Retire Wisely: Why You Should Pick Your State Before You Pick Your Date
Most retirement countdowns start with a date: 65, 67 or whenever the savings account finally looks big enough.
But that calculation may be missing one of its biggest variables — location.
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For those rethinking where to retire, new cost-of-living data findings show why it may pay to pick the state before the date. Reasons range from the taxes retirees will owe to the insurance premiums that can quietly drain a nest egg.
1. Savings Aren’t the Whole Equation
Many Americans measure retirement readiness by the size of their savings.
A Western & Southern Financial Group survey found that 69% of adults 50 and older worry they haven’t saved enough to retire comfortably, while only 37% have a clear financial strategy.
Respondents estimated they would need $500,000, on average, to feel financially secure. But that number cannot answer the question alone.
The same nest egg can support vastly different retirement budgets depending on where someone lives.
2. Location Sets the Burn Rate
A savings target means little without knowing how quickly that money will be spent.
Taxes, housing, insurance and healthcare costs collectively establish a retiree’s burn rate, according to Keith Lucas, founder of Retirement Life USA, a retirement relocation company.
“Because the location dictates the math and the math dictates the date,” he said.
Choosing a retirement age first reverses that calculation. A lower-cost location may make an existing nest egg sufficient sooner, while an expensive one can accelerate withdrawals and shorten how long the money lasts.
3. State Taxes Change the Target
A state with no income tax isn’t automatically the least expensive place to retire.
Ralph Estep Jr., an accountant and founder of Saggio Management Group, said retirement income receives widely different treatment across state lines, with some higher-tax states offering retirees more generous exemptions.
He said that only eight states tax Social Security benefits in 2026, making pensions and IRA withdrawals the more important comparison.
“The real question is how the state taxes pension and IRA withdrawals, but few people ask about that,” he said.
4. Insurance Can Erase Savings
“A mortgage payment is fixed for 30 years. The insurance on that same house reprices every 12 months,” said Jeffrey Hallman, managing director of Citizens Life Group.
That annual reset can erase the financial advantage of an otherwise affordable move.
In Florida and along the Gulf Coast, Hallman said, a homeowners insurance renewal may consume the savings retirees expected to gain from lower home prices or the absence of a state income tax.
Unlike a fixed mortgage, the premium can keep climbing while retirement income remains relatively flat.
“A retiree on a fixed income has no way to absorb it,” Hallman said.
5. Compare the Entire Budget
The lowest home price or tax rate does not reveal what retirement will actually cost.
Christina Mehltretter, a CPA and financial advisor with Carolinas Financial and Retirement Planning, recommends comparing property and income taxes, homeowners and auto insurance, healthcare, utilities and everyday expenses.
Mehltretter said many of her clients moved to the Carolinas for lower living costs without giving up good weather, outdoor recreation or access to beaches and mountains.
“Retirement is not always about finding the cheapest place to live, but about finding a place where your retirement savings supports the lifestyle you want to live,” she said.
Bottom Line
A lower-cost state only works if the budget reflects the life a retiree will actually live.
Estep advises clients moving far from family to estimate the cost of return trips and then double it. Airfare, hotels and rental cars can quietly erase relocation savings.
The best state is not the one topping a ranking, but the one where the full retirement plan still works.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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