Are your “golden years” quickly approaching?
As retirement age nears, you need to start considering where you’ll be moving. As a federal government employee, you need to ensure that the area you choose fits the bill in terms of pension taxes, Social Security taxes, plus the regular list of must-have options that might include warm weather, active 55+ communities, and the like.
What to Consider Before Choosing a Retirement Location
You might think that heading south to Florida, Texas, or Arizona would be a great choice for a federal government retiree. They’re warm, there’s the legendary Southern hospitality to consider, and the cost of living can be pretty low, too.
However, you need to make an informed decision here, as your retirement destination can have a significant impact on your ability to afford retirement in the first place. Here are some of the most important considerations you’ll need to make when comparing retirement destinations:
- Pension Taxes: As a federal government retiree, the bulk of your retirement income will be from pension payments. Obviously, areas that tax your pension are far less desirable than those that do, although you might find some tradeoffs are necessary here.
- Access to Military Bases: While this one may or may not be important to you personally, it does make a very real difference to those retiring from the US Armed Forces.
- Ability to Downsize: If you’re retiring, chances are good that you’re looking for something a little smaller than a conventional single-family home, and you’ll want a healthy real estate industry to provide that access.
- Climate: From mild summers to mild winters, there’s a lot of variety in what retirees consider a great climate.
Let’s be clear – there is no one-size-fits-all single best place to retire, whether we’re talking about federal retirees or not. There are simply too many things to take into account. To help you narrow down your own personal list of options, consider the following:
How do you want to spend your time?
If you’d rather spend your time out and about shopping, then you’ll want access to outlet malls, shopping centers, larger malls and the like. Obviously, this is going to put more rural areas out of the running.
If you’d rather spend your time golfing, then Arizona and Florida are probably the two best options, but if you’d prefer to do a lot of fishing, then Florida, Texas or any of the Gulf Coast states might be great. If you plan to take lots of cruises, again Florida would be a great choice.
Do you want to stay mobile?
If you’re going to pull up stakes and live out of an RV for all or part of the year, you’ll need to consider where you want to visit, but you’ll also want to consider where you’ll have your mailing address, as this is where you’ll pay taxes and store your RV when not being used.
How important is medical care?
Yes, outstanding medical care is going to become more and more important as you age. However, some retirees need more care than do others, or their spouses might require significant care, so you’ll need to research the available medical centers, hospitals, clinics and the like.
How much traffic and urban growth can you handle?
With any sizeable city, you’ll encounter urban growth, traffic and congestion. For some retirees, these are deal breakers. For others, they’re not that important.
The List of Best Places to Retire for Federal Employees
Once you’ve narrowed down your list of preferences, it’s time to take a look at some of the better options for retirement within the US.
If you’re a federal employee looking to retire, North Carolina might be an excellent option. You’ll find that your federal pension (both CSRS and FERS) are not taxed in the state.
While Georgia doesn’t tax Social Security, it does tax pensions (and any other forms of retirement income) until the age of 62. After this age, you can apply for a retirement income exemption. Retirees can also be eligible for property tax breaks (and exemptions after the age of 65).
The state of Alabama does not tax Social Security income or federal pensions. It’s also home to one of the nation’s lowest property tax rates and sales taxes.
While South Dakota can have very cold winters, residents do not pay state income tax, and the state doesn’t tax Social Security, either. Property and sales taxes are also low.
If you’re an adventurer and don’t mind the cold, Alaska might be a good option. There’s no state sales tax, and no income tax at all. With that being said, property taxes are high.
Scenic and beautiful, New Hampshire has no sale tax, and doesn’t assess income tax on your pension or Social Security. However, the winters can be very cold, and the property tax is pretty high.
You knew this one was coming, but it bears mentioning. The Sunshine State doesn’t assess income tax, so your pension will go farther. It also does not tax Social Security.
With no state income tax and no Social Security tax, Nevada is an attractive destination. However, the cost of living is definitely higher here.
Hawaii doesn’t tax your pension, and you’ll find more than a few military bases. The cost of living is pretty high, though.
Wyoming might see cold winters, but the state is pretty friendly for retirees. There’s no income tax, no Social Security tax, and your pension is exempt, too. Sales taxes are very low, and there are property tax breaks available for seniors, too. And the Rockies offer spectacular scenery and mountain resort jobs.
These are a few of the most retiree-friendly states in the US where you can make your pension and Social Security stretch as far as possible. However, there are other states that might be worth your consideration. For instance, Tennessee is pretty friendly toward seniors, but has the highest sales tax rate in the country. Arizona, Oklahoma, Texas, South Carolina and Kentucky are all good options, too, although they are less affordable (or less friendly toward retirees) than the ones mentioned above.