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What Are The Best States To Retire To?

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Retirement is (ideally) the big grand prize after a tenure of hard work. Whether you’re reaching this stage now, or just dreaming of the day you’ll finally be free of your 9-5, where you retire to is likely one of your retirement considerations.  

If you’re deciding where to retire, your finances and the type of lifestyle you want will help you narrow down a few states that could fit your needs and wants. Location may be a top consideration.

Have you always dreamt of retiring to a state where you can have a beachfront property? Or is a mountain retreat more your style? You might also think about if you’d like to be close to family members or have some…comfortable distance. 

Whatever your dream retirement looks like, here are some things to consider when it comes to the “best” states to retire. 

Some of the best states to retire to for taxes

When you think about where to retire for tax purposes, the first thing you may think of are states with no income tax. Some states will tax the money you receive or withdraw from a retirement plan – like an IRA, 401(k) or pension plan – before it hits your bank account.

So if you’re able to reduce your tax burden by living in a state with no income tax, you could potentially end up with more money in your pocket.

There are currently eight states in the US without income tax, which means they won’t tax your retirement funds: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.

On top of those states , there are four other ones that have state income tax but don’t tax distributions from 401(k) plans, IRAs or pensions: Illinois, Mississippi, New Hampshire and Pennsylvania. Additionally, Alabama and Hawaii don’t generally tax income from pensions – they may, however, tax income from IRAs and 401(k)s.

Good to know: If you’re going to pick your retirement home state based purely on its tax situation, there might be other costs to consider. Check out our article on states without income tax to see what other expenses (and taxes) might come up.

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Some of the best states to retire to for healthcare

As you enter retirement, healthcare is likely top of mind. For one, medical expenses can be a big part of many retirees’ budget: Fidelity Retiree Health Care Cost Estimate  found that an average 65-year-old retired couple in 2021 would need approximately $300,000 for healthcare costs throughout their second act. That’s a chunk of money!

Of course, exact healthcare costs will differ from one person to the next, and they may be just one part of the picture. When it comes to healthcare, you may want to also consider access and options – how close will you be to hospital networks and specialty care services, and what sorts of care do they offer?

In terms of healthcare quality, the states with the best healthcare in the US are Hawaii, Massachusetts, Connecticut and New Jersey, according to 2021 rankings from U.S. News. (The rankings were determined by looking at healthcare access, healthcare quality and overall public health.)

As far as access to hospitals goes, as of 2020, Texas had the highest number of hospitals at 369, followed by California with 339, and Florida with 219. 

When it comes to needing any kind of specialized services and dealing with preexisting conditions, it could be worth checking out treatment centers (for availability and costs) in the states you’re considering retiring to.

And as always, it’s a good idea to research the healthcare options in the particular cities and towns you’re thinking of calling home – access and availability may vary, even if they are located in one of the top healthcare states we mentioned above.

Some of the best states to retire to for travel

For some folks, the ultimate retirement dream might be packing up a suitcase and getting out of town. If that’s you, you might want to pick a state that makes traveling as easy as possible. 

“Easy” could look like a few different things. Maybe you want to live in a city with several airports nearby (even if they’re smaller), so you have plenty of options to get out of town.

Or maybe you’d rather live in a state that has a major international airport with tons of different airlines and destination options. WorldAtlas ranked the busiest airports in the US in 2021, and Hartsfield-Jackson Atlanta International Airport in Georgia comes in at #1, with almost 1,000 flights per day.

Next up is Los Angeles International Airport in California and Chicago O’Hare International Airport in Illinois (respectively). 

If your retirement plans include lots of travel, living near a major airport could potentially help you stretch your travel budget. With a bigger selection of flights and airlines, you could comparison shop for the best flight deals! 

And if you live close enough, getting to the airport easily could mean skipping things like parking fees to hold your car at the airport while you’re away, or hotel stays before/after flights. 

Your retirement dream

When it all comes down to it, the best state to retire to is really whatever state will allow you to live out your retirement dream! That could mean being near your grandkids or on the other side of the country soaking up sunshine and digging your toes in the sand.

Of course, taxes, healthcare and travel can all be very important retirement considerations when deciding where to settle down for your next chapter.

But how much each of those play into your decision-making is going to be personal, and look a little different for everyone. Taking a step back to think about these factors and doing a little bit of research can help you land in the best state for you.

After all, if retirement is your grand prize for a life of hard work, be sure to make it count!

This article is for informational purposes only and is not a substitute for individualized professional tax advice. Individuals should consult their own tax advisor for matters specific to their own taxes. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA and Goldman Sachs & Co. LLC are not providing any financial, economic, legal, accounting, tax or other recommendations in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates. Neither Goldman Sachs Bank USA, Goldman Sachs & Co. LLC nor any of their affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements of any information contained in this document and any liability therefore is expressly disclaimed.