Introduction
Retirement is a period of life when many people look forward to enjoying their hard-earned freedom. It is a time to explore new interests, travel, spend time with family, or just relax. To make the most of this special time, it is important to plan ahead and choose the right place to live. For retirees, one of the most important factors to consider is the financial aspects. To find the best states to retire financially in 2020, we need to compare the tax rates, cost of living, job opportunities, health care and long-term care services, average income of retirees, senior-friendly amenities, financial incentives, and access to public transportation and affordable housing options in different states.
Comparison of Tax Rates and Cost of Living in Different States
One of the most important factors to consider when choosing a state to retire in is the tax rate. According to a study by Kiplinger, the top three states with the lowest combined state and local sales tax are Alaska (1.76%), Hawaii (4.35%), and Wyoming (5.34%).1 The states with the highest combined state and local sales tax are Louisiana (10.02%), Arkansas (9.53%), and Washington (9.17%).
In addition to sales tax, retirees should also consider state income tax. According to Kiplinger, seven states do not have any income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.2 Other states have varying levels of income tax, from a low of 1% in Tennessee to a high of 13.3% in California. For example, New York has an 8.82% income tax rate, while Pennsylvania has a flat 3.07% rate.3
In addition to taxes, it is important to consider the cost of living in different states. According to the Council for Community and Economic Research, the five most expensive states to live in are Hawaii, District of Columbia, New York, California, and Massachusetts.4 The five least expensive states to live in are Mississippi, Oklahoma, Arkansas, Missouri, and Kansas.5 Retirees should consider these costs when choosing a state to retire in.
Job Opportunities for Seniors in Certain States
Although retirement usually means ending one’s career, some seniors may still be interested in working part-time. Some states have job opportunities specifically for seniors. For example, Minnesota offers a Senior Community Service Employment Program (SCSEP) for people aged 55 and over who meet certain requirements.6 The program provides subsidized jobs in non-profit organizations, government agencies, and other community service programs. Similarly, Pennsylvania has a Senior Community Corps program that provides subsidized employment for seniors aged 55 and over.7 Other states may offer similar programs for seniors.
Availability of Health Care and Long-Term Care Services
When considering a state to retire in, it is important to consider the availability of health care and long-term care services. According to the Kaiser Family Foundation, all states provide some form of Medicaid coverage for seniors, but the eligibility requirements vary from state to state.8 In addition, the availability of long-term care services such as home health care, adult day care, and assisted living facilities also vary from state to state. Seniors should research the options available in each state before making a decision.
Average Income of Retirees in Various States
It is also important to consider the average income of retirees in each state. According to the U.S. Census Bureau, the median income of seniors aged 65 and over in 2018 was $40,407.9 However, the median income of seniors varies significantly from state to state. For example, the median income of seniors aged 65 and over in Alaska was $58,298, while in West Virginia it was only $25,739.10 Retirees should consider the average income of seniors in different states when choosing a place to retire.
Senior-Friendly Amenities
When choosing a state to retire in, it is important to consider the types of amenities available. Many states have parks and attractions specifically designed for seniors, such as Florida’s Silver Springs State Park and Arizona’s Tucson Botanical Gardens. Other states may offer discounts on movie tickets, museum visits, or other recreational activities. For example, Michigan offers a free annual pass to state parks for seniors aged 62 and over.11 It is important to research the types of amenities offered in each state before making a decision.
Financial Incentives Offered by Certain States to Retirees
Some states offer financial incentives for seniors to move there. For example, Maine offers a property tax relief program for seniors aged 65 and over with a household income of less than $60,000.12 Other states may offer tax credits or deductions for seniors. For example, Georgia offers a tax credit of up to $2,000 for seniors aged 62 and over who meet certain criteria.13 It is important to research the types of incentives available in each state before making a decision.
Access to Public Transportation and Affordable Housing Options
When choosing a state to retire in, it is important to consider the availability of public transportation and affordable housing options. Many cities and counties offer discounted fares for seniors on public transportation systems. For example, the Los Angeles County Metropolitan Transportation Authority offers a reduced fare program for seniors aged 65 and over.14 Similarly, many states offer affordable housing options such as Section 8 vouchers or subsidized housing for seniors. For example, New York offers a Senior Citizen Rent Increase Exemption program that provides rent stabilization for seniors aged 62 and over who meet certain criteria.15 Retirees should research the availability of public transportation and affordable housing options in different states before making a decision.
Conclusion
Retirement is a special time in life when many people look forward to enjoying their hard-earned freedom. To make the most of this time, it is important to plan ahead and choose the right place to live. This article explored the best states to retire financially in 2020, including comparison of tax rates and cost of living, job opportunities, health care and long-term care services, average income of retirees, senior-friendly amenities, financial incentives, and access to public transportation and affordable housing options. Ultimately, the best state to retire in depends on an individual’s specific needs and preferences. Retirees should research the options in different states before making a decision.
1Kiplinger, “State-by-State Guide to Taxes on Retirees,” accessed April 20, 2020, https://www.kiplinger.com/slideshow/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.html.
2 Ibid.
3 Ibid.
4Council for Community and Economic Research, “Cost of Living Index,” accessed April 20, 2020, https://coli.org/data-products/cost-of-living-index/.
5 Ibid.
6Minnesota Department of Employment and Economic Development, “Senior Community Service Employment Program,” accessed April 20, 2020, https://mn.gov/deed/job-seekers/training-career-help/senior-employment-program/.
7Pennsylvania Department of Aging, “Senior Community Corps,” accessed April 20, 2020, https://www.aging.pa.gov/Community/Pages/Senior-Community-Corps.aspx.
8Kaiser Family Foundation, “Medicaid Eligibility for Older Adults,” accessed April 20, 2020, https://www.kff.org/medicaid/issue-brief/medicaid-eligibility-for-older-adults/#statevariation.
9U.S. Census Bureau, “Median Household Income in the Past 12 Months (in 2018 Inflation-Adjusted Dollars) by Age of Householder: 2018,” accessed April 20, 2020, https://data.census.gov/cedsci/table?q=income%20and%20age&tid=ACSDP1Y2018.DP05&hidePreview=false.
10Ibid.
11Michigan Department of Natural Resources, “Free Annual Pass for Seniors,” accessed April 20, 2020, https://www.michigan.gov/dnr/0,4570,7-350-79119_79146_78444—,00.html.
12Maine Revenue Services, “Property Tax Fairness Credit,” accessed April 20, 2020, https://www.maine.gov/revenue/forms/property/ptfc.htm.
13Georgia Department of Revenue, “Retirement Income Credit,” accessed April 20, 2020, https://dor.georgia.gov/retirement-income-credit.
14Los Angeles County Metropolitan Transportation Authority, “Reduced Fare Program,” accessed April 20, 2020, https://www.metro.net/riding/fares/reduced/.
15New York State Homes & Community Renewal, “Senior Citizen Rent Increase Exemption (SCRIE),” accessed April 20, 2020, https://hcr.ny.gov/scrie.
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