By Alan Olsen
You’ve spent your lifetime accumulating wealth through your employment and other business endeavors. You have been successful at what you do and now the time has finally come when you’re ready to ride off into the sunset, so-to-speak. It’s time for you to kick up your heels, relax and retire. Retirement can be very rewarding, but if you happen to be very wealthy, then you could lose a lot of that financial reward that you worked so had to obtain. Everyone has to pay some taxes in retirement, but in actuality, how much you pay will depend a lot on where you live. That’s because some states are a lot friendlier than others when it comes to retirement and taxes.
Location, Location, Location
So, if you’re ready to retire, then perhaps you should start reconsidering your plan based mostly on location; that is which locations are the most tax-friendly. Sunny and warm weather is nice. Being close to the kids and grandkids is also great, but if you are wealthy and want to stay wealthy, then you need to strongly consider a state that is not so tough on the wealthy come tax time. So how do you determine which states are the most tax-friendly in retirement and which states you should avoid?
GOBankingRates looked into that question and based their research on three factors: taxes, living expenses, and health care. Their study looked at estate tax, sales and property tax, inheritance tax, local tax rates, and social security income. As for living expenses, they included the value of homes, their listing prices, the cost-of-living index, and local deposit rates. The study also weighed average Medicare payments and individual insurance premiums.
And the Winners Are…
So what did they learn? According to the results, the best state to retire rich in is New Hampshire. The state has no sales tax, no estate tax, no Social Security tax, and no inheritance tax. While New Hampshire does have a high cost of living, it also has excellent health care. All of these factors make it the best place to retire if you are wealthy. Other top states on the list include Idaho, Wisconsin, Wyoming, Alaska, South Dakota, Michigan, Utah, and Arkansas.
And the Losers Are…
On the other end of the spectrum, these are the states that you want to avoid the most when you’re ready to retire wealthy. Coming in as the 10th worst state to retire rich in is Nebraska. The rest from positions nine to two are Washington, Massachusetts, Rhode Island, Vermont, California, Connecticut, Illinois, and New Jersey. And coming in as the worst state to retire rich in is New York. The state suffers from a high cost of living, poor health care, and high taxes. Add it all up and the Big Apple turns sour when it comes time to retire.
So there you have it. If you are wealthy and ready to retire make sure you weigh all of your options. If you can choose anywhere you want to live then perhaps look at New Hampshire and avoid New York. If moving to a more tax-friendly state isn’t an option for you, then you can always contact GROCO to help you find other ways to save on your taxes in retirement.