alaska just missed the cut from making this list due to its higher than average cost of living, and its proximity to the rest of the country.
While it may take you a second to find Wyoming on a map, it should be among the first states you consider retiring in. That’s because it is the second-most tax-friendly state in the country, with zero income tax, no tax on social security, and the ninth-lowest property tax at 0.52%.
Wyoming is also home to the stunning Grand Teton National Park, Yellowstone National Park (shown above), and Jackson Hole. If you enjoy the outdoors and prefer mountains to the ocean, Wyoming should be a state to consider.
Delaware probably doesn’t make the initial cut when you first start writing down a list of potential states to retire in. But if you have spent most of your life in the northeast, Delaware may be the perfect location to set up camp for retirement.
If you’re a history buff, you may appreciate Delaware more than most. As the first of the 13 colonies to ratify the constitution, Delaware is known as “The First State.” There is a wide variety of museums worth visiting throughout the small state of Delaware. If you have called Washington D.C., Baltimore, Philadelphia, or New York City home for most of your life, Delaware is a quick escape that keeps friends and family close.
Delaware has average property and income tax rates, but does not tax social security benefits and has no state sales tax.
Like Delaware, New Hampshire might not jump straight to the top of your mind when contemplating states to retire in. But when you consider that it has no income tax, no sales tax, and no tax on social security, you may start to rethink New Hampshire as a strong possibility. The only thing holding back New Hampshire from being the most tax-friendly state in the U.S. is the third-highest property tax rate in the country at 1.94%.
In addition to being incredibly tax-friendly, there are many sites to see, state parks to visit, and mountains to climb if that’s your thing. Those who enjoy outdoor sports such as skiing and snowboarding may find that New Hampshire is the perfect choice for retirement.
One of the few states that can boast having beaches and mountains in close vicinity, Oregon is an excellent option to consider for retirement. While Oregon has a 9% income tax, the highest in the United States, it has zero state sales tax, a low 0.95% property tax, and does not tax your social security benefits.
A popular state to retire in, Arizona has many positive factors going for it. One of the most significant factors for those who have lived in a northern state for most of their life is the year-round warm temperatures. Arizona is home to thousands of golf courses, hiking trails, and a long list of national parks. It also features stunning red rock mountain ranges in the Sedona area.
As far as taxes go, Arizona has a low income tax rate of 2.88% and an even lower property tax of 0.66%. There is also no tax on social security. Arizona does have an 8.25% sales tax, but those living in Tucson, Arizona have been found to retire on their social security check alone.
Hawaii may not seem like a practical option, either due to the travel or the high cost of living in the state. But if the journey to and from Hawaii doesn’t concern you and you have a nice nest egg built up, Hawaii should be under consideration for retirement. In addition to the gorgeous beauty you will never get sick of waking up to, Hawaii is one of the top states in the nation when it comes to health care.
Hawaii has an income tax rate of 7.2%, but it has the lowest property tax rate in the U.S. at 0.29%. Like every other state on this list, Hawaii does not tax your social security benefits.
Similar to Oregon, Washington can also brag about both oceans and gorgeous mountain ranges among its many benefits for retirees. There is also no state income tax and no tax on social security. Those seeking an active lifestyle can retire with endless activities to do each day and not have to worry about their bank account as much as retirees in many other states in the U.S.
Florida consistently appears near the top of most detailed studies that attempt to answer the question, “what is the best state to retire?” It’s one of the most tax-friendly states in the country, as it does not tax social security or income. The property tax is also just 0.9%, and the sales tax isn’t outrageous at 6.8%.
Florida, of course, features a warm climate and has more beaches and cities along the coastline than any other state in the country.