Older Americans have some pretty big decisions to make as they age.

For example, deciding when to file for Social Security benefits is often at or near the top of the list. Due to the fact that Social Security benefits grow over time, beginning at age 62 and ending at age 70, and keeping all other variables such as work and earnings history constant, a retired worker claiming benefits at age 70 could earn as much as 76% more a month than a retired worker claiming benefits as soon as possible (age 62). Of course, waiting until age 70 to file for benefits simply doesn't make sense for all retirees. It's a personal choice that's dictated by personal, financial, and health-related variables.

A senior man playing chess on the beach.

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Similarly, seniors have to make smart decisions when it comes to Medicare. Choosing the right prescription drug plan (known as Part D) or perhaps going off the traditional grid and purchasing a Medicare Advantage plan (known as Part C), could prove crucial to saving thousands, or tens of thousands of dollars, during retirement.

But often overlooked among these key decisions is the need to choose a state to retire in that offers benefits to senior citizens. One such state that's a common destination for older Americans is The Sunshine State, Florida. Whereas the median age per state in America is 37.9, as of 2016, Florida is the fifth highest at 42.1 years of age. 

Five reasons retirees gravitate to Florida

What makes Florida so special for retirees? Let's have a look.

1. No state income tax

One of the top selling points for retirees, or folks of any age, is the fact that Florida is one of seven states (along with Washington, Alaska, Nevada, Wyoming, South Dakota, and Texas) that has no state income tax. For retirees without a lot of money saved but are still in good health and plan to keep working, Florida is a smart destination for avoiding in-state income taxes. The state does have a 6% levied sales tax rate and an average combined tax rate of 6.8%, but this isn't particularly high relative to the rest of the country.

A senior woman holding out a neat stack of cash bills.

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2. Retirement income is exempt (including Social Security)

Because Florida has no state income tax, this also means that retirement income is exempt from state taxation. Any money you receive from Individual Retirement Accounts, private and public pensions, 401(k)s, and Social Security, is completely free of in-state taxation. Florida is one of 37 states that currently does not tax Social Security benefits.

A word to the wise: You may still have federal income-tax liability on some of these forms of retirement income, even if Florida isn't taking a red cent. 

3. Cost-of-living right around the national average

Another reason to consider Florida is that it's not particularly costly to live there. Using median household income from the Census Bureau's American Community Survey in 2015 and adjusting those figures to account for regional price parity based on calculations from the U.S. Bureau of Economic Analysis, Money found that Florida had a regional price parity index of 99.5. With 100 being the mark of parity, this suggests that Florida residents are paying an average of 0.5% less than the national average for goods and services. When combined with no state income tax, it's easy to see how retirees can make a dollar stretch in Florida. 

An elderly couple embracing one another.

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4. The homestead exemption

In terms of property tax rates, Florida ranks toward the middle of the country. However, there's a sizable deduction available for lower-income seniors over the age of 65 who've resided in the state for a considerable amount of time. As noted by Kiplinger, Florida residents with household income not exceeding $28,841 (as of 2017), and who've maintained permanent residence at an in-state location for at least 25 years, may qualify for an extra homestead exemption of up to $50,000 from some city and county governments. Also, any widow or widower who's a Florida resident can claim an additional $500 exemption.

5. The weather (duh!)

Lastly, retirees choose Florida because of its temperate climate. After all, it's called The Sunshine State for a reason. With very mild winters and generally warm summers, Florida presents with a climate that most senior citizens can appreciate.

The one reason retirees won't like Florida

Of course, there are no perfect states to retire in, even if no income tax, no tax on retirement benefits, an average cost-of-living, a homestead exemption, and ample sunshine sound great. The biggest issue retirees could run into in Florida, assuming they purchase property, is homeowner insurance costs.

One of the downsides of being in a temperate tropical climate is the potential to be hit by hurricanes. According to data from the National Oceanic and Atmospheric Administration, hurricanes have made landfall in Florida 117 times. By comparison, the next-closest states are Texas and Louisiana at a respective 64 and 54 landfalls (keep in mind that hurricanes can make multiple landfalls). Because of its propensity to be hit by damaging storms, homeowners insurance costs a veritable arm and leg in Florida.

A hurricane on radar bearing down on Florida.

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Insurance.com notes that insuring a $200,000 dwelling with a $1,000 deductible and $100,000 liability costs an average of $1,228 per year nationally. In Florida, though, the average annual rate, assuming the coverage listed above, is $3,575 a year, or nearly triple the national average. Ouch! 

Are high insurance costs enough to dissuade you from considering Florida as a state to retire in? That's up to you to decide.

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