About 40% of Americans plan to move to another part of the country in retirement. And with good reason -- after all, reaching the end of a career and having raised children affords an easy opportunity to move to a new a place for the first time in 20 or 30 years.
But there are a lot of different factors to consider when choosing a new place. Personal ones like proximity to loved ones, living in a place that suits your lifestyle and interests, available healthcare, and geographical factors like climate and surroundings are important, and then there are financial considerations, such as cost of living, real estate, and taxes.
As the economy has bounced back from the recession and more baby boomers are exiting their careers, moving in retirement has become more popular. Below, we'll take a look at the three most popular states for retirement -- what's attracting seniors, and what they can expect financially in their new homes.
Not surprisingly, Florida continues to draw more seniors than any other state. The Sunshine State beckons with warm weather year-round, miles of sandy beaches, and no state income tax. About 55,000 Americans over 55 move to Florida each year, twice the number that were flocking there during the great recession. More seniors call Florida home than any other state in the nation, with 19.1% of the state's population above 65. One county, Sumter, west of Orlando, counts over half of its residents as over 65, much more than any other country in the country.
Here's what prospective transplants to Florida should know.
- Average home price: $220,000, slightly more than the national average of $215,000. Price per square foot is $126 vs. the national average of $117.
- Cost of Living Index: 99.3 (100 is average)
- Personal income tax: None
- Average property tax: $1,773 (#23 out of 50 states), or 0.97% of home value, though some deductions are available for seniors.
While Florida's cost-of-living is average, the warm weather, lack of sales tax, and convenient travel connections to the Northeast and Midwest seem to make it the nation's favorite retirement destination.
What Florida is for the East Coast, Arizona is for the West. The state offers desert heat, beautiful scenery, and a modest of cost-of-living. For those looking to escape the bustle and long commutes of cities like Los Angeles, San Francisco, and Seattle, Arizona offers a promising alternative.
Phoenix is the most popular metropolitan area for retirees, according to the Brookings Institution, and annual retiree moves to the state have increased 18% in the post-recession years. Here are some fast facts on the Grand Canyon State.
- Average home price: $209,000. Price per square foot: $105
- Cost of Living Index: 100.3
- Income tax rate: Top bracket is 4.54%, which ranks 13th lowest of states that collect income tax. Social Security is untaxed.
- Average property tax: $1,356, or 0.72% of home value, ranking 31st out of 50 states.
Like Florida, Arizona seems to draw retirees because of its modest cost of living, relatively low taxes, and warm weather and pleasant surroundings.
3. South Carolina
Rounding out the list is South Carolina. Like Florida, South Carolina offers warm weather, beaches, and several coastal towns that are popular for retirees. Among them are Myrtle Beach, Hilton Head Island, Charleston, and Beaufort. Topretirements.com ranks three of those cities in its Top 10 retirement destinations people most often search for. Since the recession, the number of retirees moving to the Palmetto State increased 6%.
If you're thinking of moving to South Carolina, here are some facts you may want to consider.
- Average home price: $179,000. Price per square foot: $94.
- Cost of Living Index: 95.2
- Personal income tax: Top bracket is 7%, but the state is generous to seniors. Social Security is untaxed, and seniors are allowed to deduct $15,000 in additional income.
- Median property tax is just $689 (#6 out of 50 states), or 0.5% of home value.
While South Carolina's winters may be colder than Florida's, like other popular destinations the state offers mild weather, a low cost of living, and a low tax burden.