Only a few months away from 70 and still working full-time, I sometimes think about retiring in a few years, or longer, and maybe even relocating. A very major consideration costwise would be state income tax on retirement income, including Social Security. The situation varies dramitically, even for similar, adjacent states.
New Hampshire, for example, does not have an "income tax" on Social Security, pensions, 401k & 403b withdrawals, etc. Nearby Vermont, on the other hand taxes the same income as the Federal government, namely all of the above, at a rate that quickly reaches 8 %. I think that Maine also taxes retirement income, but don't know what the rate structure is.
As already pointed out, PA is retirement friendly, no state income tax on Social Security or pensions, 401K & 403b withdrawals. Adjacent NY taxes all of these at rate as high or higher than Vermont. I don't know about NJ, but would not be surprised to find it similar to NY.
Although these few examples focus on the Northeast, the bottom line is there is wide divergence in state income taxation of retirees, even in seemingly similar states. Not a trivial consideration in choosing a retirement location.
For someone in NJ, I add to the suggestion of crossing the Delaware as an option. There are many other reasons, in addtion to retiree income taxes.
Last edited by vangulil; 03/17/12 06:22 AM.
