ROSELAND – This year, the first of the nation’s 78 million Baby Boomers will begin turning age 65. Once they stop working and no longer need to live in their current location for professional reasons, many retirees consider pulling up stakes and moving elsewhere. The New Jersey Society of CPAs (NJSCPA) recommends that you keep these issues in mind if you’re considering relocating in your retirement:
Is There a State Income Tax?
This is the first question many people ask. You will generally pay the same in federal taxes no matter where you live, but your other tax bills may vary considerably based on location. For instance, there are nine states with no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming. (New Hampshire and Tennessee do tax interest and dividend income.)
What Else Should I Know About Taxes?
When you’re comparing possible tax costs in a new location, remember that income taxes are not the only issue to consider. For example, some states impose relatively high sales taxes. Other locations may have steep property or local taxes. Thus, while it may be appealing to avoid state taxes, what you save on them may cost you elsewhere. Keep in mind, too, that many states with an income tax do exempt Social Security and other types of pension or retirement income from taxes, or they may have other retiree-friendly policies. Look at the big picture, and determine your net cost of living in the location you’re considering. If you’re uncertain about how relocation will affect your tax situation, your CPA can help you compare your options and make the best choice.
Where’s The Best Place to Work?
While previous generations gave up working once they retired, many seniors today seek to continue part-time jobs or start second careers. That means for numerous retirees, choosing a new home will include investigating the local employment situation and overall strength of the area economy. Many seniors are drawn to locations that feature high-quality medical facilities and vibrant cultural opportunities available in college towns. That makes sense, because not only are these areas great places to live, but health care and education are also strong industries that may offer good job prospects.
Is It Senior Friendly?
While financial concerns are critical, it’s also important to determine whether the new location is a livable place to settle down. An inexpensive living situation will not offer true value if it’s difficult to get around or take an active part in the community. Many towns actually offer incentives for retirees, such as low-cost transportation or senior cultural and recreational activities. Consider not only what it will be like to live in the new location, but also the outlook in the future. Will the town that is appealing to you at age 65 be just as attractive when you’re 75? In addition to top medical facilities, think about easy access to shopping, friends and family. They are among the many tangibles and intangibles that will add up to an enjoyable quality of life, now and in the future.
Your CPA Can Help
Retirement can be an exciting time, but there are also many uncertainties. Turn to your local CPA for advice on how to make the most of this new chapter in your life. He or she can help you find answers to all your financial questions.
If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.
For more information on various personal financial matters, visit the NJSCPA’s public service website at MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.
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