Which are the best states for retirees?December 19, 2012: 6:30 AM ET
Which states are most tax-friendly for retirees? — Larry O.
There are a lot of things to think about when choosing a place to retire, and state taxes are definitely worth considering. It's particularly useful to look at how states tax Social Security, pensions and IRA distributions, says Liane Warcup of Geneva, Ill.-based Clarus Financial Planning.
For instance, Social Security benefits are federally taxed, but they are excluded at the state level in 27 states. "A lot of money is coming in from Social Security or a pension for many retirees," says Warcup. "So it's important to look at the way these are taxed because it varies so much from state to state."
Other taxes, such as property or sales taxes, vary from state to state as well, but their impacts will vary depending on the specifics of your situation. Warcup suggests checking out maps such as the one at retirementliving.com, which offers a state-by-state view of income tax, property tax, sales tax and inheritance and estate tax rates. In addition to the income taxes, you'll want to judge whether certain taxes will affect you more based on your lifestyle and estate planning needs. Just make sure you actually want to live in a tax-friendly state before you pick up and move there.
— Austin Kilham
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