Yahoo Finance 3 Reasons You Shouldn’t Worry About Social Security Taxes When Choosing a Place To Retire
Deciding where to live out your golden years is an important choice to make. It can affect how far your money goes, as well as your overall quality of life. While taxes — and particularly taxes on Social Security income — may be taken into consideration, this probably shouldn’t be your deciding factor.
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“Most states do not tax Social Security benefits,” said Barbara O’Neill, Ph.D., CFP, expert contributor for Annuity.org. “Obviously, moving to a state that does not tax income from Social Security (or a pension) can save money. [However], other factors are often more important in choosing a place to retire than taxes on Social Security benefits.”
Here are some reasons you shouldn’t focus too much on Social Security taxes when choosing where to retire.
Income and Property Taxes Will Have More of an Impact
Zeroing in on taxes on Social Security benefits can be a mistake, as they will likely have less of an impact on your bottom line than other taxes.
“I would certainly consider all types of taxes when choosing a place to retire,” said Chris Urban, CFP, founder at Discovery Wealth Planning. “This may include income tax, property tax, sales tax, tax on Social Security benefits and/or pensions, and any other local taxes that may or may not exist. Generally, income and/or property taxes are probably going to have a larger impact on your tax situation.”
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Total Cost of Living Is More Important
Taxes on Social Security are just one tiny piece of the puzzle when it comes to your financial situation in retirement. Taking a broader view is more useful.
“From a financial perspective, I would recommend considering the total cost of living in a particular area,” Urban said. “Taxes would be included in that but so would such factors as home prices/rental market, public services and how much it costs to go out and enjoy yourself and be active, social, etc.”
Your Happiness Is the Most Important Factor of All
At the end of the day, you should choose a place where you can live a fulfilling life in retirement. This trumps any tax considerations.
“You certainly want to find a place where you will be happy living,” Urban said. “This is the most important factor to consider.”
This can often mean residing close to family.
“For many retirees, proximity to family, especially when grandchildren are born, is the most important factor when deciding where to retire,” O’Neill said. “Family ties often trump income and property tax bills and weather considerations.”
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