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Planning for a Retirement Move
Studies show that about 80 percent of Americans say they want to stay right where they are when they retire. For them, the decisions have been made. The same may be true for those who simply plan to retire wherever their children or other relatives live. But for that adventurous minority that wants to move somewhere different and, in a sense, begin a new life, the choices can be daunting. Many factors — taxes, health care, climate, transportation, cultural opportunities — must be considered. Luckily, the Internet can be helpful. Three free Web sites in particular offer good information for retirement planning: • www.RetirementLiving.com is an excellent source for tax information on individual states. • www.kff.org is run by the Kaiser Family Foundation and provides comprehensive health care data on the states. • www.BestPlaces.net is the main source for many of those magazine articles about the "best places" to live or retire and offers a lot of information on how people live. Of course, there is some overlap among these sites. But together they can help develop a good database on potential retirement spots. RetirementLiving.com is operated by the Retirement Living Information Center in Redding, Conn. It has several categories on retirement living, but the section on state taxes is one of the most popular. One warning: the listings in the sections on retirement communities and senior housing and products and services have not been evaluated; they are simply there because they have paid a fee. The state tax section lays out the facts on each state, but cites no favorites. "We don't make recommendations because of people's different lifestyles and needs," said Tom Wetzel, president of the Retirement Living Information Center. Five states — Alaska, Delaware, Montana, New Hampshire and Oregon — have no sales tax. Nine have no personal income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. However, New Hampshire and Tennessee tax dividends and interest income that exceed certain limits. Florida has a tax on the value of stocks and bonds above $250,000 for an individual and $500,000 for a married couple. Of 41 states that do have income taxes, 26 do not tax Social Security benefits. Some states have limited exemptions for certain pensions. Mr. Wetzel warns that sales taxes should be considered closely. Oklahoma, for instance, has a state sales tax of only 4.5 percent. But local governments are allowed to increase that by 5.28 percentage points, which means the sales tax could be as much as 9.78 percent, depending on where you live in the state. The same is true in Louisiana, where a state rate of 4 percent can grow to 9.5 percent locally. "People need to look at the total tax picture as they try to shelter themselves as much as possible," he said. "A state may look inexpensive because it has no income tax, but it may have high property taxes. You also need to consider what tax relief is available for seniors." He cites six states — California, Montana, Nebraska, New Mexico, North Dakota and Vermont — that are particularly tough on retirees because they have a relatively high top tax bracket and fully tax most retirement income. Although the site does not give information on local property taxes because they can vary so much, it does give information on statewide property tax breaks available to retirees. The Kaiser site was primarily designed for health policy researchers and policy makers, Larry Levitt, vice president of the foundation, said. "But now we find that everyday consumers are using it as well," he said. No wonder. By clicking on "state health facts" on the home page of this well-designed site you can, for instance, learn which states have a prescription drug program for the elderly, where Medicare health maintenance organizations are most available and the average price of prescriptions in the 50 states. The states are also ranked in various categories and compared with national averages; color-coded maps also provide visual comparisons. Take the price of drugs. In 2000, the national average cost of a single prescription was $45.43. However, that same prescription could run as little as $37.99 in Alabama to as much as $55.56 in Alaska. New York ranked fourth highest at $52.84. New Jersey was No. 2 at $53.81, and Connecticut came in ninth at $48.66. "On a number of issues, the differences among states is striking," Mr. Levitt said. "And a lot of the differences are regional; it's cheaper in the South than the Northeast. In general, states with higher family incomes are likely to have better services, as well as higher taxes." BestPlaces.net allows you to get local information. It compares quality-of-life and cost-of-living data for 3,000 towns and cities across the United States. The site, which is operated by a company called Fast Forward in Portland, Ore., carries no advertising; it makes money selling data to corporations and publications like Money magazine. The site also allows visitors to compare salary information for 300 metropolitan areas. For instance, if you make $100,000 a year in San Francisco, you would need only about $52,000 to maintain the same standard of living in Tampa, Fla. The information on these three sites is fun to consider even if you don't plan to move. Who knows? You might even change your mind.
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