You Don’t Consider State Taxes
Your retirement savings drawdown strategy is in place, primarily based on federal tax rules. But have you considered how state and local taxes will hit your retirement nest egg? Depending on where you live, high state income taxes, state and local sales taxes or property taxes – or a combination of all three – could eat up your hard-earned savings quickly. Thirteen states even tax Social Security benefits.
It’s a big reason so many people pull up stakes and move to tax-friendly states for retirees such as Florida and Georgia. The nice weather is a draw, to be sure, but so too are incentives such as low or no state taxes on retirement income and generous tax breaks for older homeowners.
Do your research, consider friends and family in the equation and consult our handy State-by-State Guide to Taxes on Retirees.