When I think of Maryland, I think of some of the best crabs in the world, Chesapeake Bay, and Baltimore Ravens football. I'm sure I'm not alone in that. What you may not think about when you hear Maryland is that it's a popular retirement destination.
Conveniently located within relatively short distances of some of the country's major cities, Maryland has the location and natural beauty that attracts many people. It doesn't have a tropical or warm year-round climate like Florida or Southern California, but it has all four seasons, letting retirees experience the full weather spectrum. Maryland ranked No. 7 in a Motley Fool look at the best states to retire in.
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Maryland's cost of living is higher than most states'. According to RentCafe, its housing and utilities are 44% and 10% higher, respectively, than the national average. Healthcare, however, is 4% lower, which is beneficial because that's usually one of retirees' largest expenses.
Tax-wise, let's start with the good news: Maryland is one of the 41 states that doesn't tax Social Security benefits, and pension income up to $39,500 is excluded from taxes in 2024. To be eligible for the pension exclusion, you need to be 65 or older, disabled, or have a disabled spouse. The exclusion amount can also change yearly, so it's important to stay current on it.
The bad-but-could-be-worse news is that Maryland does tax money received from 401(k)s and traditional IRAs. It taxes this money as regular income.
Overall, Maryland is a good place for retirees looking for travel convenience, natural beauty, and favorable Social Security and pensions tax treatment. The latter, especially, can keep thousands in retirees' pockets.
