When it comes to which state you live in, not all retirements are created equal.
Taxes, cost of living, and even climate could make certain states more beneficial to your retirement goals. Depending on where you live, the same income and investment portfolio may potentially be a luxurious surplus or barely enough to get by. Today, we're ranking some of the top states that can potentially be ideal for retirement.
Before packing your bags: we recommend speaking with a financial advisor. They can help you consider the state that makes the most sense for your specific financial situation. Different savings amounts, taxes, and other factors can change which state is best for you specifically. We built a free quiz that will match you with up to three fiduciary advisors in minutes.
The value of working with an advisor varies by person, and advisors are legally prohibited from promising returns. That said, research suggests people who work with a financial advisor feel more at ease about their finances, and could end up with about 15% more money to spend in retirement.1
Where can I potentially pay the least in retirement taxes?
A few states stand out for their competitive tax rates, especially for retirees. Our winners for the tax category each have either no state income tax, no tax on retirement income, or a substantial discount on retirement income taxes.2
But that’s just the start: each state on our list has competitive sales, property, inheritance and estate taxes as well.
Alaska
No state, retirement, or social security income tax3
Arizona
No social security income tax4
Florida
No state, retirement, or social security income tax5
Iowa
No state, retirement, or social security income tax6
Nevada
No state, retirement, or social security income tax7
North Dakota
Partial social security income tax8
South Dakota
No state, retirement, or social security income tax9
Tennessee
No state, retirement, or social security income tax10
Washington
No state, retirement, or social security income tax11
Wyoming
No state, retirement, or social security income tax12
If those states don’t fit into
your plan, consider our runner up list of tax-friendly states. The
following highlights our winners from above along with states that have
fewer tax advantages for retirees, but they all do have one big perk: no taxes on social security income.13
Top States Favored By Retirees:
Retiring is more than just a dollars and cents decision. Tax policy, while important, may not be all important to your specific situation. For that reason, let’s get it from the horse’s mouth: our next list provides where residents are most likely to be 65+.14
According to the Federal Interagency Forum on Aging Statistics in 2020, six states are the standout favorites among the over-65 crowd. No states have a greater density of residents over 65 than these:
States With the Highest Percentage of Population Older Than 65 Years Old
So Which State Do We View Is The Best Overall?
Let’s compare by cross-referencing each list we just went over. You may be surprised to notice that only one state made both lists.
So, which state do we rank as the best to retire in? According to tax liability and population density data, we see none better than:
Taking the quiz will not determine which state you should retire in, as that depends on your own personal situation. The quiz will match you with up to three financial advisors for free, which state is best for you can be discussed with the advisor you choose.
What Might Be The Best State For You?
Above all, it’s important to make a decision that 1. Makes you happy and 2. Works for your financial situation.
While several states have favorable tax policies (as we discussed), there may potentially be one or two that are particularly beneficial to you. You also should weigh cost of living, climate, and other considerations like distance to family and healthcare needs.
A fiduciary financial advisor can help you forge a financial plan that lets you focus on other, more personal considerations.
That’s why we built a free quiz to help you find vetted financial advisors that serve your area. Be sure to mention where you may want to relocate when meeting with your matches, so you can verify they serve that state as well.
We’ll give you up to three matches because, just like when choosing which state to retire, it’s always important to weigh a few options!
Find up to three advisors who serve your area, free!
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any Adviser, participate in the management of any user’s account by an Adviser or provide advice regarding specific investments.
We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
SmartAsset.com is not intended to provide legal advice, tax advice, accounting advice or financial advice (Other than referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). SmartAsset is not a financial planner, broker or tax adviser. The Service is intended only to assist you in your understanding of financial organization and decision-making and is broad in scope. Your personal financial situation is unique, and any information and investing strategies obtained through SmartAsset.com may not be appropriate for your situation. Accordingly, before making any final decisions or implementing any financial strategy, you should consider obtaining additional information and advice from your accountant or other financial advisers who are fully aware of your individual circumstances.
- "Journal of Retirement Study Winter" (2020). The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Journal of Retirement study.
- “Americans Are Moving to the Most Tax-Friendly States in the Country, MoneyGeek (March 2023)
- Alaska Retirement Tax Friendliness, SmartAsset (2022)
- Arizona Retirement Tax Friendliness, SmartAsset (2022)
- Florida Retirement Tax Friendliness, SmartAsset (2022)
- Iowa Retirement Tax Friendliness, SmartAsset (2023)
- Nevada Retirement Tax Friendliness, SmartAsset (2022)
- North Dakota Retirement Tax Friendliness, SmartAsset (2022)
- South Dakota Retirement Tax Friendliness, SmartAsset (2022)
- Tennessee Retirement Tax Friendliness, SmartAsset (2022)
- Washington Retirement Tax Friendliness, SmartAsset (2022)
- Wyoming Retirement Tax Friendliness, SmartAsset (2022)
- Which states tax Social Security benefits? AARP (Dec. 2022)
-
Older Americans Key Indicators of Well Being. (2020)
Source: https://articles.smartasset.com/best-states-to-retire/ux/index.html?utm_medium=cpc&utm_source=powerinbox&utm_campaign=jee__falc_content_beststateretire_desk&utm_content=879490&utm_term=4049&pi_adid=879490&pi_clickid=24df75fa81f54a8a9684b5852b172c23
