Here is something worth thinking about before you decide where to spend retirement: where you live can have a big impact on how much of your Social Security check you actually get to keep.
Some states tax retirement income heavily. Others barely touch it. And a handful give retirees a genuine financial edge, no tax on Social Security, low or no income tax, and other perks on top of that.
Here are five states that stand out to retirees who want to keep more of what they have earned.
Florida
Florida does not tax Social Security benefits. That means you keep 100 percent of your monthly payment. The state also has no income tax at all, so any extra hours you put in during retirement stay in your pocket, too.
According to Acts Retirement, Florida also exempts pensions, 401(k) withdrawals, and IRA distributions from state taxes. Add in a warm climate, beaches, and a huge number of walkable retirement communities built for active seniors, and it is easy to see why so many people head south.
Pennsylvania
Pennsylvania is a strong pick for budget-minded retirees who do not mind colder months or who plan to travel through them. The state does not tax Social Security income, and, according to ACTS Retirement, most other retirement income is also exempt for residents aged 60 and older, including pensions.
Pennsylvania also has one of the lowest flat income tax rates in the country at just 3.07 percent. And if you own a home, eligible retirees can apply for a property tax rebate.
Mississippi
Property taxes are a real concern for retirees living on a fixed income. Mississippi is known for keeping those costs relatively low, according to SmartAsset. That alone makes it worth a look for anyone planning to stay in their own home through retirement.
Mississippi also does not tax retirement income (including Social Security), and its winters tend to be mild. For those ready to leave the snow behind for good, it is a quieter and more affordable alternative to the well-known Sun Belt destinations.
Texas
Texas has no income tax and no tax on Social Security or other retirement benefits, according to Edelman Financial Engines. That is a straightforward combination that puts more money back in your hands each month.
The state also offers a wide range of places to land. Whether you want a lively city, a quiet small town, or something in between, Texas has it. And the winters are generally mild enough that you can probably leave the snow shovel behind for good.
Delaware
Delaware may be the smallest state on this list, but it packs in a lot of retirement-friendly tax benefits. According to the Acts Retirement, retirees here are exempt from taxes on Social Security income, and that is just the beginning.
- No sales tax
- No tax on Railroad Retirement benefits
- A retirement income exclusion
- No inheritance tax
- Low property taxes
Delaware also puts you within easy reach of some of the East Coast’s best cities and attractions. New York and Philadelphia are both nearby. Washington, D.C., is close to, with all of its free museums and landmarks. And the beaches along the southern shore are just a short drive away.
No single state is perfect for everyone. But if keeping more of your retirement income is a priority, these five are worth a serious look before you decide where to put down roots.