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Moving After Retirement Sounds Great—But It Could Affect Your Taxes, Benefits, and Healthcare Access

Missy E
November 14, 2025

Key Takeaways

Moving to another state after retirement can impact your taxes, access to public benefits, and healthcare coverage—sometimes in unexpected ways.
Before relocating, it’s critical to evaluate how state laws and residency requirements could influence your federal retirement benefits, FEHB coverage, and Social Security taxation.

A Fresh Start Can Come With Complex Changes

Many government retirees look forward to relocating after retirement—often chasing better weather, lower living costs, or proximity to family. But while the idea of moving is appealing, it’s not just about lifestyle. Where you live directly affects how much you keep from your benefits and how easily you access critical services like healthcare. You may find that your new state taxes your retirement differently, treats federal health coverage differently, or has limited access to providers in your network.

Relocating in retirement isn’t just a personal or emotional decision. It’s a financial and administrative decision that can carry long-term implications. Here’s what you need to examine before making the move.

State Income Taxes on Retirement Benefits

The most noticeable change when you move across state lines can be your tax burden. States vary widely in how they tax public sector pensions, Thrift Savings Plan (TSP) withdrawals, and Social Security.

States That Tax Your Pension

In 2025, several states continue to fully or partially tax government pensions. Others offer full exemptions. Moving from a tax-friendly state to one that taxes your pension could reduce your spendable income each month.

You should also consider how your new state treats:

TSP distributions: Some states tax TSP withdrawals as regular income, while others offer partial or full exemptions for retirement income.
Social Security benefits: Although many states exclude Social Security from taxation, a handful still apply income thresholds and tax benefits accordingly.

Before finalizing a move, compare the state’s treatment of all retirement income sources.

Property Taxes and Local Levies

In many cases, property taxes can be a more significant burden than income taxes, especially if you’re buying a home. States and even counties vary in their property tax rates, exemptions for seniors, and homestead protections.

Some key points to consider:

States like New Jersey and Illinois have high property taxes regardless of age.
Others offer senior property tax exemptions or freeze property assessments once you reach a certain age or income level.
Local sales taxes can also add up, particularly if you’re living on a fixed income.

These tax differences affect your total cost of living, even if a state appears tax-friendly at first glance.

Health Insurance Access and Provider Networks

One of the most overlooked aspects of retirement relocation is healthcare access, particularly if you rely on the Federal Employees Health Benefits (FEHB) Program.

In 2025, FEHB still provides nationwide coverage, but plan networks and in-network providers differ significantly between regions. That means the plan you currently use may not be cost-effective or accessible in your new location.

Important considerations include:

In-network availability: Rural or less populated states may lack in-network specialists or hospitals.
Need to change FEHB plans: You can switch plans during Open Season or after a qualifying life event, but you must research which FEHB plans offer strong coverage in your new state.
FEHB and Medicare coordination: If you’re enrolled in both, make sure your Medicare integration benefits (like waived deductibles or copay reductions) still apply under local providers.

Don’t assume your current health plan will serve you equally well after you move.

Medicare Enrollment and Accessibility

If you’re 65 or older, Medicare becomes a major piece of your healthcare. But Medicare Part C (Advantage) and Part D (drug plans) are region-specific, and your plan may not be available in your new state.

What you should know:

Moving triggers a Special Enrollment Period (SEP): You generally have two months after your move to change or enroll in a new Advantage or drug plan.
Original Medicare (Parts A and B) stays consistent, but your supplemental coverage might need an update.
Medicare Advantage enrollees must review new local plan options, as provider networks and coverage levels vary.

If you move without reviewing your options in time, you may face coverage gaps or higher out-of-pocket costs.

Medicaid Eligibility and State Rules

If you or your spouse expect to rely on Medicaid in retirement, moving complicates things further. Medicaid is administered at the state level, and each state sets its own income limits, asset tests, and application requirements.

Key changes you should anticipate:

Eligibility thresholds vary significantly: A move could make you newly eligible or disqualify you.
Enrollment isn’t automatic when moving across state lines. You must cancel in your old state and reapply in your new state.
Long-term care coverage under Medicaid is more accessible in some states than others.

Retirees anticipating future Medicaid use should research the long-term implications before establishing new residency.

State Residency Requirements and Timelines

Establishing residency in a new state doesn’t happen the moment you unload your boxes. States have specific requirements for proving intent to reside, which can impact your eligibility for benefits and tax status.

Typical residency requirements include:

Obtaining a state-issued driver’s license
Registering to vote in the new state
Filing state income taxes as a resident
Updating your mailing address with government agencies

Some states use a minimum residency period (such as 183 days) to determine whether you owe state income taxes. This is especially important for snowbirds splitting time between two states.

Failure to meet these criteria could lead to dual-taxation issues or delays in accessing certain benefits.

Impact on Survivor and Spousal Benefits

Moving to another state can also affect how spousal and survivor benefits are handled, especially if you’re receiving a pension that includes a survivor annuity or FEHB spousal coverage.

Things to check:

If your spouse will be covered under your FEHB plan after your move, confirm provider access and network adequacy in the new state.
Ensure your survivor benefits don’t become subject to unexpected taxation.
Some states have inheritance or estate taxes that could reduce the net value of survivor benefits.

Your move could affect not just your retirement income, but your family’s financial security as well.

Cost-of-Living Differences Aren’t Always Straightforward

A lower cost of living is one of the main drivers behind retirement relocations, but averages can be misleading. For government retirees with specific needs, localized costs may offset any savings.

For example:

Rural areas may have cheaper housing but higher transportation and healthcare costs.
Utilities and insurance premiums may be higher in areas prone to natural disasters.
Some regions may offer fewer public transportation options, requiring a car and increasing monthly expenses.

It’s not just about how cheap a place is—it’s about how well it fits your retirement lifestyle and budget.

Timing Matters When You Move

If you’re close to major benefit milestones, your moving timeline can affect your eligibility or financial outcomes.

Considerations include:

Minimum Retirement Age (MRA): If you retire under MRA+10 and move, ensure you maintain the right health coverage and benefit elections.
Medicare Part B enrollment timing: Missing your Initial Enrollment Period or Special Enrollment Period after moving could result in lifelong penalties.
TSP Required Minimum Distributions (RMDs): At age 73, you must begin RMDs. Your new state may tax these differently.

Coordinate your move with these timelines in mind to avoid disruptions.

Don’t Rely Solely on Online Comparisons

Online calculators and retirement rankings often base their ratings on average costs, but they don’t account for your federal benefits, FEHB options, or TSP withdrawals.

Use these tools as a starting point, but:

Speak with a financial advisor who understands public sector retirement.
Review plan brochures and FEHB provider directories.
Contact the state’s Department of Revenue or Taxation for direct answers.

Making assumptions based on general data could cost you in unexpected ways.

Planning Ahead Makes Your Retirement Move Smarter

Relocating in retirement can absolutely be the right move for the next phase of your life—but it should be strategic. Take time to understand how your new state will interact with your federal benefits, FEHB coverage, and retirement income.

Even small differences in tax treatment, provider access, or benefit eligibility can have lasting financial implications. This is especially true for public sector retirees with complex retirement income streams.

Before making a move, consider getting in touch with a licensed agent listed on this website. They can help you evaluate how relocation affects your total retirement picture and help you choose the best path forward.