Certain tax friendly states can help you cut down on expenses in retirement. Other states will increase your expenses. Know what to look for when searching for the best places to retire.
If you plan to remain in the United States upon retirement, search for tax friendly states that offer the most benefits to the retiree. This means knowing whether to focus on affordable property taxes or income taxes.
Are property taxes more important or income taxes? This will depend on your income and age. If you are retired, income taxes will not play such an important role as will property taxes.
Keep in mind that retiring in one state can be much cheaper than another. Especially if you own your own home. Are you planning on purchasing a house or condo in another state? Most retirees prefer to own their own home during their golden years. It makes for a good tax deduction and, depending on the state, means a break on property taxes.
Saving for Retirement
Are you a few years away from retirement? Searching for affordable places to retire and wondering if you will have enough money?
Then focus on saving for retirement to guarantee you come up with what you need. Worrying about tax friendly states is something you should leave for later, when you are nearer retirement age.
Start by analyzing what your largest expenses will be. There are many affordable places to retire if you know where to look. The following are the major tax expenses you will face in retirement:
Certain tax friendly states may be beneficial to one retiree and not so for
another. Keep in mind that different states offer different options.
Income taxes treat social security benefits differently, depending on where you live.
Some states do not tax social security. Other states will exempt income from certain pensions. You will also find states that only tax out of state pensions.
There is a variety of exemptions for veterans and government pensions. Some give you a break if you’re over 65.
Use these tips for a frugal retirement if you are on a budget. Frugal living is not synonymous with a shoddy existence. It is about using simple techniques to ensure a secure retirement.
States without income tax include: Florida, Texas, Washington, Alaska, Wyoming and South Dakota.
This is probably the highest tax you will dish out in your retirement years. Do you own your own home and live in the Northeast? Then you’re paying a hefty bill. Try moving to one of the more tax friendly southern states. It is a good option when searching for affordable places to retire.
Not only is it warmer, but you’ll pay much less in property taxes. Especially Florida and Arizona. If you’re a homeowner over 65, your property taxes will only go up a small amount per year down south.
Want to move to a state without sales taxes? Then you’ll need to live in Montana, Alaska, New Hampshire, Oregon, or Delaware. But research specific cities in these states first. Many charge city sales taxes which can be just as high.
Take a look at your spending and saving habits before deciding on a move. Sticking to simple strategies will help guarantee a secure retirement.
Renting vs. Buying During Retirement
Most folks avoid renting during retirement. Except for the adventurous ones who prefer to travel and taste what other shores have to offer.
If you plan on staying put during retirement, your best option is to buy a house or condo. That way you can take advantage of tax breaks with homestead exemption. Other tax credits for retirees include being over 65 and widowhood.
Retire Overseas for Affordable Retirement
On the other hand, if you are searching for great retirement opportunities on a budget, then retiring overseas should be a major consideration.
Unfortunately, retirement in the U.S. is getting less and less affordable. What used to buy you a safe and secure retirement, now buys you one where you barely make ends meet.
Expatriates are growing in numbers every year. They are extending their boundaries to discover the wonders of a new and more affordable shore.
For under $900 you can retire in Ecuador and afford a much richer lifestyle than you would back home. Of course, depending on your spending habits, you could spend much less.
Essential Retirement Factors
Consider proximity to medical facilities, bus services, and family before deciding on a retirement spot.
Consider tax friendly states offering property tax benefits in the form of Homestead Exemption. This will benefit you more than states offering income tax benefits.
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Weigh your options first to find out what’s most important. Then make your choice.
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