Retirement Advice for Those Who Are on the Brink
Retirement Advice for Those Who Are on the Brink of an Early Retirement
Retiring far away from one’s hometown is getting to be really popular. Seniors, upon retiring, consider places as far away as Colombia, Panama, Croatia and Kuala Lumpur. With better health care for less and lower prices all around, seniors find that they can make a better life for themselves elsewhere. The less adventurous of course head over to Florida or Southern California for the warm sunny lifestyle these places promise. But before you sell everything you own and head off for warmer and sunnier climes, it should be a good idea to assess how much exactly you owe in taxes in your sunny new future home town. Let’s look at some retirement advice for seniors considering a move to a better location.
Federal taxes remain more or less the same no matter where in the US you settle down. What will change though however are your local and state taxes.They change from city to city and state to state; they can change dramatically. You can even work out a cheaper federal tax rate is you can itemize your deductions. There are states that have no income tax. Casual retirement advice usually has it that it could easily be the best decision to make to just move over to Florida, Alaska, South Dakota or any of the other tax-free states. However, you need to pay attention to what they do charge you in lieu of state taxes. These states have very high property and sales taxes that can easily run up to more than you would ever save not paying income taxes.
Still, even moving to a state that gives you discounts on your income tax can turn out to be pretty profitable. It could even work out to be cheaper than a state that does away with income taxes altogether. The economy might be in a bad state, but there is one area that’s consistently healthy for seniors – low prices on new homes. Homes that would have only two years ago been completely out of your price range, are easily affordable now. But let’s look at some other areas where little retirement advice may be called for.
There are 10 states, Alabama, Kansas, Illinois and others that excuse you from paying income taxes if your income comes from a pension from the military or if you draw a pension from a former government job. In the states of Mississippi and Pennsylvania, all retirement income happens to be tax-free. And that includes IRA and 401(k) distributions.
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In the end, about 85% of your Social Security benefits may count when you file your federal return. Many states however are beginning to withdraw from taxing Social Security benefits. Moving to one of the 27 states that don’t tax your Social Security benefits were pumped into a really profitable move.
