Financial Factors to Consider when Relocating during Retirement

The lure of leaving a cold climate for some tropical paradise might seem irresistible for many, but it is important to weigh the financial pluses and minuses before you actually make the move. The state you choose to live in can affect the amount of income you earn. For instance, if you're in one of the forty-three states that currently tax personal income, moving to any of the seven states that have no personal income tax could save you money.

Consider this:

• States That Don't Tax Personal Income
• States That Exempt Taxes on Social Security
• Other Factors

States That Don't Tax Personal Income

In the following states, you do not have to pay personal income tax:

Source: Tax Foundation

Alaska Florida Nevada South Dakota Texas Washington Wyoming

States that Exempt Taxes on Social Security

In the following states, you do not have to pay taxes on Social Security payments:

Source: Tax Foundation

Alabama Arizona Arkansas California Delaware District of Columbia Georgia Hawaii Idaho Illinois Indiana Kentucky Louisiana Maine Maryland

Massachusetts Michigan Mississippi New Hampshire New Jersey New York North Carolina Ohio Oklahoma Oregon Pennsylvania South Carolina Tennessee Virginia

Other Factors to Consider Before Relocating

• Keep tax benefits in perspective. Many people often ignore other tax bills in looking at states with low-or no-income taxes. These states could have higher property or sales taxes.
• Do not assume the price of Medicare and other necessities (such as car insurance) will be the same as they were in your current home state. These costs vary greatly throughout the country.
• On a more personal level, you may want to factor in the cost of traveling back to your hometown to visit family and friends. With the price of gas consistently on the rise, the extra expense of driving or flying could eat into your retirement budget.