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From a tax perspective, I was always thinking I would move to Florida where there is no income tax and now I hear there is a wealth tax....scrap that Florida idea!

So from a tax perspective,
If you have been Foolish (capital F) and
LBYM all your life,
and saved over $1,000,000...

what state does the Fool community feel is best to retire in? and why
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. . . I hear there is a wealth tax....scrap that Florida idea!


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How about the Intangible Tax whiuch is one-tenth of one per cent. LOL. If you can't afford that then you a certainly "not wealthy">

Here a link to the FLA Dept of Revenue:

http://www.myflorida.com/dor/taxes/ippt.html


sunray
in FLA
p.s. We have enuff retirees, go elsewhere.
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and saved over $1,000,000...

what state does the Fool community feel is best to retire in? and why


Some research is definitely called for.

There are a few states with no income tax. Some of them compensate with high property taxes (TX), while elsewhere property taxes may be more reasonable (WA ouside of the Seattle area).

How much income do you plan to take out of your portfolio to live on? How much will you spend on items subject to sales tax? Does it make sense to pay no income tax but a relatively high sales tax or does it make sense to pay income tax but no sales tax? Some states even have sales tax on food.

How about living in southern WA and paying no income tax and doing your shopping for bigger-ticket items across the river in OR, which has no sales tax?

An even bigger consideration may be (if you're too young to qualify for Medicare and don't have company-provided health insurance, which may be cancelled anyway down the road) what is the health insurance situation in the states you are considering? If you find a state to minimize your taxes but end up paying lots more for health insurance, is that a good thing? There may be states in which it is nearly impossible to find health insurance if you have pre-existing conditions.

Sounds like a fun project to figure all this out. Good luck.

--fleg, currently in OR but eyeing WA for when DW stops working
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what state does the Fool community feel is best to retire in?

A state of good health with plans for both your financial and day-to-day futures.

Taxes are taxes are taxes. States will support their activities somehow, and it's much more than a question of "do they have an income tax?" For example, NH has no income tax but an outrageous property taxes. DC has outrageous income tax, but cheap property tax. IL has cheap income tax (especially for retirees), but high property,gas and tobacco taxes. I suspect you can find some comparisons at the AARP site, but for my money the starting point of this decision has nothing to do with taxes.

Where to you want to live based on non-tax issues? Unless you're a hermit who cares nothing about the presence of family and friends, cultural activities, etc. I'd start with considerations about how you want to spend your time. If it turns out you have competing places, taxes for your particular situation could turn out to be an issue down the line.

Phil
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<A state of good health with plans for both your financial and day-to-day futures.>


I'm with Phil on this one. It is generally not a good idea to have your major life decisions driven primarily by taxes. I am sure that one could find a very affordable place to retire to in South Dakota (no harm meant against any of our Foolish SD friends). Downsizing to a smaller home or a lower cost area could give your budget some breathing room. Each person has to decide for themselves where their comfort level is regarding any tradeoffs they make.

Life almost always comes down to a matter of balance. If you have had enough of long, cold winters, a low level of taxes in a harsh winter state may not be your best choice. Likewise if you want to be able to play golf every week (or partake in some other favorite outdoor activity), a cold weather choice may not be your best one. OTOH, if the changing of the seasons is something you enjoy, the Sunshine state may not be your best choice. As Phil mentions, good health is another major factor. If you have any health concerns you would not want to be living in an area where the nearest hospital is an hour away.

One piece of advice I would give to anyone who is looking to relocate in retirement is to plan on multiple visits or even an extended stay before finalizing anything. I have read more than a few sad stories from those who thought they knew what they wanted only to discover that they really did not like it after a few months. Renting for 6 months to a year may give you enough time to make a well thought out decision.


B
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I don't know the answer to your question but the following link may be of interest: http://www.taxadmin.org/fta/rate/tax_stru.html
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What Phil said is so very true.

We lived in the WA area that fleg referred to for about 13 years PRIOR to retirement. But our property taxes really started to get expensive, as did our heating costs. (The latter perhaps could have been remedied by a smaller, more energy-efficient home.) Most importantly, though, was that we were just fed up with the lack of sun. It doesn't bother many people, but my DW and I just couldn't take the endless clouds for another year. (Often times you can go 4 weeks without seeing the sun once.) The summers are wonderful, though -- usually.

So, it really does amount to what you want to do, what climate you like, what amenities -- as well as where you can best afford to live. We researched the entire US when deciding where to retire. We finally decided on CA, because it met most of our requirements. FL's intangibles tax is low, but at 0.1% it's $1000 / million. We haven't paid that much annually in CA income tax since we moved here in '01 (last year it was $300 or $400). Our property taxes are prevented from rising more than 2% / year. Our gas & electric bills are usually very small, due to the mostly temperate climate. (Well, we do suffer a bit in the summertime, making conservative use of the A/C.) And we enjoy having about 2x as many sunny days as we had in WA.

Another factor was health insurance. At the time we left WA, the only individual health insurance policy we could find was more than 3x as much as what was available in CA. At the time, there were very, very few choices (one or maybe two) in SW WA, but 5-6 in No CA. Unfortunately, health insurance costs are not capped (of course), and they are a few years away from becoming outrageous. Certainly state income tax pales by comparison.

So follow Phil's, and the other's, advice. Pick out several places that you think you'd like, regardless of cost, and then compare costs. But take into account as many factors as you can, because state income tax certainly may not be that significant at all.

Ken
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I just had to reply because we intentionally moved to Washington (Olympic Peninsula) from Ohio for tax and weather reasons. I used the "Retirement Places Rated" book for a guide, then covered several Northern, Western, and a few Southern states. As an engineer I looked carefully at the pie charts on weather, liking what I saw for Port Angeles, WA. Nearly 11 months of spring or fall, with very little winter of summer. Seldom do we have days above 80 or below 30 degrees. Our specific area, in the shadow of Mt. Olympus, gets 12" to 15" of rain per year. The tax situation fits us well, including being a community property state. We have now been here 11 years and love it. The number of cloudy days was similar to Cleveland so that was not a drastic change for us, and my wife loves the cloudy weather for gardening. We do not need air conditioning, and heating costs are reasonable for us, as are property taxes. Tax rates were very important to me as I have significant capitol gains.

Good luck, Gapfan :-)
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Gapfan,

(Getting a bit OT, but ...)

I think your experience shows just how personal this decision really is. One person's heaven can be another person's ... well, I wouldn't say hell, as we actually loved it in SW WA, if not for all the cool, damp, cloudy weather.

Are you in Port Angeles, or Sequim? I thought Port Angeles was known as one of the cloudiest places in the US. Anyway, I can't really comment, as sadly, despite my 13 years as a WA resident, I never made it up your way. :-(

But I did compare Cleveland & Port Angeles at bestPlaces.net. Cleveland seems to be quite a rainy place! (Not to mention, cold & snowy.) I have to say, if my only choices were between Cleveland & Port Angeles -- well, it's a no brainer!

Lastly, for any self-employed folks interested in moving to WA to escape taxes, beware. It's very true that there is no state income tax, but WA does levy a "Business & Occupations" tax which can be quite high, depending on your business & gross.

Ken
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Just for giggles, you might want to try the questionaire at www.findyourspot.com

I've long wanted to move to WA in the outlying area of Seattle (Snohomish/Lake Stephens area). The results I got from the profile gave me Port Townsend and Sequim to look at - would've never given it a thought as being dryer than the Seattle area.

Note that the results from this site is limited in the number of locations that it yields, but it's still good to toss some ideas into the hat that one may not think of on their own.

I'm getting pressed for looking further south as an alternative as half of my in-laws are moving to Bend, OR later this year. But there ain't no way they're getting this SoCal native to move where he has to own a snowblower!
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what state does the Fool community feel is best to retire in? and why

This can, potentially, be divided into several parts, such as:

(1) the best state(s) to maintain legal residence in

(2) the best state(s) to have your house or apartment in (which can be different if you move from one state to another frequently and are careful to keep track of the relevant laws)

(3) the best state(s) to engage in other commerce in (which can be different from EITHER of the above if you live near a state line - or if you move from state to state a lot).

And aside from taxes and such legal issues (and even for those in some cases), most states cannot be regarded as a unified whole. Different parts of a state can have different taxes, different regulatory requirements, different climate, and different social amenities.

(We plan to live full-time in an RV and travel a lot, so the second question above won't apply while practically anything is possible on the first and third.)
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I'm with Phil on this one. It is generally not a good idea to have your major life decisions driven primarily by taxes

I agree, but some people are, uh, goofy about taxes.

So in the spirit of continuing the thread, I'll pass along one of the tips from the Retire Early board (a few years ago) written by just one such person.

Live in a state with no income tax which supports itself with high sales taxes. But live right at the border of a state with no sales taxes which supports itself with income taxes.

Then drive across the state line to do all your shopping. Washington/Oregon may fit the bill. New Hampshire/Massachusetts? Tennessee/North Carolina? and so on.
 
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Ken,

Actually, we live in Port Townsend, WA. We had looked at Sequim but could not find a 2400 sq. ft. house (4 bedroom) that we liked, so came to Port Townsend and had one built for below $150,000. Found PT because we were members of the Escapees club for motorhomers, and they have a park at Chimacum. (That is an interesting option for full-timer RVers.) Anyway, as the Pacific winds approach NW Washington, they rise over Mt. Olympus, causing a rain-forest at Hoh, leaving the air dry as it comes down the NE side of the mountain. We had perhaps 2" of snow this last year, and none the year before. Seattle, by contrast, is in a valley and just West of the Cascades, which gives it lots of rain.

We moved from the West side of Cleveland, just on the edge of Lake Erie. Hot and humid in the summer, snow and ice in the winter. And a 6% income tax and about 7% sales tax at the time, and I was looking at a tentative $150,000 capitol gain. WA sales tax was about the same as Ohio but no income tax. That meant a potential tax savings of about $9000 on that one transaction, which could pay for a move. And the savings continue. We happily pay the sales taxes on things we buy (food is not taxed). But coming from the Midwest, we missed the trees in AZ and NM and the tax situation in CA just offended me.

It is very personal where one retires, and my wife and I like smaller towns. Had Sequim had what we wanted in housing, we might have ended up there, and Port Angeles had promise, but we loved what we found here. For a while we loved that the deer came to our house but later found them too friendly and had to fence our yard and garden areas.

We looked for the area to move to in 1988 but family health issues delayed the move until 1992. We had subscribed to the local paper in 1988 and COC gave us a previous year's copy of the phone book, so that familiarized us with details before we actually made a final decision.

Gapfan :-)
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Warri,

(We plan to live full-time in an RV and travel a lot, so the second question above won't apply while practically anything is possible on the first and third.)

You may already know about Escapees which is a private club for full time or part time RVers. We paid $40 a year dues. The started in Texas and have private parks in several places. If you buy a lot in their park (waiting lists involved), then that can become your official residence. Some people get lots in two areas, such as WA and AZ, spending part of the year at each, or one area and travel the rest of the time. You live in your motorhome on your lot but have a storage area etc. It handles "legal residence", mail forwarding and similar issues. There may be many such clubs now, I do not know.

Posting this mainly for you and others considering RVs. We have a micro-mini (that is "small" to those not familiar) which we used for weekends, winter trips to Florida from Ohio, and our trips West. Her name is "Patience" for rather obvious reasons, including the 4 cylinder 100 hp engine. (She has served us very well!) We would not suggest it for more than a single full-timer tho.

Gapfan :-)
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We have a micro-mini (that is "small" to those not familiar) which we used for weekends, winter trips to Florida from Ohio, and our trips West. Her name is "Patience" for rather obvious reasons, including the 4 cylinder 100 hp engine. (She has served us very well!) We would not suggest it for more than a single full-timer tho.

Not a lot of individuals, let alone couples, would enjoy full-timing in the sort of RV that can get around effectively on 100 HP. (A Toyota Prius does 76 HP.)

What we're thinking is that we'll probably buy one of these: http://www.alfaleisure.com/2004_seeya/why.asp - a 2005 to 2007 model, in 2010.

But if we strike it rich in the stock market, we might instead have a chat with these people: http://www.powerhousecoach.com/

(Just for comparison, they use 330HP and 650HP diesel engines respectively.)
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Warri,

I agree!! We did not know if we would like a motorhome or not, so when I needed to replace a second car while working, we bought an "Escaper" brand, ('85 model) much like the "Dolphin" based on a 3/4 ton Toyota chassis with the 22R engine. I used it often as a work car as it was like a big station wagon. It was great for weekends at state parks.

Because we had that, a close friend bought a Dolphin so he could travel with his wife. (The toilet in the unit was very important for her.) Years later after she had died, he (at 80 years old) drove from Ohio to visit us here in WA, then back again. That meant a lot to both of us. We logged about 75000 miles on ours before we stopped traveling in it.

We considered at one time moving to a larger unit but did not get into traveling that much. We are very content with a simple home life. Retirement meant it was less important to take a "break" from work.

Gap :-)
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Hi,
I'm not selling anything, but, all pension and social security income is NOT taxable in Pennsylvania. This includes 401k distributions. Some other states in the tables linked here may have similar benefits for retiring folks. Use it but double check for items not given in the table.

Regards.

Pat
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Now that is one funny website. According to their recommendations, I am already in the right state. Of the 4 pages, over 50% were for Texas.

Jenn
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Now that is one funny website. According to their recommendations, I am already in the right state. Of the 4 pages, over 50% were for Texas.

And over 1/2 for me were WA (none CA). LOL!

Told ya I loved it there. ;)

I highly recommend this site, including its own "best places" tool (though the "Compare Cities" tool is my favorite part):
http://bestplaces.net/fybp/

Not coincidentally, when I answered their questions, CA cities populated 7 of the top 10 (with only one WA spot).

Ken
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wow I have been travelling on business for over a week and I am amazed to see this many (excellent and insightful) replys.

I am going to have to sort thru all the suggestions but I like the idea of living in one state and shopping in another, especailly since we plan to RVing several months of the year anyway.

Mega thanks to all.
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I am going to have to sort thru all the suggestions but I like the idea of living in one state and shopping in another, especailly since we plan to RVing several months of the year anyway.

I just remembered something that I don't think anyone mentioned regarding living in a state with sales tax and shopping in a nearby state without sales tax. At least in the case of Washington/Oregon, if you shop in Oregon and live in Washington, you are still required to pay sales tax as if you bought the items in Washington. I don't know anyone that does this, but I remember that the state used to run ads in the Vancouver, WA newspaper (right across the border from Oregon) reminding people of this and including a form to fill out and submit with your payment.

Erin
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At least in the case of Washington/Oregon, if you shop in Oregon and live in Washington, you are still required to pay sales tax as if you bought the items in Washington. I don't know anyone that does this, but I remember that the state used to run ads in the Vancouver, WA newspaper (right across the border from Oregon) reminding people of this and including a form to fill out and submit with your payment.

This is difficult, if not impossible, to inforce except for business expendatures and things that require licenses. Businesses are audited to see if they bought something, not inventory, in a state without sales tax. They are required to pay sales tax on the item. It's on the "use" tax portion of the B & O tax form.

The auditor collects sales tax on vehicles, etc. when they are licensed, if they are bought in a state without sales tax.

Jean....lives in Washington 14 miles from Oregon
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if you shop in Oregon and live in Washington, you are still required to pay sales tax as if you bought the items in Washington. I don't know anyone that does this

If you pay cash and don't keep any receipts lying around, I can't imagine how WA could ever find out. I suppose they could compel you to say where you bought something and if you lie and name a WA store they could check the serial number against the store's inventory records.

You can tell how popular this practice is by the unusually high proportion of WA license plates in the appliance and electronics store parking lots in the Portland area.

--fleg
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I'll chime in on this one a bit, since my husband and I just retired too. One state I didn't see mentionned is ours -- Wyoming! And we're in the northwest corner, close to Montana, with no sales tax (everything in WY is flat 4% sales tax, and somewhat steep personal property taxes.)

But what others said about not making that your entire criteria is surely also true. To us, no state income tax was a bonus. We love the west and the Rockies, and we don't like lots of people around. Having lived in the country for the past 13 years anyway, we knew exactly what we were getting into moving here, where the nearest 'town' is 35 miles away. That said, there seems to be interest in our little community of Clark by lots of folks in California.

Wyoming does benefit from large natural resources, but that also means you see lots of environmental stuff you may not appreciate. Mineral rights are owned by a few. We could wake up to find an oil rig in our front yard, although there's been some legislative activity on that in recent years. But when you consider the financial support those oil rigs give, well, it becomes a bit more palatable.

Personally, we like the dry climate. Although it's been much colder than we were used to, it simply is not as chilling as it was in Virginia. And summers get hot, but step in the shade and the air temp still feels mild.

Randi
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