For many people, retirement means moving to a more desirable location. People choose their retirement location based on a wide variety of factors and considerations. If you are at the point in your life where you are considering a retirement location, be sure that you consider the financial implications of your choice of location along with other considerations.
Naturally, you will likely take into consideration things such as proximity to grandchildren or climate when you make a decision about where to retire; however, if you want to maximize your disposable income during your golden years then you may also wish to consider the financial implications of your choice of location as well. In the U.S., most states impose a state income tax on residents in addition to any federal income taxes the resident owes. As of 2013, the only states in which residents pay no state income tax at all are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Residents of New Hampshire and Tennessee pay state income taxes on dividends and interest income only.
Whether or not a state imposes a state income tax is unlikely to be the deciding factor when choosing a retirement location, but it is certainly something worth factoring in if you are torn between two or three locations. In addition, if you are not planning on moving to another state full-time, be sure to consult with your financial advisor about which state is the most advantageous to consider your official state of residence.
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