Congrats! Congratulations! Now the question is, where should you retire? While there are certain states that offer better retirement living and financial benefits, the best place to retire is dependent on your priorities.
Jump to the Best States for Retired >>
Personal Capital's Retirement Planner is a great tool to help you understand the potential impact of retirement in different states. These online tools allow you to anticipate large expenses, such as buying a house or sending your children through college, run different scenarios and create a retirement spending plan.
This calculator can help you compare your retirement savings to other people in your state as you think about making a major move.
How to Choose the Best State for Retirement
Your unique financial situation and priorities will determine the best decision for you. These are important considerations to make when you're looking for the best retirement locations.
Quality of Life
This is the most personal consideration because everyone has their own definition of what makes life great. It may be soaking up the city's cultural riches. It may also mean being alone or surrounded by nature.
Are you more drawn to the tranquility of a small beach town than the bustle and bustle of a large city? Do you want to explore new communities and make new friends? Or would you prefer to build deeper relationships with those you already know, or be closer to your family? These and many other factors will impact your quality of life.
Housing Prices
Since the outbreak of the pandemic, housing costs have been rising almost everywhere. However, there are still some areas that started with high rent and home prices. They've risen even more. Your budget will be affected more by where and how you plan to purchase or rent a house in retirement.
Healthcare Costs
The location is only one of many factors that can influence the cost of healthcare for retirees. HealthView Services' 2021 report revealed that the majority of retirees can expect to see their total retirement healthcare expenses fall between $156,208 – $1 million.
Medicare Part D premiums and Medicare Advantage plans, Medigap premiums and out-of pocket spending are some of the costs that can vary from one state to another. According to the report, Massachusetts and Maryland are more costly in these categories while Hawaii and New Mexico are much less expensive with some costs close to 50% lower.
Taxes
While this is an important consideration all through our lives, it can be a significant factor in retirement. You may need to pay taxes depending on how much retirement income you have. While federal income tax is an established fact, living in a state that has a high income tax rate may leave you with less income.
Cost of Living
The state cost of living encompasses healthcare, housing, taxes and insurance. It also includes the cost of daily goods, such as food and transport. It is clear that certain places in the U.S. can be more expensive than others. This should be your first consideration if you want to reduce retirement costs.
Weather
Do you want all-year sunshine? Do you prefer to see the seasons all year? Perhaps two homes are better suited to your snowbird tendencies. No matter what your preference may be, it is important to do your research. Climate change will have a significant impact on retirement destinations like Florida. It is becoming more expensive to insure homes in states that have higher climate risk factors. Make sure you factor this into your plan.
Learn More: 7 Essential Steps to Retirement Planning
These are the Best States to Retire In 2022
We came up with an easy formula to find the right state to retire in: Follow the money.
Millionaires are more likely to have the opportunity to live in areas that offer the best lifestyles. While anyone can go broke if they spend too much, it is possible to have more choices about where to live.
Let's take a look at the states that have the highest number of millionaires to determine the best state for retiring. Then, we can compare those states with the lowest taxes with those with the highest. This allows us to take into account both lifestyle and financial considerations. This is a fun way to have some fun with retirement planning.
According to our formula, the top two states in which to retire are — please roll your eyes — Alaska and New Hampshire. Washington, Virginia, Delaware and Virginia are all among the top 20 most popular states to retire in, according to both lists.
It is interesting to note that states with low taxes like South Dakota or Texas are not in the top 10 or 20 states with the highest number of millionaires. These states have such great tax benefits that we will be watching to see if they make it on the list.
The surprise of the shortlist is Delaware, which is not a state that you would normally think of when it came to millionaires. Wyoming and Florida are also on the list but they did not make the cut due to their low taxes and great lifestyles. Florida is known for its beachfront lifestyle, but if you have ever visited Jackson Hole, Wyoming will be your first choice.
Which States have the lowest tax burden?
Instead of looking at taxes rates, which may vary depending on your particular circumstances, the "tax burden” number measures the percentage of personal income you would pay for state and local taxes.
We used Wallethub's list to determine the tax burden. It compares 50 states against three types of state taxes in 2022: individual income taxes, property taxes, and sales & exise taxes.
Rank | State | Total Tax Burden | Property Tax Burden | Individual Income Tax Burden | Total Sales & Excise Tax Burden |
1 | Alaska | 5.06% | 3.54% | 0.00% | 1.52% |
2 | Tennessee | 5.75% | 1.71% | 0.06% | 3.98% |
3 | Delaware | 6.22% | 1.77% | 3.28% | 1.17% |
4 | Wyoming | 6.32% | 3.32% | 0.00% | 3.00% |
5 | New Hampshire | 6.41% | 5.11% | 0.14% | 1.16% |
6 | Florida | 6.64% | 2.77% | 0.00% | 3.87% |
7 | South Dakota | 7.12% | 2.84% | 0.00% | 4.28% |
8 | Montana | 7.39% | 3.45% | 2.66% | 1.28% |
9 | Alabama | 7.41% | 1.41% | 2.00% | 4.00% |
10 | Oklahoma | 7.47% | 1.74% | 1.90% | 3.38% |
Which States have the Most Millionaires?
Let's now look at the 10 states with the highest number of millionaire households. This is the most recent data.
Rank | State | Millionaire Households: % |
1 | New Jersey | 9.76% |
2 | Maryland | 9.72% |
3 | Connecticut | 9.44% |
4 | Massachusetts | 9.38% |
5 | Hawaii | 9.20% |
6 | California | 8.51% |
7 | New Hampshire | 8.47% |
8 | Virginia | 8.31% |
9 | Alaska | 8.18% |
10 | Washington | 7.85% |
Is it financially wise to move in retirement?
There are nine states in the United States that do not have income taxes for those who wish to retire. These include Alaska, Florida (Florida), Nevada, New Hampshire and South Dakota. Relocating is financially smart for many retired people who have the financial means to do so, especially if their home states have high taxes such as New York or California.
Continue reading:Average Retirement Savings per State
The Best Places to Retire in Each State
PREV
NEXT
What about Retirement Lifestyle?
In retirement, money is not everything. If you don't have the means to spend your money on a lifestyle you love, like being outdoors and able to go to fine dinners, shows, or museums, then it's not worth it. Many people won't have unlimited money when they reach retirement age so it may be necessary to make sacrifices or relocate.
Since it is subjective, it's difficult to determine which state offers the best retirement lifestyle. Do you prefer the big cities? Do you prefer quieter towns? Perhaps you prefer a quiet retreat in the country? It all depends on you.
Our Take
It's not clear which state is best for retirement. Everybody is biased. My home state of Hawaii is my dream based on its lifestyle. However, Colorado, where we've lived for almost two decades, offers many of the same lifestyle perks with lower overall cost. Decisions!
This list is purely for entertainment, but it can also be a great place to start if your goal is to move to a lower tax state. Check out our Retirement Planner tool to determine if moving would be financially beneficial. It allows you to plan scenarios to assess how your retirement prospects will change.
Get financial tools for retirement planning
Frequently Asked Questions
What are the advantages of a IRA with a gold component?
The benefits of a gold IRA are many. It is an investment vehicle that can diversify your portfolio. You can control how much money is deposited into each account as well as when it's withdrawn.
You also have the option to roll over funds from other retirement accounts into a gold IRA. This allows you to easily transition if your retirement is early.
The best part is that you don't need special skills to invest in gold IRAs. They are readily available at most banks and brokerages. You don't have to worry about penalties or fees when withdrawing money.
That said, there are drawbacks too. Gold is known for being volatile in the past. It is important to understand why you are investing in gold. Is it for growth or safety? Is it for security or long-term planning? Only once you know, that will you be able to make an informed decision.
If you plan to keep your gold IRA indefinitely, you'll probably want to consider buying more than one ounce of gold. A single ounce will not be sufficient to meet all your requirements. Depending upon what you plan to do, you could need several ounces.
A small amount is sufficient if you plan to sell your gold. Even a single ounce can suffice. But, those funds will not allow you to buy anything.
What are the pros & cons of a Gold IRA?
An Individual Retirement account (IRA) is a better option than regular savings accounts in that interest earned is exempted from tax. This makes an IRA great for people who want to save money but don't want to pay tax on the interest they earn. This type of investment has its downsides.
You could lose all of your accumulated money if you take out too much from your IRA. You may also be prohibited by the IRS from making withdrawals from an IRA after you turn 59 1/2. If you do withdraw funds from your IRA you will most likely be required to pay a penalty.
A disadvantage to managing your IRA is the fact that fees must be paid. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management charges ranging anywhere from $10 to $50.
Insurance will be required if you would like to keep your cash out of banks. A majority of insurance companies require that you possess a minimum amount gold to be eligible for a claim. You may be required by some insurers to purchase insurance that covers losses as high as $500,000.
If you choose to go with a gold IRA, you'll need to determine how much gold you want to use. Some providers limit how many ounces you can keep. Others let you choose your weight.
It's also important to decide whether or not to buy gold futures contracts. Futures contracts for gold are less expensive than physical gold. Futures contracts offer flexibility for buying gold. Futures contracts allow you to create a contract with a specified expiration date.
You also need to decide the type and level of insurance coverage you want. Standard policies don't cover theft protection, loss due to fire, flood or earthquake. The policy does not cover natural disasters. If you live near a high-risk region, you might want to consider additional coverage.
Apart from insurance, you should consider the costs of storing your precious metals. Storage costs will not be covered by insurance. Additionally, safekeeping is usually charged by banks at around $25-$40 per monthly.
If you decide to open a gold IRA, you must first contact a qualified custodian. A custodian helps you keep track of your investments, and ensures compliance with federal regulations. Custodians can't sell assets. Instead, they must retain them for as long and as you require.
After you've determined which type of IRA is best for you, fill out the paperwork indicating your goals. You should also include information about your desired investments, such as stocks or bonds, mutual funds, real estate, and mutual funds. It is also important to specify how much money you will invest each month.
After completing the forms, send them along with a check or a small deposit to your chosen provider. The company will then review your application and mail you a letter of confirmation.
A financial planner is a good idea when opening a gold IRA. A financial planner is an expert in investing and can help you choose the right type of IRA for you. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
How Does Gold Perform as an Investment?
The supply and demand for gold affect the price of gold. It is also affected negatively by interest rates.
Because of their limited supply, gold prices can fluctuate. Additionally, physical gold can be volatile because it must be stored somewhere.
How is gold taxed in an IRA?
The fair market value of gold sold is the basis for tax. When you purchase gold, you don't have to pay any taxes. It's not considered income. If you decide to sell it later, there will be a taxable gain if its price rises.
You can use gold as collateral to secure loans. Lenders try to maximize the return on loans that you take against your assets. For gold, this means selling it. There's no guarantee that the lender will do this. They might keep it. They might decide that they want to resell it. Either way, you lose potential profit.
So to avoid losing money, you should only lend against your gold if you plan to use it as collateral. If you don't plan to use it as collateral, it is better to let it be.
Statistics
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
External Links
irs.gov
cftc.gov
investopedia.com
- Are You a Good Candidate for a Gold IRA
- What are the Options Types, Spreads. Example. And Risk Metrics
finance.yahoo.com
How To
Investing In Gold vs. Investing In Stocks
Investing in gold as an investment vehicle might seem like a very risky proposition these days. This is because most people believe that it is no longer economically profitable to invest gold. This belief arises because most people believe that the global economy is driving down gold prices. They fear that investing in gold will result in a loss of money. In reality, though, gold investment can offer significant benefits. Below we'll look at some of them.
The oldest form of currency known to mankind is gold. There are thousands of records that show gold was used over the years. It was used by many people around the globe as a currency store. As a means of payment, South Africa and many other countries still rely on it.
You must first decide how much you are willing and able to pay per gram to decide whether or not gold should be your investment. If you're interested in buying gold bullion, it is crucial that you decide how much per gram. If you don’t know the current market rate for gold bullion, you can always consult a local jeweler to get their opinion.
Noting that gold prices have fallen in recent years, it is worth noting that the cost to produce gold has gone up. So, although gold prices have declined in recent years, the cost of producing it has not changed.
When deciding whether to buy gold, another thing to consider is how much gold you intend on buying. If you plan to buy enough gold to cover your wedding rings then it is probably a good idea to wait before buying any more. If you plan to do so as long-term investments, it is worth looking into. It is possible to make a profit by selling your gold at higher prices than when you purchased it.
We hope our article has given you a better understanding of gold as an investment tool. Before making any investment decisions, we strongly advise that you thoroughly research all options. Only then can you make informed decisions.
—————————————————————————————————————————————————————————————–
By: Paul Deer, CFP®
Title: 2022’s Best States to Retire in the U.S.
Sourced From: www.personalcapital.com/blog/retirement-planning/top-states-to-retire/
Published Date: Wed, 21 Sep 2022 14:00:27 +0000
Leave a Reply