After having worked for most of their lives, retirees want to kick back and rest, enjoying their retirement funds as much as possible. However, those funds can go much farther in some states than in others. From a financial perspective, here are some of the best states to retire to.
Texas is a great retirement location, first, because of the low cost of living. CNBC ranks Texas as the #5 state in terms of living costs. Residents pay low prices for fuel, food, housing and other basic goods. Texas also has a strong economy that is as diverse as it is large. On top of this, Texas has no income tax, opting to base its tax revenue primarily on sales taxes. This type of non-bracketed taxation is particularly beneficial for retirees who would be subject to an income tax in other states. Retirees who intend to buy a house should bear in mind that Texas is home to some of the nation’s cheapest urban and suburban housing markets – particularly in the Dallas-Ft. Worth area. For those retirees who have health concerns, Texas is home to the largest and most diverse medical center in the world. However, for those retirees who intend to run a business, when it comes to business costs, Texas comes in at #33 on CNBC’s review.
In CNBC’s rankings, Kentucky is #1 in terms of living costs. This makes the Bluegrass State a prime target for retirees looking for a place to settle down and settle in. In addition to low living costs, Kentucky also enjoys a low cost of doing business – ranking #4 in that area. This can be a major issue for retirees who intend to run their own businesses while in retirement.
Some retirement planners are hesitant about Oklahoma because of its less-than-ideal crime rates. However, in terms of cost of living and tax burdens, it is one of the best states for retirees. CNBC rates Oklahoma as #3 in cost of living, #6 in cost of doing business and #4 in general economic strength.
The state of Arkansas scores low against other states when it comes to things like transportation infrastructure and technological achievements. However, for retirees, such things are generally less of an issue than taxes and living costs. According to CNBC, Arkansas has the lowest cost of doing business in the nation, and it ranks #4 when it comes to the cost of living.
For retirees, the main draw of Tennessee is that it has one of the lowest costs of living in the nation. Coming in just behind its northern neighbor Kentucky, Tennessee ranks #2 for cost of living. It also has a transportation infrastructure that is far above average. However, while the violent crime rates in Kentucky are lower than average, Tennessee has some of the highest violent crime rates in the nation.
Colorado is not a particularly cheap place to live – coming in at #33 on CNBC’s list for cost of living. Its taxes – including both income tax and sales tax – are not particularly low either. However, one thing that makes Colorado advantageous for retirees is the fact that the state allows for an exemption of federal pension (Social Security) income for retired individuals. If you are between 55 and 64 years of age and receive less than $20,000 per year or if you are 65 years of age or older and receive less than $24,000 per year, the state does not tax any of your pension income. Due to Colorado’s income tax rate of 4.63 percent, this exclusion alone can make a difference of over $1,000 per year.
Virginia is a mid-level state when it comes to cost of living and tax levels. However, with its healthy economy and low crime rates, Virginia is one of the best places to live in the United States.
U.S. Virgin Islands
Even though the U.S. Virgin Islands do not technically constitute a state, they are part of the United States and their beautiful climate may be enough to draw retirees, regardless of financial concerns. While most financial planners regard the British Virgin Islands as a tax haven, the U.S. Virgin Islands do not constitute a tax haven. However, living in the U.S. Virgin Islands may still come at a lower cost than living on the mainland. First, as is the case for a few states, there is no sales tax in the U.S. Virgin Islands. Second, there is no additional income tax in the U.S. Virgin Islands – residents just pay the normal federal income tax. The drawback of relocating to the U.S. Virgin Islands, though, lies in the fact that the cost of living there is not particularly low.
While financial issues are very important when it comes to judging your choices related to retirement, they are not the only important things. For instance, while it may be more financially advantageous to live in Kentucky than in the U.S. Virgin Islands, a retiree may be better off heading to the Caribbean if the warmer climate is worth more to him or her than the monetary difference. Weigh your options carefully and look at the question from multiple perspectives before deciding on a final course of action.