Moving After You Retire Could Save You Big

September 16, 2019

[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]Taxes are a big reason to relocate, and when you retire, when cashing in all your savings and accounts, could certainly add up to a lot. Certain states like Virginia and Maryland have low sales taxes, while other states like Washington and Delaware have none.

Relocating after retirement could save you big and could save you money on all the big federally sponsored retirement accounts like your FERS, your CSRS, your TSP, and your Social Security benefits, meaning you’ll save much more. There are currently nine states that don’t have state taxes, and they are South Dakota, Texas, Washington, Tennessee, Wyoming, Florida, Alaska, and Nevada.

Of course, there are other reasons to move somewhere besides tax reasons, and things like access to health care and the weather, as well as things to do, are also important factors. That said, across all metrics, South Dakota has ranked first for retirement destinations, oddly enough, with the more obvious choice of Hawaii soon following up. It can get tricky, weighing the pros and cons of a place, because a nicer climate, like Hawaii, may be balanced out by a tax-free place, like Nevada.

In addition to the nine-state tax-free states listed before, there are another group of nine states that will give you a tax break specifically on your annuities through CSRS and FERS, those being Illinois, Kansas, Louisiana, Hawaii, Alabama, Mississippi, Pennsylvania, Kansas, New York, and Massachusetts.

Then there is also the sales taxes to consider, especially if you’re looking to purchase a home in one of the states you’d be moving into. Some states like Oregon have no sales tax, but places like Tennessee see their sales tax at 9.47 percent, which is the highest in the nation. D.C. and Maryland, home to a large amount of federal employees, see their sales take relatively low, at 6 percent, but not quite as low as nearby Virginia which is slightly lower, at 5.3 percent.

Certain states also give breaks on Social Security.

The majority of federal workers heading into retirement are a part of FERS, which is based on a determined annuity that is adjusted with the rate of inflation, as well as collecting on Social Security, and then there is the money they stashed away in the TSP while they were working. All of these accounts can be subject to a variety of taxes depending on where you live and how much you have.

At the end of the day, federal employees need to be informed about the tax status as they retire and beyond.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”37403″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]