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Thinking of Moving for Retirement? Check This Out

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As elections come up, where we live and the political/governance climate there comes into sharper view. This piece I wrote on August 10, 2017 examines the tax climates of the states, and how retirees should make that a factor in their plans. 

Guess who needs the most of your dollars to survive? You guessed it, Washington D.C.

If you’re a retiree who has been living and working in Washington D.C. for your entire career, you would without a doubt stretch your dollars further if you moved to a less expensive locale. Washington D.C. is the most expensive place to live in the continental United States.

As the Tax Foundation map below makes clear, for $100 of spending in Washington D.C., a consumer only receives about $85.47 worth of goods when compared to the national average.

How does a 15% haircut on all your purchases sound on a fixed income in retirement?

Instead of taking a beating on each purchase, retirees can look for low tax, low cost states where their money will stretch the furthest. Check out the map below for more.

Amir El-Sibaie writes for the Tax Foundation:

This map shows the real value of $100 in each state. Prices for the same goods are often much cheaper in states like Missouri or Ohio than they are in states like New York or California. As a result, the same amount of cash can buy you comparatively more in a low-price state than in a high-price state.

The Bureau of Economic Analysis has been measuring this phenomenon for two years now; it recently published its data for prices in 2015. Using this data, we have adjusted the value of $100 to show how much it buys you in each state.

For example, Ohio is a low-price state. There, $100 will buy you goods that would cost $112.11 in a state at the national average price level. You could think of this as meaning that Ohioans are, for the purposes of day-to-day living, 12 percent richer than their incomes suggest.

The states where $100 is worth the most are Mississippi ($116.01), Alabama ($115.21), Arkansas ($114.42), South Dakota ($113.38), and Kentucky ($112.87). In contrast, $100 is effectively worth the least in Hawaii ($84.18), the District of Columbia ($85.47), New York ($86.73), New Jersey ($88.18), and California ($88.18). See the table at the bottom of this post for a ranking of all 50 states.

Regional price differences are strikingly large; real purchasing power is 36 percent greater in Mississippi than it is in the District of Columbia. In other words, by this measure, if you have $50,000 in after-tax income in Mississippi, you would need after-tax earnings of $68,000 in the District of Columbia just to afford the same overall standard of living.

Read more here.

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.