Retirees Should Skip These 10 States With High Taxes and a High Cost of Living
Planning for retirement is like preparing for a long-awaited cruise; you want smooth sailing, pleasant weather, and no unexpected storms. Choosing the right state to drop anchor can make all the difference between a relaxing voyage and choppy waters. High taxes and a steep cost of living can quickly turn your retirement dream into a financial nightmare.
It’s essential to chart your course carefully, avoiding states where your hard-earned savings might be siphoned off faster than you can say “bon voyage.” Let’s explore some states that might have you clutching your wallet tighter.
California
With its sunny beaches and Hollywood allure, the Golden State comes with a hefty price tag. California’s state income tax is one of the highest in the nation. This rate applies to all forms of retirement income except Social Security. Additionally, the cost of living is notoriously high, with housing prices soaring above the national average. California’s financial demands can be overwhelming for retirees on a fixed income.
New York
New York is a state that never sleeps and never stops taxing. Its relative tax burden ranks among the highest in the country. While Social Security benefits are exempt, other retirement incomes like pensions and IRAs are taxed. Couple that with steep property taxes and a high cost of living, and you might find your retirement savings dwindling faster than a New York minute.
Connecticut
Connecticut’s charm comes at a premium. The state imposes taxes on Social Security benefits for certain income levels and fully taxes other retirement income. It’s grappling with significant financial challenges and a high per capita debt. High property taxes and living costs make it less than ideal for stretching your retirement dollars.
Vermont
Vermont’s picturesque landscapes are accompanied by a hefty tax bill. The state taxes Social Security benefits and other retirement income. According to Senior Living, Vermont is among the less tax-friendly states for retirees, with a relative tax burden of 10.73%. Property taxes are also higher, adding to the financial strain.
New Jersey
The Garden State might make your retirement garden wilt. New Jersey has some of the highest property taxes in the nation, with the average bill exceeding $10,000. While it doesn’t tax Social Security benefits, other retirement income can be taxed, and the overall cost of living is significantly above the national average.
Maine
Maine’s rugged coastlines come with rugged taxes. The state taxes Social Security benefits for certain income levels and fully taxes other retirement income. Property taxes are above the national average, and the overall cost of living can be a burden to retirees on a fixed income.
Minnesota
Minnesota’s lakes are beautiful, but its tax landscape is less inviting. The state taxes Social Security benefits and other retirement income. It’s among the higher-taxed states with a relative tax burden of 10.19%. Property taxes and the cost of living are also above average, making it a challenging environment for retirees.
Rhode Island
Rhode Island’s small size doesn’t equate to small taxes. The state taxes Social Security benefits and other retirement income. Property taxes are high, and the overall cost of living is above the national average, which can erode retirement savings more quickly than anticipated.
Illinois
Illinois offers a mixed bag for retirees. While it doesn’t tax retirement income, it has high property taxes, a high sales tax, and an above-average overall cost of living, which can impact your retirement budget.
Maryland
Maryland’s proximity to the nation’s capital comes with elevated expenses. The state taxes Social Security benefits for certain income levels and fully taxes other retirement income. Property taxes are moderate, but the overall cost of living, especially housing, is high, making it a less attractive option for retirees looking to maximize their savings.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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