Where Will You Live During Retirement?

Posted on : May 20, 2013 | Filled under : News

As with many of life’s important questions, the answer depends on you and, possibly, your partner or spouse. Before you make a decision and decide to retire to wherever your grandchildren live (or in your favorite King Wealth Planning-Retirement Livingvacation spot) you might want to take a moment and consider the tax implications of your decision.

If your grandchildren live in Alaska, Nevada, Wyoming, Mississippi, or Georgia, you’re probably okay. Each year, Kiplinger.com reviews the tax rules of each of the 50 states, giving special consideration to states which offer attractive tax incentives to retirees and then provides a list of those states it deems most tax-friendly for retirees. For 2012, Kiplinger reported the five states listed above were the most tax-friendly. According to the article,

“All of these tax havens exempt Social Security benefits from taxation (and some impose no state income tax at all). Many of them exclude government and military pensions from income taxes, and some exempt private pensions, too. A few offer blanket exclusions up to a specific dollar amount of retirement income from a wide variety of sources, which is important if you depend on distributions from IRAs and 401(k) plans rather than traditional pensions. Review all of your sources of income before you decide which state may be the best fit for your retirement home.”

Kiplinger.com reported the least tax-friendly states included Connecticut, Vermont, Rhode Island, Montana, and Minnesota, which have one or more of the following:

  • Estate or inheritance taxes
  • High property taxes
  • No tax breaks on Social Security benefits
  • No special treatment for various types of retirement income

Source: Kiplinger.com

No matter where you decide to settle, it’s important to evaluate all of the factors which may affect your income during retirement. Contact the ‘Retirement Guides’ at King Wealth Planning for assistance in defining your retirement needs and goals.

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