Congrats! Congratulations! Now the question is, where should you retire? While there are certain states that offer better retirement living and financial benefits, the best place to retire is dependent on your priorities.
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Personal Capital's Retirement Planner is a great tool to help you understand the potential impact of retirement in different states. These online tools allow you to anticipate large expenses, such as buying a house or sending your children through college, run different scenarios and create a retirement spending plan.
This calculator can help you compare your retirement savings to other people in your state as you think about making a major move.
How to Choose the Best State for Retirement
Your unique financial situation and priorities will determine the best decision for you. These are important considerations to make when you're looking for the best retirement locations.
Quality of Life
This is the most personal consideration because everyone has their own definition of what makes life great. It may be soaking up the city's cultural riches. It may also mean being alone or surrounded by nature.
Are you more drawn to the tranquility of a small beach town than the bustle and bustle of a large city? Do you want to explore new communities and make new friends? Or would you prefer to build deeper relationships with those you already know, or be closer to your family? These and many other factors will impact your quality of life.
Since the outbreak of the pandemic, housing costs have been rising almost everywhere. However, there are still some areas that started with high rent and home prices. They've risen even more. Your budget will be affected more by where and how you plan to purchase or rent a house in retirement.
The location is only one of many factors that can influence the cost of healthcare for retirees. HealthView Services' 2021 report revealed that the majority of retirees can expect to see their total retirement healthcare expenses fall between $156,208 – $1 million.
Medicare Part D premiums and Medicare Advantage plans, Medigap premiums and out-of pocket spending are some of the costs that can vary from one state to another. According to the report, Massachusetts and Maryland are more costly in these categories while Hawaii and New Mexico are much less expensive with some costs close to 50% lower.
While this is an important consideration all through our lives, it can be a significant factor in retirement. You may need to pay taxes depending on how much retirement income you have. While federal income tax is an established fact, living in a state that has a high income tax rate may leave you with less income.
Cost of Living
The state cost of living encompasses healthcare, housing, taxes and insurance. It also includes the cost of daily goods, such as food and transport. It is clear that certain places in the U.S. can be more expensive than others. This should be your first consideration if you want to reduce retirement costs.
Do you want all-year sunshine? Do you prefer to see the seasons all year? Perhaps two homes are better suited to your snowbird tendencies. No matter what your preference may be, it is important to do your research. Climate change will have a significant impact on retirement destinations like Florida. It is becoming more expensive to insure homes in states that have higher climate risk factors. Make sure you factor this into your plan.
Learn More: 7 Essential Steps to Retirement Planning
These are the Best States to Retire In 2022
We came up with an easy formula to find the right state to retire in: Follow the money.
Millionaires are more likely to have the opportunity to live in areas that offer the best lifestyles. While anyone can go broke if they spend too much, it is possible to have more choices about where to live.
Let's take a look at the states with the highest number of millionaires to determine the best places for retirees. Then, we will compare those states to the ones with the lowest taxes. This allows us to take into account both lifestyle and financial considerations. This is a fun way to have some fun with retirement planning.
According to our formula, the top two states in which to retire are — please roll your eyes — Alaska and New Hampshire. Washington, Virginia, Delaware and Virginia are all among the top 20 most popular states to retire in, according to both lists.
It is interesting to note that states with low taxes like South Dakota or Texas are not in the top 10 or 20 states with the highest number of millionaires. These states have such great tax benefits that we will be watching to see if they make it on the list.
The surprise of the shortlist is Delaware, which is not a state that you would normally think of when it came to millionaire concentration. Wyoming and Florida are also not on the list because they have low taxes and offer great lifestyles. Florida is known for its beachfront lifestyle, but if you have ever visited Jackson Hole, Wyoming will be your first choice.
Which States have the lowest tax burden?
Instead of looking at taxes rates, which may vary depending on your particular circumstances, the "tax burden” number measures the percentage of personal income you would pay for state and local taxes.
We used Wallethub's list to determine the tax burden. It compares 50 states against three types of state taxes in 2022: individual income taxes, property taxes, and sales & exise taxes.
|Rank||State||Total Tax Burden||Property Tax Burden||Individual Income Tax Burden||Total Sales & Excise Tax Burden|
Which States have the Most Millionaires?
Let's now look at the 10 states with the highest number of millionaire households. This is the most recent data.
|Rank||State||Millionaire Households: %|
Is it financially wise to move in retirement?
There are nine states in the United States that do not have income taxes for those who wish to retire. These include Alaska, Florida (Florida), Nevada, New Hampshire and South Dakota. Relocating is financially smart for many retired people who have the financial means to do so, especially if the home state has high taxes such as California or New York.
Continue reading:Average Retirement Savings per State
The Best Places to Retire in Each State
What about Retirement Lifestyle?
In retirement, money is not everything. If you don't have the means to spend your money on a lifestyle you love, like being outdoors and able to go to fine dinners, shows, or museums, then it's not worth it. Many people won't have unlimited money when they reach retirement age so it may be necessary to make sacrifices or relocate.
Since it is subjective, it is impossible to determine which state offers the best retirement lifestyle. Do you prefer the big cities? Do you prefer quieter towns? Perhaps you prefer a quiet retreat in the country? It all depends on you.
It's not clear which state is best for retirement. Everybody is biased. My home state of Hawaii is my dream based on its lifestyle. However, Colorado, where we've lived for almost two decades, offers many of the same lifestyle perks with lower overall cost. Decisions!
This list is purely for entertainment, but it can also be a great place to start if your goal is to move to a lower tax state. Check out our Retirement Planner tool to determine if moving would be financially beneficial. It allows you to plan scenarios to assess how your retirement prospects will change.
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Frequently Asked Questions
How is gold taxed within an IRA?
The fair market price of gold when it is sold determines the tax due on its sale. When you purchase gold, you don't have to pay any taxes. It is not income. If you sell it later you will have a taxable profit if the price goes down.
Gold can be used as collateral for loans. Lenders try to maximize the return on loans that you take against your assets. For gold, this means selling it. This is not always possible. They might just hold onto it. Or, they may decide to resell the item themselves. The bottom line is that you could lose potential profit in any case.
If you plan on using your gold as collateral, then you shouldn't lend against it. You should leave it alone if you don't intend to lend against it.
What is a gold IRA account?
You can purchase physical bullion gold coins at any point in time. To invest in gold, you don't need to wait for retirement.
The beauty of owning gold as an IRA is you can hold on to it forever. Your gold holdings won't be subject to taxes when you pass away.
Your heirs inherit your gold without paying capital gains taxes. And because your gold remains outside of the estate, you aren't required to include it in your final estate report.
You'll first have to set up an individual retirement account (IRA) to open a gold IRA. After you do this, you will be granted an IRA custodian. This company acts as an intermediary between you and IRS.
Your gold IRA Custodian will manage the paperwork and submit all necessary forms to IRS. This includes filing annual reports.
When you withdraw your gold from your IRA, you'll pay taxes on it. You will be liable for income taxes and penalties if you take the entire amount.
However, if you only take out a small percentage, you may not have to pay taxes. There are exceptions. You'll owe federal income tax and a 20% penalty if you take out more than 30% of your total IRA assets.
It's best not to take out more 50% of your total IRA investments each year. Otherwise, you'll face steep financial consequences.
What is the cost of gold IRA fees
A monthly fee of $6 for an Individual Retirement Account is charged. This fee covers account maintenance fees, as well any investment costs that may be associated with your investments.
You may have to pay additional fees if you want to diversify your portfolio. These fees will vary depending upon the type of IRA chosen. Some companies offer free checking, but charge monthly fees for IRAs.
A majority of providers also charge annual administration fees. These fees are usually between 0% and 1%. The average rate is.25% each year. These rates are often waived if a broker like TD Ameritrade is used.
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement funds
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
Three ways to invest in gold for retirement
It is important to understand the role of gold in your retirement plan. You can invest in gold through your 401(k), if you have one at work. You might also be interested to invest in gold outside the workplace. For example, if you own an IRA (Individual Retirement Account), you could open a custodial account at a brokerage firm such as Fidelity Investments. Or, if you don't already own any precious metals, you may want to consider buying them directly from a reputable dealer.
These are three simple rules to help you make an investment in gold.
- Buy Gold with Cash – Avoid using credit cards or borrowing money to fund investments. Instead, deposit cash into your accounts. This will help you to protect yourself against inflation while also preserving your purchasing power.
- Physical Gold Coins to Own – Physical gold coin ownership is better than having a paper certificate. The reason for this is that physical gold coins are much more easily sold than certificates. There are no storage fees for physical gold coins.
- Diversify your Portfolio – Don't put all your eggs in one basket. This means that you should diversify your wealth by investing in different assets. This will reduce your risk and give you more flexibility in times of market volatility.
By: Paul Deer, CFP®
Title: 2022’s Best States to Retire in the U.S.
Sourced From: www.personalcapital.com/blog/retirement-planning/top-states-to-retire/
Published Date: Wed, 21 Sep 2022 14:00:27 +0000
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