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Money Fix: Tax-friendly places to retire

Alaska is on the Kiplinger's Personal Finance list

Alaska is on the Kiplinger's Personal Finance list of hot places to retire. At Chena Hot Springs resort outside Fairbanks, retirees can mix hot with the cold. This photo is from 2011. Photo Credit: Denise Ferree

In retirement every penny counts. Taxes can be especially taxing on a fixed income. So should you relocate?

A new ranking of tax-friendly states for retirees by Kiplinger's Personal Finance lists the 10 best: Alaska, Wyoming, Nevada, Georgia, Arizona, Mississippi, Delaware, Louisiana, South Dakota and Florida. And the 10 worst? Rhode Island, Vermont, Connecticut, Minnesota, Oregon, Montana, California, Nebraska, New Jersey and -- no surprise -- New York.

What gives the top spots bragging rights? "Most have low or no income taxes. All exempt Social Security benefits from state taxes, and most exempt a significant portion of other retirement income, such as 401(k) plans," says Sandra Block, senior associate editor at Kiplinger's. Most of the least-friendly places do the opposite, and some have high property taxes, too.

Should the tax tail wag the retirement dog?

Home sweet home: "Moving to a new state isn't necessarily a financial slam dunk. Will you be able to sell your home here quickly and for the price you need?" asks Mark Snyder, a financial consultant in Medford. Then, too, "What are the costs to rent or buy?" asks Josh Fatoullah, founder of JR Wealth Advisors in Great Neck. How expensive are nursing homes and assisted living facilities?

Healthy equals happy: Is there quality, affordable health care? "You want good medical facilities," says Matthew Senicola of JHS Capital in Plainview.

Quality of life: Will you be so far from friends and family that trips home eat into savings? Says Block, "If the state's low tax rates mean it can't provide important services, the trade-off might not be worth it."


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