Baby Boomers are attracted to retirement destinations that offer unique financial advantages. Untethered to specific geographic locations to employers for the first time in their life, retirees often strike out for a new adventure. It’s no secret that money concerns top the list of factors that determine exactly where and how retirees decide to live in their golden years.
Moving to another state or even to a new country is common. Below are some retirement destinations that offer distinct financial advantages for boomers interested in a change of scenery.
Retirement Destinations: Tax-friendly States Perfect for Retirees
While some boomers choose to retire in place surrounded by the familiar, others decide to venture out to find a less expensive way to live compatible with a fixed income status.
Below are some states that offer lower tax rates by not taxing pension or Social Security income. It is important to remember that all states use some form of tax income to keep the lights on, so reviewing property and sales tax rates is always a good idea to ensure that a move into that state ultimately lowers the taxes you pay.
Florida
One of the first places people think of moving when it is time to retire in the U.S. is Florida. The warm weather and sandy beaches reminiscent of some of our best vacations beckon us with the promise of low taxes, fresh seafood, and ocean breezes. In addition to the no-tax policy on Social Security and pension income, Floridians who decide to work part-time don’t have to pay state income taxes either.
Alabama
If you fancy moving to the South, then Alabama might be a good choice for baby boomers interested in warm weather and low taxes. With no income taxes to pay on Social Security and pensions, and the lower than average property tax and sales tax rates, The Heart of Dixie qualifies as a place where it is easy to stretch your retirement dollars.
Alaska
In sharp contrast to the southern states mentioned above, Alaska is also a financially attractive option for boomers looking for greener pastures and cooler temperatures. The tax structure in Alaska is unique. While property taxes tend to be expensive, residents who have lived in Alaska at least a year can offset that bill with an annual disbursement that totaled $1,606 in the tax year of 2019.
Washington
Known as the Evergreen State, this Pacific Northwest state offers natural beauty and attractive tax laws. As a state that does not tax pensions, Social Security, or a job taken on during retirement, it is hard to ignore the allure of Washington. Granted, the property taxes aren’t low, averaging $3,601 in 2019, but it is important to remember that all things are relative. For moderate to high-income earners, annual property taxes are a small price to pay, respectively.
Nevada
Travelers from all over the world are attracted to Nevada for the glitz and glamour of the nightlife. Boomers are discovering that there is more to this state than casinos and warm winters. Retirees don’t have to pay taxes on part-time jobs, social security, or retirement income. Additionally, property taxes are relatively low, with a median tax bill of $1,695 in 2019.
New Hampshire
If you are strictly a New Englander, then the Granite State might be the place to retire for boomers looking for tax breaks. You can rest assured that by moving to this state known for its awe-inspiring foliage and maple syrup, you won’t pay state income tax on pensions, distributions from retirement accounts, earned retirement job income, or Social Security benefits. As if that is not enough to get a financially savvy boomer’s attention, there is the added benefit of paying no state sales tax.
Other states with no tax on Social Security and pension are:
- Illinois
- Mississippi
- Pennsylvania
- Texas
- Tennessee
- South Dakota
- Wyoming
Retirement Destinations: Most Affordable Countries for Retirement
Portugal
Portugal is getting a lot of attention these days, topping the list of favorites and published in the Annual Global Retirement Index for 2020. In some ways, you may feel like you never left home. With English spoken by many medical professionals and U.S. dollars flowing freely as the country’s currency, Portugal is undeniably attractive. It doesn’t hurt that the country is considered extremely safe with low tax rates and an affordable cost of living.
For a mere $1700 per month, a couple can live comfortably. There are many areas along Portugal’s Silver Coast where you can live for less than a modest $1400 for the month. To provide some perspective, it is not uncommon to find a home that needs a little TLC for as little as $11,068.
France
There is no denying that there is a special cultural bond between the countries of Europe and the U.S. France stands out as a likely retirement choice for Baby Boomers seeking an adventure without feeling like they are giving up all the luxuries and cultural necessities of home. Surprisingly, France is more affordable than most people realize.
A couple can live on as little as $2,083 per month. When you consider the fact that France provides universal healthcare for all residents including expats, then it is easy to understand why this country is a popular retirement option for boomers hoping to stretch their retirement dollars.
Other countries to consider that made the list of favorite retirement options are:
- Costa Rico
- Columbia
- Ecuador
- Mexico
- Malaysia
- Spain
- Vietnam
The Takeaway
Boomers seeking adventure and a comfortable lifestyle have many options for retirement destinations in the U.S. and abroad. Tax savings and beautiful settings are hard to resist!