Moving in retirement? Key factors for switching states
Beyond considerations like climate and proximity to loved ones, moving to a new state in retirement comes with a host of other decisions and ramifications.
- Investopedia
- – 12/01/2022
Lifestyle. Sunshine. Scenery. Friends. These are just some of the attractions that might draw you to a different state when you retire. You might also find a low (or non-existent) state income tax to be a compelling siren song.
But no matter what state you end up in, stuff in your life that you considered settled may turn out not to be. Besides the big, obvious differences between states – things like income tax, estate tax, and so forth – there are a host of smaller issues you might not have thought of.
Example: New York does not have a residency requirement for the person you choose to be executor of your will (assuming they’re a U.S. citizen); Florida does, unless you’re related by blood, marriage, or adoption.
So does that mean you’ll have to rewrite your will? Well, it means you may have to tweak it and sign a new version – no matter what state you move to. The same might go for power of attorney documents, as well as a healthcare proxy and living will.
While many states will in theory honor a legally executed document from another state, in practice local professionals might be more comfortable acting on a familiar format or execution. The requirements and standard formats of these documents tend to be dictated on a state-by-state basis – and while some states have stated statutorily that they will honor other states’ legal documents, this is not by any means standard.
You are probably better off updating your critical documents in your new state of residence, since the times when these documents come into play are often not times you want to be running around looking for a notary.
Here, some key considerations for the most popular states for people to retire to:
1. Florida
Income Tax:3 None
Estate tax:4 None
Inheritance tax:5 None
Property tax (avg. tax as percent of home value):6 .86%
Median housing price per sq. foot:7 $277
Percent of population age 65+:8 21.1%
Average winter temperature:9 59.4 degrees
Residents per golf course:10 24,364
2. South Carolina
Income Tax (top marginal rate): 7%
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .53%
Median housing price per sq. foot: $190
Percent of population age 65+: 18.4%
Average winter temperature: 46.1 degrees
Residents per golf course: 19,994
3. Arizona
Income Tax (top marginal rate): 4.5%
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .6%
Median housing price per sq. foot: $279
Percent of population age 65+: 18.2%
Average winter temperature: 43.6 degrees
Residents per golf course: 25,633
4. Delaware
Income Tax (top marginal rate): 6.6%
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .59%
Median housing price per sq. foot: $210
Percent of population age 65+: 19.7%
Average winter temperature: 36.1 degrees
Residents per golf course: 35,355
5. Idaho
Income Tax (top marginal rate): 6%
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .65%
Median housing price per sq. foot: $293
Percent of population age 65+: 16.2
Average winter temperature: 25.4 degrees
Residents per golf course: 23,280
6. Nevada
Income Tax: None
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .56%
Median housing price per sq. foot: $273
Percent of population age 65+: 16.3
Average winter temperature: 32.2 degrees
Residents per golf course: 37,405
7. Wyoming
Income Tax: None
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .51%
Median housing price per sq. foot: $188
Percent of population age 65+: 17.2%
Average winter temperature: 21.2 degrees
Residents per golf course: 17,480
8. Mississippi
Income Tax (top marginal rate): 5%
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .63%
Median housing price per sq. foot: $130
Percent of population age 65+: 16.5%
Average winter temperature: 46.7 degrees
Residents per golf course: 27,676
9. New Mexico
Income Tax (top marginal rate): 5.9%
Estate tax: None
Inheritance tax: None
Property tax (avg. tax as percent of home value): .59%
Median housing price per sq. foot: $183
Percent of population age 65+: 18.3%
Average winter temperature: 36.1 degrees
Residents per golf course: 57,230
10. Maine
Income Tax (top marginal rate): 7.15%
Estate tax: 8% to 12% ($5.8 million exemption)
Inheritance tax: None
Property tax (avg. tax as percent of home value): 1.2%
Median housing price per sq. foot: $234
Percent of population age 65+: 21.3%
Average winter temperature: 16.8 degrees
Residents per golf course: 11,644