Where do you want to live after you’ve reached financial independence? For many people, where they live is dictated by their career. That restraint ends once you have built your net worth and no longer need to work for a living. Do you want to live in the country, near the ocean, or in a busy metropolitan area with lots to do?
The question of where to live in retirement is a very personal decision, and the right answer will depend on many factors. Roughly 930,000 people age 60 and older moved across state lines in 2018. Financial implications are not necessarily the most important factor, but they’re definitely up there. Most reports published on the best places to retire give a heavy weighting to affordability. Other important considerations are access to healthcare, climate, and culture.
I was curious to see how Pennsylvania fared in the rankings of the best states for retirees. MoneyWise analyzed studies by Bankrate, WalletHub, and Kiplinger to create a list of the “best of the best” states for retirement. In 2019, Pennsylvania ranked number 14. MoneyWise cited our livable, four-season climate with warm summers, a pleasant fall, and a genuine winter. While Pennsylvania lacks a coastline, it offers easy access to beaches and lakes, mountains, and several bustling urban centers.
A more recent ranking by MoneyRates placed Pennsylvania in the thirteenth position overall.
RetirementLiving placed Pennsylvania at number eight in their top ten states to retire to, noting the many senior housing options to choose from and housing affordability.
Source: RetirementLiving.com, February 17, 2021
Taxation is often cited as an important factor when considering where to live in retirement. The key aspects of taxes to consider are:
State income tax: Seven states do not have a personal income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
Taxation of retirement income: Four states—Hawaii, Illinois, Mississippi, and Pennsylvania—exempt all or most retirement income (such as Social Security benefits) from taxable income.
Sales Tax: Adding a sales tax onto a purchase makes everything you buy a little more expensive. Pennsylvania has a 6% sales tax—but groceries, clothing, pharmaceutical drugs, and residential heating fuels are exempt.
Property Tax: Property taxes can severely impact retirement living because the tax is not based on income or spending.
Kiplinger provides a helpful state-by-state guide to taxes for retirees. Their site allows you to compare states side-by-side. I used this resource to compare Pennsylvania with a few of its neighbors.
By Rick Rodgers, Rodgers & Associates.