For many pre-retirees, the idea of a new chapter brings with it the excitement of choosing a new place to live. Whether you dream of staying put, downsizing in a different part of town, or moving to a new state or country, the perfect location is a deeply personal decision. What works for one person may not be right for another. As you envision your retirement, here are some practical considerations to guide your choices.

The Tax Implications of Your New State

State taxes can significantly impact your retirement income. While no state is completely tax-free, they vary widely in how they treat retirees. It’s crucial to look beyond just state income tax and examine the full tax picture, including:

• Income Tax: A handful of states have no state income tax, which can be a major draw for retirees. However, other states that do levy income tax may have generous exemptions for retirement income, Social Security, or pensions.
• Property Tax: Even in states with no income tax, property taxes can be high. Be sure to investigate local property tax rates, especially if you plan to buy a new home.
• Estate or Inheritance Tax: Currently, a dozen states have an estate tax and/or an inheritance tax. While the federal estate tax only affects ultra-wealthy estates, some state estate taxes have much lower exemption thresholds, potentially impacting “mass affluent” residents and their heirs.

Access to Quality Healthcare

As we age, our healthcare needs will likely increase. When scouting locations, prioritize areas with a strong healthcare infrastructure. Research the quality of local hospitals, the availability of specialists, and whether nearby facilities and physicians are covered by your Medicare supplement plan or other insurance. A great healthcare network is a non-negotiable for a comfortable and secure retirement.

Transportation and Mobility

Even if you plan to travel less, proximity to a major airport or key highways is a benefit. Easy access makes it simpler for family and friends to visit you. More importantly, consider your future mobility. While autonomous vehicles may one day be commonplace, you may eventually choose to give up driving. Look for locations with reliable public transportation, ride-sharing options, or a walkable community where you can easily get to the grocery store, pharmacy, and other essential services without a car.

Estate Planning for Your Heirs

For the sake of your heirs, it’s wise to consider the estate laws of your chosen state. As mentioned, a small number of states have an estate tax, which could reduce the inheritance you leave behind. Understanding these laws and how they might affect your estate is a critical part of a comprehensive retirement plan.