Retirees flock to Florida and Arizona for year-round sunshine and golf, but all things considered, they're not the best states for happy golden years, according to a new survey. Along with average number of sunny days, factor in cost of living, residents' sense of well-being, quality of health-care, crime and, yes, humidity, and the best destination is (surprise!) South Dakota, according to a 2014 Bankrate report.
As the Bankrate report suggests, pre-retirees need to consider a lot more than snow days and tradition, according to a recent Investor Ideas article titled "3 Tips for Retiring Out of State."
States have different tax laws and other regulations that can significantly affect your retirement funds. Be aware of these as you plan for where you want to live and how you want to live.
If you're planning to settle in one of the other top four "best states to retire"—Colorado, Utah, North Dakota and Wyoming (in that order)—or elsewhere, here are some tips to consider from the original article:
- Take a look at the tax laws in the state where you want to retire. Two of the top five spots on Bankrate's Best List—South Dakota and Wyoming—don’t have a state income tax and neither do several others: Nevada, Texas, Washington, Florida, and Alaska.
- An itemized deduction in one state may not be an itemized deduction in another. If you use the long form (1040) to file federal income taxes, hire a good CPA for guidance.
- Analyze how your new state taxes retirement income. States differ on taxing interest income from tax-free municipal bonds, and some states give tax credits, treat public and private pensions differently, or offer federal, military or blanket exclusions.
- These states are community property states: Idaho, New Mexico, Texas, California, Arizona, Wisconsin, Nevada, Louisiana, and Washington. These states divide all martially-acquired assets and debt 50/50 in the event of divorce. (Except for inheritance or gifts received by one spouse and maintained separately in his or her name.) Talk to an estate planning attorney about how this may impact you, if you are moving from a “separate property” state.
In fact, all of your existing estate planning documents should be reviewed by an experienced estate planning attorney in your new state because of the potential for new and different laws and requirements.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: Investor Ideas (November 21, 2014) "3 Tips for Retiring Out of State"