Planning for retirement is becoming more and more tricky as folks are finding themselves strapped for cash or struggling to find sound investments in the struggling economy. However, while planning for retirement, most people focus on saving money by crunching money in to a retirement calculator – very few think about the state in which they will live.
Certain states can actually make retiring even harder. These states have notoriously high income taxes – some even allow cities within the state to add on additional taxes – which can quickly dwindle resources. If you have found yourself considering retirement in one of the following states, you may want to rethink your options.
Coming in as possibly the most unfriendly state in regards to taxes for retirees is Vermont. The state may have great cheese, maple syrup, and stellar ski slops, but it also has high income tax and estate taxes. Not to mention, that out-of-state pensions are fully taxable, and that the cost of living is one of the highest in the nation as well.
Most retirees want to avoid long, cold winters, but for those planning on retiring on one of the many lakes Minnesota has to offer, be prepared for high taxes alongside high snowfall. The state income tax is high – and can be almost 2.65% higher depending on the county in which you live. In addition, pensions are highly taxable, and social security is taxed on your federal return.
Nebraska may seem like a bland state, but that doesn’t mean that people aren’t retiring there. Folks who plan on retiring in Nebraska to hand down the family farm, may want to reconsider. The state income tax can reach as high as 6.84 percent, social security has no tax breaks, and there is a high inheritance tax.
Oregon boasts the second highest state income tax, next to Hawaii, at 11 percent, and the only tax break offered is that of social securities. Otherwise, everything is taxable, and the inheritance tax is so severe that even intangible personal property, such as investments, can’t hide.
Most areas of California might have the ideal weather that retirees seek, but the state unfortunately has some of the worst taxes. Coming in at a close third, California’s state income tax is a whopping 9.55 percent, and all forms of social security income, with the exception of social security, are taxable.
If you believe that you have run out of options for good places to retire, never fear. There are a few states that are actually easy on retirees including Wyoming, Mississippi, Pennsylvania, Kentucky, Georgia, and Oklahoma. Planning for retirement may not always be easy, but finding a great state in which to retire can often make the process easier.