If you had to choose your top five states to retire to, would South Dakota show up on your list? Do weather and taxes factor into your retirement destination decision? Many Canadians have dealt with higher taxes and shoveling snow their entire lives and are ready to transition to lower taxes and a tennis racket. According to an article by Bankrate.com, South Dakota is considered the best state to retire in. No, it’s not because of Mount Rushmore or the numerous national parks that are scattered throughout the state. South Dakota is considered the top state to retire in mainly due to its low taxes, access to high quality of healthcare and low cost of living. The states ranked from second to fifth are: Colorado, Utah, North Dakota and Wyoming. Have you considered any of these states as viable retirement destinations for you and your spouse? Do tax considerations drive your decision?
According to the same article, the five worst states to retire in are New York, West Virginia, Alaska, Arkansas and Hawaii. New York, Alaska and Hawaii all suffered as a result of their high cost of living. Retirees on a fixed income may opt-out of living in these states for that reason. West Virginia and Arkansas are guilty of less than stellar “wellness” and healthcare quality scores. It should be noted that Alaska was ranked the number one state to retire in from a tax perspective as there is no state income tax, no sales tax and no state estate taxes either. Alaska is one of seven states to not have state income tax; the other six are Florida, Nevada, South Dakota, Texas, Washington and Wyoming.
Most Canadians retiring south of the border choose to retire in Florida, which ranks as the 39th best retirement state. While Florida’s high temperatures, 0% state tax and low cost of living are very inviting to people nearing retirement, it also has one of the highest crime rates in the US and is in the bottom third of all US states in terms of access to quality healthcare.
Arizona, another popular retirement destination for Canadians, was ranked as the 16th best state to retire in, however from a tax perspective they rank 4th. Despite having one of the highest cost of living in the US, they also boast no state estate taxes. California, a popular retirement destination for clients of western Canada, ranked 28th as a result of high state income taxes and living costs; unfortunately palm trees and movie stars do not factor into this equation.
Have some of these rankings made you start second guessing your ideal retirement destination? Maybe you want to live close to family or friends, or maybe you want to get away from the cold weather. Your decision should be based on factors that you ascertain to be important. If you are considering retiring in the US and have questions about immigration, healthcare or tax impacts, please do not hesitate to contact MCA Cross Border Advisors Inc.
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