Inevitably all of us have the dream of being able to make work optional. I've written lots of articles regarding the subject of retirement, but as we approach another Presidential election you may need to consider which state to live in when it comes to saving money in taxes. Outside of how you like the overall lifestyle of the state in which you live, where your family resides, and other factors, taxation certainly should be in the top five list on where you choose to make your final place of residence. Since states are changing their laws all the time, I wanted to share that I think Georgia will continue to be a top ten player for retirees over the next twenty years.
I recently had the opportunity to do an interview with Susan Garland who is the editor for the retirees section of Kiplinger and we had a candid conversation around their article of the 10 most friendly tax states for retirees today. It's no big surprise to me that Alaska came out as number one on the list. I suppose if you don't mind the extreme cold, lack of sunlight, and rugged terrain, Alaska could be a great place to retire. Alaska is one of the very few places that imposes no state estate tax, state sales tax, or state income taxes. In fact, residents of Alaska actually get a check from the state each and every year. How's that for state Government working for you? On the Kiplinger's list the far west had the first three friendliest states with Alaska, Nevada, and Wyoming. After that, the list becomes a virtual map of the SEC and puts Georgia smack in the middle of being a great place to retire.
Georgia is doing its part to attract retirees to the Peach State by phasing out income taxes on all retirement income by 2016. Taxpayers ages 62 to 64 can exclude up to $35,000 per person from state income taxes for a total of $70,000 per couple. Georgia residents who are 65 and older can exclude up to $65,000 of retirement income (or $130,000 per couple) from state income taxes in 2012. Retirement income is broadly defined as interest, dividends, capital gains, net income from rental property, pensions, annuities and up to $4,000 of earned income. those per-person exclusion amounts for residents 65 and older will increase to $100,000 in 2013, $150,000 in 2014 and $200,000 in 2015. Non-retirement income is taxed at a rate as high as 6% and statewide sales tax is 4%, but you still need to be careful of the local jurisdiction which can add to the state sales tax. (source: www.kiplinger.com) Property taxes overall are reasonable relative to other states, but a little higher than other SEC states.
Outside of being a retiree, Georgia continues to have program like the HOPE Scholarship funded through the lottery, state tax credit programs from the Film and Entertainment Industry, and other good strategies to help Georgia taxpayers. While Georgia is going to quickly become an exceptional place for people to retire with changes coming up in the next few years, it also represents a good place to be even as you are raising a family.
Who is at the bottom of list? Well clearly you don't want to be in California or almost any of the major Northeastern states. Many of them have high taxes across the board and since I lived in several of these states I know first hand how they get you. Not to mention having to dig your car out of snow during a major winter windfall. If you want to make a smart money move, take a look at the top 10 states and see if one of these might be a place you want to retire in someday. I warn you though, if you move to Georgia you better get ready to make college football your number one sport or they just might sick UGA the dog on you!
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Written by:
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc - The Leaders in Gen X & Y Financial Advice and Services
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