(Molly Bachman)
There may come a time in your retirement when you decide you’re ready for a change of scenery and pace. You may be looking for warm weather. Perhaps you want access to more entertainment than the sleepy city currently provides. Or maybe a grandchild has recently joined and you want to move closer to your family.
Either way, moving is a big decision, whether you decide to retire or not.But if you that is If you’re retiring and have a move on your mind for 2023, we recommend asking these key questions first.
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1. How will the cost of living change?
Moving to a new state can introduce a whole new set of expenses. In some cases, moving may result in you spending less than you used to. But otherwise you may end up spending more.
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Moving to a place with higher housing costs and property taxes can increase your total expenses by itself. But also consider the impact of things like the climate on your spending.
For example, if you live in the northern half of the country and are used to hibernating during the winter, you may spend very little money on entertainment during those months. trend may disappear. As a result, retirement spending may increase.
2. Do you plan to increase your income tax spending?
There are eight states with no personal income tax.
- Alaska
- florida
- Nevada
- south dakota
- Tennessee
- texas
- Washington
- wyoming
If you currently live in one of these states and move to another state, your IRS liability could increase significantly.
If you happen to get a lot of your income from retirement savings plans that offer tax-free withdrawals, Ross IRA, this may not be so much of an issue.But if the majority of your income comes from traditionally taxable sources IRA or 401(k) planthat is something to consider before taking action.
3. Are my Social Security benefits taxable?
Your Social Security benefits may be subject to federal taxes based on your gross retirement income. However, when it comes to state taxes, each state has its own rules.
12 states have taxes Social security income:
- Colorado
- connecticut
- Kansas
- Minnesota
- Missouri
- Montana
- Nebraska
- new mexico
- rhode island
- Utah
- Vermont
- west virginia
If you are a low- or moderate-income earner, you may be exempt from taxes on Social Security benefits, but not all of these states offer such exemptions. You should keep that in mind before you move.
In short, relocating can make retirement more enjoyable and financially more comfortable. But before we can make that leap, we need to understand what it means to move from one state to another. So if you’re planning to move in 2023, do a good amount of research first so you don’t regret your decision after cleaning up your home and uprooting your life.
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