There are a lot of decisions you have to make if you don’t want to regret your retirement. One of the choices you have to make is where you want to live. And there are definitely some states people are leaving during retirement.
Taxes are just one reason you should consider a new state during retirement. Sure, you could get a job to earn some extra money during retirement. Wouldn’t you rather enjoy a stress-free, happy retirement instead? Retiring to a new state isn’t always a great idea (especially if you don’t do the research), but that doesn’t stop people from leaving during retirement.
A study done by United Van Lines shows which states people are leaving during retirement. Retirees are moving away from Illinois and New York in favor of states out west and another that might surprise you. We’ll show you 10 states people are leaving during retirement, then show you the 5 states attracting retirees.
10. Wisconsin
- Percentage of outbound moves: 55%
- Retirees as percentage of people leaving: 16.56%
The brutal winters in Wisconsin aren’t the only reason retirees leave the state. According to data from Kiplinger, the state taxes income from a 401(k)s and other retirement accounts. Not only that, but Wisconsin has some of the highest property taxes in the country, making it a state worth leaving during retirement.
9. Utah
- Percentage of outbound moves: 56%
- Retirees as percentage of people leaving: 8.87%
Utah’s flat 5% tax is one reason why people consider leaving during retirement, but it’s not the worst part. The state also taxes Social Security benefits. It is just one of a few states that take a cut of Social Security, which is one of the reasons retirees leave Utah.
8. Kentucky
- Percentage of outbound moves: 56%
- Retirees as percentage of people leaving: 19.21%
Medical costs are one of the biggest expenses retirees have to worry about. Going to the doctor is unavoidable, but finding a doctor in Kentucky isn’t easy. The state is No. 42 in the United Health Foundation rankings, and it’s No. 40 when it comes to primary care doctors per capita. Those poor results can’t make up for Kentucky’s retirement-friendly tax code.
7. Ohio
- Percentage of outbound moves: 56%
- Retirees as percentage of people leaving: 19.20%
Ohio leaves Social Security benefits untouched by the tax man, but retirees are leaving in droves. The Buckeye State allows just a $200 tax credit on retirement income, and Ohio’s 7.14% state and local sales tax rate is on the higher end nationwide. Plus, the state of health care in Ohio isn’t great. It ranks No. 39 in the United Health Foundation rankings. Add it all up, and older people are leaving during retirement.
6. Massachusetts
- Percentage of outbound moves: 56%
- Retirees as percentage of people leaving: 20.62%
Massachusetts is back-handedly known as Taxachusetts, and housing the most innovative city in the country isn’t enough to keep retirees from leaving. Social Security income is safe in Massachusetts, but 401(k), IRA, and pension income is all taxed at more than 5%. The way the state takes money from retirees doesn’t make up for its outstanding health ranking.
5. Kansas
- Percentage of outbound moves: 57%
- Retirees as percentage of people leaving: 10.81%
Kansas once tried a bold tax experiment. It failed miserably, and now retirees are being punished. Retirement income from 401(k)s, IRAs, and pensions are fully taxed. Plus, the income tax rates are going higher. Even Social Security is taxed for folks with an adjusted gross income higher than $75,000. Not only that, but the 8.62% combined state and local sales tax rate is one of the worst in the country. Put it all together and people can’t wait to ditch Kansas during retirement.
4. Connecticut
- Percentage of outbound moves: 57%
- Retirees as percentage of people leaving: 24.20%
Take a closer look and it’s easy to understand why people are leaving during retirement. First, any income from retirement accounts, such as 401(k)s or IRAs, is taxed at the full rate. Second, Social Security isn’t safe if your benefits are above a certain threshold. Finally, Connecticut has some of the worst real estate taxes in the country, according to WalletHub. Put it all together, and it adds up to a Connecticut exodus of retirees. Even longtime Connecticut residents don’t plan on staying there during their retirement years.
3. New York
- Percentage of outbound moves: 61%
- Retirees as percentage of people leaving: 25.29%
When people can drastically cut their real estate taxes just by crossing state lines, it’s easy to see why people are leaving New York during retirement. One woman trimmed her real estate bill by 60% just by moving from New York to Pennsylvania. That’s not an isolated case, and real estate savings aren’t the only reason people are leaving during retirement. New York’s 8.79% combined state and local sales tax rate is one of the highest in the country, and its state income tax rate starts at 4%.
2. New Jersey
- Percentage of outbound moves: 63%
- Retirees as percentage of people leaving: 28.44%
New Jersey topped United Van Lines’ list of states with the most people moving out for five straight years before being unseated. Yet the Garden State still sees folks leaving during retirement. A 2.35% effective real estate tax that is the highest in the country is one of several reasons to leave. Yet New Jersey is doing its best to be more friendly to retirees. It is one of the worst states for estate and inheritance taxes. Well, the estate tax is gone and Kiplinger reports New Jersey is overhauling its tax code. People are still leaving during retirement, but they have more reasons to stay these days.
1. Illinois
- Percentage of outbound moves: 63%
- Retirees as percentage of people leaving: 21.30%
After sitting in the top 5 of United Van Lines’ outbound movers list for nine years, Illinois finally takes the top spot. Want to know why people in Illinois are leaving during retirement? There are three main reasons. First, the state is a financial disaster zone with recovery a long way off. Second, WalletHub shows Illinois has the second-worst effective real estate taxes in the country. Finally, Illinois is in the top-10 of worst states for sales tax. Put it all together and it’s why Illinois is one of the worst states for retirees and why people can’t wait to leave the state behind.
We’ve just covered the 10 states people are leaving during retirement, but where are they headed? The following five states have the highest percentages of retirees among the inbound moves, including something of a shocker right off the bat.
5. Maine
- Percentage of inbound moves: 46%
- Retirees as percentage of people arriving: 29.55%
Maine doesn’t tax Social Security benefits, and it offers a $10,000 tax deduction on retirement income from IRAs and 401(k)s. Plus, its combined state and local sales tax rate of 5.5% is one of the lowest in the U.S. Among the five states luring the most retirees, Maine is an outlier be being in the north of the country.
4. Arizona
- Percentage of inbound moves: 55%
- Retirees as percentage of people arriving: 32.63%
You’d expect to find Arizona on a list of states attracting retirees. It’s state and local sales tax rates are among the highest in the country, but it makes up for it with low real estate and income tax rates.
3. South Carolina
- Percentage of inbound moves: 57%
- Retirees as percentage of people arriving: 33.42%
Songwriter James Taylor had Carolina on his mind when he wrote a song in 1968. Modern day retirees are thinking about Carolina, too. As Kiplinger reports, South Carolina offers several tax breaks for retirees, and it has some of the lowest real estate taxes in the country.
2. Nevada
- Percentage of inbound moves: 61%
- Retirees as percentage of people arriving: 33.97%
If you’re about to retire and you’re sick of paying state income taxes, Nevada is here for you. The Silver State doesn’t have income tax, which is one major reason retirees love it. The loose marijuana laws can’t hurt either.
1. Florida
- Percentage of inbound moves: 55%
- Retirees as percentage of people arriving: 37.95%
You can’t talk about retirement destinations and not mention Florida. The state doesn’t have an income tax, property taxes are lenient, and some retirees can claim a $50,000 exemption on their property tax bills. Plus, the state and local sales tax rates are middle of the road nationally. It all adds up to an attractive destination for retirees.
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