SmartAsset is a financial advice company and recently compiled a list of the best states for those entering retirement early. The list was created based on factors like the state’s effective income tax rates on people ages 55 to 64, state and local sales taxes, property tax rates, and the cost of health care. So if you’re interested in retiring early, location may be key.
The first state for early retirement is Texas. The Lone Star State’s “varied topography helped it crack the top 10, as early retirees can choose to live out their golden years in a major city like Houston or Dallas, or in the Big Bend of Far West Texas.” Additionally, Texas’ lack of state income taxes make it popular with early retirees. However, make sure you check out the state’s property taxes before packing your bag: they’re among the highest in the nation.
Florida was ranked the ninth best state for early retirement. Its weather and lack of income tax make it extremely popular. However, the high cost of living for areas like Miami and West Palm Beach means you’ll need to carefully consider exactly where you live in Florida for the move to be affordable.
Just a step ahead of Florida, Montana is affordable—with no sales tax and the eighth-lowest housing costs in the country. Additionally, the beautiful views and low taxes on retirement income make it a great option.
As the only state from the Northeastern United States, Pennsylvania is an option for early retirement thanks to its lack of taxation on retirement accounts and tax exemption for pension income after a certain age. Meanwhile, New Mexico is another option because its health-care plan is the third lowest in the country.
Mississippi presents another potentially attractive option for early retirement. The cost of living is the lowest in the nation and exempts all retirement income from state and local taxes.
Tennessee is, “home to some of the best music and food in the country, as well as to one of the most storied college football programs in the country, at the University of Tennessee. The state also has some of the lowest costs of living in the country.” The only downside is the state’s sales tax can be as high as 9.75 percent, one of the highest in the nation.
The third best state for early retirement is Wyoming thanks to its beautiful surroundings, low state and local taxes, and relatively low costs of living. Second place for early retirement is South Dakota. Although its extremely cold winters could be difficult for newcomers, the low taxes and low housing costs make it hospitable for early retirement.
Last and far from least, Kentucky is the best state for early retirement in the United States according to SmartAsset. “Not only does it have the nation’s fourth-lowest housing costs, but living expenses in the state’s largest cities—Louisville and Lexington—compare favorably to other major U.S. cities.” The state does have an income tax, but few retirees pay the full amount and many pay nothing at all.
There are a plethora of costs associated with early retirement, so it’s vital that your finances are prepared for the adjustment. The cost of everything from health-care to collecting Social Security early can impact your retirement plan and expectations. Talking to an expert at Apex Financial Advisor can help you develop a financial plan to make the move to retirement easier—at any age.