Updated June 29, 2021 Are you ready to start life after your career? Or maybe retirement is still a ways down the road, but you prioritize self-reliance and realize it’s never too early to start planning for the future. At some point, most people decide to stop working and enjoy the golden years, once their preferred lifestyle is assured. Exactly when that happens will differ from person to person, depending on their wealth and specific family circumstances. However, no matter what kind of career you’ve chosen, or when to retire, taxes will play a role in how much your nest egg is affected. In other words, the IRS is going to be dipping its hands in the cookie jar no matter what. However, there are some factors that will play a key role in how much the agency gets to take and how much you get to keep. Listed below are some of those considerations and a list of the top 10 tax-friendly States for retirement.
LOCATION, LOCATION, LOCATION
Many different components will affect your retirement income, including how much you saved, how you saved it and where you saved it. In fact, when it comes to location, not only does it matter where you keep your money, it also matters where you physically live. There are several factors which will help determine your tax bill depending on which state you call home, and it’s not just your income taxes. For example, how high are the property taxes where you live? What kind of property tax breaks, if any, are there for seniors? Does your state tax Social Security benefits and will there be an estate tax when you are gone? These are all important things to consider when you decide where to live after you retire.
YOU MIGHT WANT TO LIVE HERE
To that end, there are definitely states that are better for taxes in retirement than others. In fact, the best states each exempt Social Security benefits, and most of them also exempt at least a part of other retirement funds. The top 10 tax-friendly states for retirement, according to Kiplinger’s 2021 analysis[i] in order are:
7 -South Carolina
3 -District of Columbia
Some of these states have a lot more to offer than just lower taxes for retirees, and even though Delaware has the lowest tax rates, its hard to beat Hawaii for making the most of those golden years.
We hope you found this article about the Top 10 Tax-Friendly States for Retirement helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us, GROCO, or visit our home page at www.GROCO.com. For GROCO Family Office Services or GROCO Family Office Wealth visit our Family office page. For GROCO tax, GROCO Advisory Services, GROCO Consulting Services, or GROCO Consulting/Advisory Services, please contact us here. For GROCO Technology and for GROCO Relationship Services contact us here.
And for our free newsletter, contact us here. Unfortunately, we no longer give advice to other tax professionals gratis.