One For The Money

• United States Retirement Migration trends [03:35]
• Factors to Consider when retiring out of State  [05:47]
• How to save on taxes for those with residences in two states   [12:57]

More than a few Americans decide to relocate to another state. Smart Asset examined U.S. Census Bureau migration data to uncover where retirees are moving. They noted, unsurprisingly, that a lot of seniors are moving out of expensive northeastern cities and into other parts of the country. Here are some of the key findings of their analysis of the census data:

The most popular city for retirees to move to was Mesa, Arizona which topped the list for the nation’s highest net gain of seniors for the third consecutive year. In fact, the influx of retirees more than doubled that of the second place city.

The most popular state is Florida which sees a massive influx of seniors. Florida netted more than 78,000 senior residents from other states in 2021 – three times as many as the second-ranked state. Miami, Jacksonville, St. Petersburg, and Tampa all placed among the top 20 cities gaining the most seniors.

Smart Asset noted that Taxes and climate appear to influence retirees.

The most obvious factors to consider when moving to another state in retirement. 

Proximity to Family - As you get older, you want to cherish your time with family. Obviously, you’ll get more of that when you live closer to one another. Additionally, you may need some assistance as you get older so you will want to have family close to help you. Clearly, being geographically close to family is a compelling reason to retire to another state but maybe not too close to your family, as the comedian George Burns put it “Happiness is having a large, loving, caring, close-knit family in another city”. But it should be noted that he didn’t say in another state.

Cost of Living —The next most important factor when considering retiring in another state is the cost of living. This has more to do with just taxes as things can be significantly more or less expensive. 

Climate — There’s a reason why more retirees are moving to sunnier climes such as Florida, Arizona, Texas and the like. 

Taxes — Are a huge consideration when deciding to retire in another state. Some states tax income at higher rates, some don’t tax income at all. Some tax social security benefits and some don’t at all. Others have no to low income rates but have higher property tax rates to make up for it. Some have high sales tax and a few have none.

In short, if you are looking to retire to another state some of the factors you will want to consider is proximity to family, the climate, the cost of living and of course taxes. Because if you live close to family near the border of two different states, it might make a big difference in which of the fifty nifty United states you decide to retire to. 

There is a tax saving strategy for those who have residences in two different states. We’ll call it the 183 rule. Why that number, because there are 365 days in a year and 183 days is just over half. If a person has residences in two different states, say California and Nevada, they would want to become a resident in Nevada and spend 183 days or more in their Nevada residence. This would ensure that their income would be taxed at Nevada rates and not Californias, because they spent the majority of the time in Nevada.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

Resources & People Mentioned

• https://www.investopedia.com/articles/personal-finance/110614/overall-tax-burden-state.asp
• https://www.nerdwallet.com/cost-of-living-calculator
• https://www.kitces.com/blog/state-income-tax-retirees-top-marginal-rates-social-security-pension-income-age-exemptions/
• https://smartasset.com/data-studies/where-retirees-are-moving-2023
• https://www.investopedia.com/tax-residency-rules-by-state-5114689