Best States to Retire for Taxes, Climate and Activities
When you retire, you’re no longer tied to a location by your employer. You’re free to move wherever you want, depending on your financial situation and interests. Let’s look at some of the best states to retire for taxes, climate activities, amenities, and family – so you can decide which features appeal to you as you either prepare for the “big R” or look to enjoy the next phase of it.
9 Best States to Retire
While we share our favorite states for retirees, we understand that everyone’s situation is different. Peek at the states below and envision yourself retiring there. At the very least, you’ll find features to consider as you kick off your own search for the perfect retirement spot.
1. Alabama
There’s no denying that Alabama is a southern state, and that’s exactly what charms so many retirees. For those seeking life with a slower pace, Alabama is a perfect choice. Of course, it’s also home to the city of Birmingham for those who prefer a more cosmopolitan locale. The state comes in 19th in terms of percentage of senior population.
Alabama is generally considered one of the best states to retire for taxes. Alabama does not tax Social Security benefits, and there are also property tax breaks available to older adults. However, Alabama does have an incomes tax, and the state tax rate, including groceries, is around 9.15%.
2. Delaware
Delaware offers a comfortable environment for retirees, boasting a moderate climate that experiences all four seasons without any extremes. If you love beaches, check out Rehoboth, Bethany, Dewey, and Lewes. Delaware comes in 7th in terms of senior population.
Delaware is another one of the most tax friendly states for retirees, since it also does not tax Social Security benefits and offers property tax breaks to seniors. Delaware is also one of only five states that do not have a sales tax, along with Alaska, Montana, New Hampshire, and Oregon. Additionally, there is no tax on inheritances and estates.
3. Florida
As one of the most popular retirement destinations, Florida can’t be beaten when it comes to beaches. You’ve got plenty of choices, from the East Coast to South Florida to the white-sand Gulf Coast. Its warm weather is what draws many older adults to the area. Like to golf? Take your pick in Florida, with the most golf courses of any state (more than 1,000). And there’s a good chance your family will want to visit, a lot.
Florida is also considered one of the best states to retire for taxes, because there’s no state income tax, which means Social Security benefits, pension income and other forms of retirement income are not taxed at the state level. There is also no inheritance tax or estate tax in Florida. The absence of these taxes contributes to Florida’s appeal as a popular retirement destination. Without a doubt, the Sunshine State is one of the best states for retirement.
4. Georgia
Georgia is a compelling choice for retirees seeking a diverse and enriching lifestyle. Blessed with a mild climate, the state offers a pleasant mix of seasons without extreme weather. There’s a vibrant city life in Atlanta, where 37% of residents are not originally from Georgia, and charming historic towns, providing a range of activities and cultural experiences.
Georgia is yet another great state to retire for taxes, because it also does not tax Social Security income, and there are various exemptions and deductions available for retirement income. Georgia’s income tax rates are relatively moderate with a tax rate of 6.8%, and municipalities determine whether groceries are taxed. The state also does not impose an estate tax or inheritance tax.
5. Maryland
Maryland is a sports lover’s paradise, with popular teams in all four major sports. The state’s famous beaches include Ocean City and Assateague Island National Seashore. The Baltimore Aquarium, Camden Yards, the Chesapeake Bay, and Annapolis make the state a popular tourist destination for those looking to step back in history or learn more about the world around them. Maryland also has an award-winning public transportation system that allows retirees to easily enjoy the many amenities and attractions./
Maryland may not be as tax friendly as the previously mentioned states, because certain forms of retirement income such as pensions and 401(k) withdrawals are subject to state income tax. However, Social Security benefits are not taxed at the state level, and the income tax rates are progressive, with a maximum rate of 5.75%. There is an estate tax, although the exemption amount is relatively high.
6. New Jersey
New Jersey is another popular destination for retirees. Those who enjoy gambling will appreciate Atlantic City and the renaissance it’s currently experiencing. And its beaches, made famous by the Monopoly board game, are still extremely popular recreation destinations. You also gain easy access to Philadelphia and New York City. The state ranks 28th in percentage of seniors.
New Jersey does not tax Social Security benefits and does not require an estate tax. However, other forms of retirement income, such as pensions and distributions from retirement accounts, are subject to state income tax. The state also has relatively high-income tax rates, which should be considered based on your individual circumstance.
7. North Carolina
Many retirees flock to North Carolina for ideal weather, gorgeous scenery and friendly residents. The Blue Ridge Mountains are a big draw. The Raleigh-Durham area, known as “the Triangle” because of Research Triangle Park, ranks among the best places to live and retire in the country. North Carolina comes in just ahead of New Jersey, at 27, in numbers of senior citizens.
While North Carolina, like all the states listed, does not tax Social Security benefits, the state does tax other forms of retirement income - albeit at lower rates than some other states. There are also deductions available to other types of retirement income. North Carolina also has relatively low-income tax rates, with a maximum rate of 5.25%, and offers deductions for military, federal, state and local government pensions.
8. Pennsylvania
Pennsylvania is rich in history. Its largest cities are located at either end of the state: Pittsburg to the west and Philadelphia to the east. Those who live in Philly say it offers all the big-city advantages of New York, without its overcrowded and overpriced drawbacks. The Pocono Mountains offer year-round fun, with skiing in the winter and hiking in the summer. Pennsylvania comes in fifth for percentage of seniors living in the state.
As another one of the best states to retire for taxes, Pennsylvania does not tax Social Security benefits and provides a relatively high income tax deduction for other types of retirement income like pensions and distributions from retirement accounts. Additionally, PA does not tax estates or inheritances, which can be advantageous for retirees and their heirs. Property taxes can vary by locality. Pennsylvania does have a flat income tax rate of 3.07% for all income levels.
9. South Carolina
South Carolina offers a pleasant climate, diverse activities, and abundant amenities. Hilton Head is a haven for golf enthusiasts, while Myrtle Beach is a popular resort town with a boardwalk, variety shows and more. Charleston is another favorite, thanks to its vibrant cultural offerings. The state ranks 14th in terms of senior population.
SC does not tax Social Security benefits and offers generous retirement income deductions for individuals 65 and older. The state also has low income tax rates, with a maximum of 7%, which is attractive to retirees with other sources of income. Property taxes in South Carolina are reasonable, and the Homestead Exemption for qualifying homeowners reduces the taxable value of primary residences, making it another one of the most tax friendly states for retirees.
Best States to Retire Criteria
Deciding where to retire requires more thought than simply throwing a dart at a map and seeing where it lands. The following are several criteria to consider for each state, so you can avoid ending up in a state of confusion.
Taxes
When it comes to your retirement savings and income, you want to stretch your dollar as much as possible. To do this, older adults will often move to the most tax friendly states for retirees. Taxes usually play a big role in deciding where to retire. For example, for those with no children in public schools, high state taxes can be a deal breaker.
Climate
Climate is a crucial factor in choosing a retirement state. Warmer regions like the South are popular choices. Dry areas in the Southwest can be appealing, especially for those with joint conditions or allergies. Think about whether dealing with snow is something you want to leave behind, or if you’re the type who enjoys all four seasons.
Activities and Amenities
Think about your favorite hobbies. Are you into museums or envision yourself as regular at the local theater? Do you want to travel? When considering what state to retire to, consider the medical, cultural and geographic elements. Keep in mind the power of numbers: states with a larger senior population will likely have more services and benefits to that demographic.
Family
Consider where your family lives and how close you’d like to be to them. This may be the most important factor of all. While we can help you find the most comfortable and engaging location that fits your budget, ultimately, your decision may come down to this single consideration.
Determining the best state to retire is a uniquely personal decision. What makes a location perfect for one person may make it undesirable for another. That’s why you need to weigh all the factors and decide what works best for you. If you’re looking for a retirement community in these states that fits your lifestyle, explore all the Acts Retirement-Life Communities. With 28 campuses across these states, you’re sure to find one that checks all your boxes. And residents of our communities can visit and stay at all our campuses through our Travel Program, turning your retirement into a top-tier vacation experience.
