7 Tips for Retirement Saving After 40

That’s a lot of money, of course, but when it comes to retirement savings it might be less than it seems. With million, you’ll still have to live frugally in retirement. On the other hand, with a good chunk of capital like this, you’ll continue to see significant returns long into your retirement.
This is a particular problem for women, because according to the U.S. Department of Labor, women are likely to work part-time jobs that don’t offer a retirement plan of some kind. And even if they are working full time, women tend to invest more conservatively than men. And unlike men, they tend to have about twenty years of retirement.
By the time you turn 40, you are more than aware of the importance of saving for retirement.
In this guide, we’ll take you through a seven-point plan to start working toward a comfortable retirement, from setting your goals to structuring your accounts. This can lead to a vicious cycle, in which (slightly) older people feel guilty for not planning sooner for retirement, and end up ignoring the issue.

7-Point Plan for Over-40 Retirement Saving

Many people forget about insurance when they are planning for retirement, but this is a big mistake. Most bankruptcies are caused by unexpected accidents or illnesses, and a disaster of this type can wreck the most carefully planned retirement plans.

1. Don’t Lose Hope

Paying the maximum amount into a 401(k) might, of course, be easier said than done. Ultimately, your ability to save for retirement depends on the amount you can save each month during your working years. Increase this amount, even by a little a month, and you’ll see a big difference in your eventual retirement savings.
Today, there are plenty of online platforms that will allow you to explore freelance, remote work that can fit around your other commitments, and research shows that 75% of people working remotely make just as much money freelancing as they did when they were working full time. Taking on a second job, and pouring all of your earnings into a retirement fund, can be a neat and effective way of saving.
The truth, however, is that there are plenty of people who only start saving in their 40s, and go on to have a comfortable retirement. And, while you may have to make up for a little lost time by boosting your retirement savings, as long as you understand how to save for retirement it’s never too late to start planning for it.

2. Planning to Save

Assume that you are 40 years old, and have no savings. At this age, in 2021, you can save up to ,500 in a 401(k) plan, and this increases to ,000 once you turn 50. If you are able to invest the maximum in this account, and get a (more than reasonable) 7% rate of return, by the time you are 63 you will have million.
Roth IRAs are just one option at this point, though, and you should make sure you explore all the options available to you. You can use a retirement calculator to work out how much you will need in retirement, and how much you will need to save to realize this.
That’s not to say that you can’t get creative. Online trading can be relatively safe as long as you don’t put your entire retirement fund into high-risk stocks. An acceptable risk level when it comes to investing in stocks is to subtract your age from 120, with the resulting figure being the percentage of your portfolio that you invest into the stock market.

Looking for a second job to pad your retirement savings? Here is The Penny Hoarder list of the 25 best side hustles for 2021.

3. Open a Roth IRA

Don’t be tempted to take on extra risk because you feel that time is running out. Most retirement funds will pay about 7% in annual returns, and in your 40s this is an acceptable rate. Younger people can go for riskier options, because they have more time left in which to recover from the inevitable losses, but you really don’t want a stock crash just before your retirement date.
Source: thepennyhoarder.com

4. Make Sure You’re Insured

Last but definitely not least, be honest about what your retirement savings are for. Don’t be tempted to use them to send your kids to college, for instance, because ultimately your kids have more opportunities, and more time to save for their own retirement, than you do. You should, in other words, be a little selfish. When you’ve worked hard for your retirement savings, you should be able to enjoy them.
Ready to stop worrying about money?

5. Plan Your Risk

First and foremost, let’s get one thing out of the way. At 40, or even at 50, it is not too late to start saving for retirement, no matter what some pension products will claim. To see why, it’s worth running the numbers.
New York contributor Kiara Taylor specializes in financial literacy and financial technology subjects. She is a corporate financial analyst who also leads a group affiliated with the University of Cincinnati that teaches financial literacy to Black students and helps them secure employment and internships.

6. Pay Down Debt

Increasing the amount you save can be done in several ways. It might be cutting out an expensive indulgence, shopping in a supermarket that offers better value, or even getting an additional job.
In your 50s, it might be too late for whole life insurance to make financial sense. However, you can still reduce your financial risk by making sure you have the best health and disability insurance you can afford. You can also look at term life insurance, which will provide for your dependents should the worse happen.

7. Set Your Priorities

If you are in a position where you can save more than the maximum allowed amount in your 401(k), the next logical step is to take out a Roth IRA. These funds allow you to put extra money toward your retirement each year, and come with significant tax breaks. In fact, your contributions to a Roth IRA will grow tax-free, and you can withdraw a certain amount each year tax-free as well.
In fact, it might seem like every magazine and personal finance website, and even chats with friends raise the issue. The problem is that some of the advice out there is less than helpful, and sometimes downright depressing, because it will tell you that you should have started saving in your 20s. <!–

–>




Privacy Policy

7 Social Security Spousal Benefit Rules Every Couple Should Know

There’s also an exception to the remarriage rule for surviving spouses: Widowed and ex-spouses who qualify for survivor benefits can remarry at 60 (or 50 if disabled) and continue to receive their late spouse’s benefits.
If you were married for at least 10 years and you’ve been divorced for at least two years, you can claim your ex’s Social Security. The same spousal rules apply: Your maximum benefit will be 50% of their primary amount. You’ll receive a lower amount if you claim early, and you won’t earn delayed retirement credits for waiting past your full retirement age.

7 Social Security Rules Every Married Couple Should Know

You can only claim Social Security Disability Insurance (SSDI) if you’ve paid into Social Security yourself and have a qualifying medical condition. You can’t take disability on someone else’s record, including a spouse’s.
When you take Social Security on your own record, you’ll get the maximum benefit at age 70. That’s because for every year you delay Social Security, you boost your checks by 8% for life thanks to delayed retirement credits.

1. You can get up to 50% of your spouse’s full benefit.

But the rules for marriage and Social Security get complicated. Here are seven things married couples can’t afford not to know.

Once you remarry, you’re not allowed to claim your ex’s Social Security. But once you’ve been married a year, you can qualify for benefits on your current spouse’s record. If you’ve had more than one marriage that lasted 10 years or more and ended in divorce, Social Security will look at everyone’s record — yours and each ex-spouse’s — and give you the biggest benefit.

2. You don’t get to claim both benefits.

Get the Penny Hoarder Daily
If you take benefits before your own retirement age, you’ll get less than 50%. For example, if you start your benefits at 62 — the earliest age you can take Social Security — you’d receive just 32.5% of their primary amount.

3. There’s no extra credit for waiting past full retirement age for spouses.

But if you’re taking spousal benefits, you can’t earn delayed retirement benefits. Your benefits will max out once you reach full retirement age.
The maximum spousal benefit is 50% of your spouse’s primary insurance amount. That’s the benefit they’ll qualify for once they’re full retirement age, which is 67 for anyone born in 1960 or later.

4. You can’t claim a spouse’s Social Security disability.

Source: thepennyhoarder.com

5. Divorcing? You may still be able to get their benefits.

If your spouse dies before you, you can qualify for up to 100% of their Social Security through survivor benefits if you wait until your full retirement age. You can start survivor benefits as early as 60 (or 50 if you’re disabled), but you’ll receive a reduced amount. These rules apply to ex-spouses as well, provided that the marriage lasted for 10 years. As with spousal benefits, you’ll get whichever is bigger: your own benefit or the survivor benefit, but not both.
Sorry, but the perks of marriage don’t include double-dipping. Social Security will give you whichever is higher: your own benefit or your spouse’s benefit, but not both.

6. If you’ve remarried, you can’t claim your ex’s benefits.

But if your work history is limited and you marry someone who earns significantly more money than you do, you may get more Social Security by claiming spousal benefits. Here’s how it works.

7. Survivor’s benefits are up to 100% of the deceased spouse’s benefit.

You don’t automatically get more Social Security benefits just because you’re married. Many, if not most, people will get the biggest benefit by claiming on their own record.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]
If you qualify for some benefits based on your earnings history, technically Social Security will use your own record first. Then they’ll use your spouse’s record to get you the maximum benefit. <!–

–>




Ready to stop worrying about money?

Dear Penny: Can My Criminal Ex-Husband Take My Social Security?

Dear Penny,

My spouse was in the Air Force National Guard on and off. He owned a private, profitable tree work, gutter cleaning, snow-plowing and roof-raking company. He hasn’t filed business or personal taxes since the mid-’90s. He NEVER paid into Social Security and has been involved in fraudulent activities. Is he still entitled to 50% of my Social Security?

I’ve been disabled since 2000. I’ve paid all the bills, while he has been stashing cash and trying to get me to return to work, all while working only on bending his right elbow and lying in court. 

His attorney told the court outright that he will NOT file taxes. Since he’s a hoarder, I believe he filled his friend’s dumpster and disposed of his paperwork in the friend’s outside furnace to impress his mistress.

-Hands Off My Social Security

Dear Hands Off,

Unfortunately, Social Security doesn’t have special rules for lying, cheating, no-good rotten scoundrel spouses. The rules that were meant to protect spouses who stayed at home for much of their marriage, often caring for a family, also apply to guys like your husband.

So yes, he’ll probably be able to collect up to 50% of your full retirement age benefit, whether you’re still married or you’re divorced.

You say your husband has been involved in fraudulent activities. Technically, if your husband were incarcerated for more than 30 days, any Social Security benefits would be suspended until his release. But this sounds like it’s a nasty divorce involving a deadbeat husband, rather than a criminal case.


That’s the bad news. The good news is that even if your ex gets Social Security based on your work record, it will never, EVER affect your benefit. If you remarry at some point, his benefit also wouldn’t have any impact on your current spouse.

Since your husband was in the National Guard off and on, I’m guessing he paid at least something into Social Security, even if it wasn’t much. What happens in this situation is that Social Security looks at whatever your husband qualifies for based on his own work record. Then they use his current or ex-spouse’s record to qualify him for extra benefits if applicable.

It sounds like this divorce is still underway. You’re probably not going to be able to prove how much cash he’s earned over the years or whether he torched his business records. Focus on what you can control. For example, anything you can do to prove you shouldn’t pay alimony or that any assets should go to you would be a far better use of your time and energy than worrying about his Social Security.

Hang on to any financial documentation you have, like bank statements and copies of bills you’ve paid, so that you can present them to an attorney. If you can’t afford an attorney, search the American Bar Association’s website to see if free legal assistance is available in your area.

Your ex’s Social Security benefit is out of your hands, and it doesn’t affect you. You can’t undo what sounds like a miserable couple of decades with this guy. But rather than getting angry about his Social Security, channel your energy toward building a life that he’s not part of.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

Related Posts

<!–

–>

Source: thepennyhoarder.com

33 States with No Estate Taxes or Inheritance Taxes

The Tax Cuts and Jobs Act raised the federal estate tax exemption considerably. Before the tax reform law, it was $5.49 million per person for 2017. It’s up to $11.7 million for 2021 ($23.4 million for a married couple). So, now, even fewer taxpayers have to worry about federal estate taxes when they die. However, if your goal is to leave as much as you can to your heirs, then you should also pay attention to the state you choose for retirement.

Twelve states and the District of Columbia levy their own estate taxes, sometimes called death taxes, and some have much lower thresholds than the federal government. In addition, six states have inheritance taxes. Maryland, whose nickname is the Free State, has both.

The good news for retirees focused on estate planning: There are 33 states that have neither estate taxes nor inheritance taxes. Take a look.

1 of 33

Alabama

A lone fisherman seen from above fly fishing in AlabamaA lone fisherman seen from above fly fishing in Alabama

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.22%, according to the Tax Foundation.

  • Groceries: Taxable
  • Clothing: Taxable
  • Motor Vehicles: Taxable (2% state rate; additional local taxes may apply)
  • Prescription Drug: Exempt

Income Tax Range: Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others). High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others).

Some Alabama municipalities also impose occupational taxes on salaries and wages.

Taxes on Social Security: Benefits are not taxed.

Property Taxes: In Alabama, the median property tax rate is $395 per $100,000 of assessed home value.

For more information on these and other Alabama state taxes, see the Alabama State Tax Guide for Retirees.

2 of 33

Alaska

A lake and mountains in Alaska at sunrise or sunsetA lake and mountains in Alaska at sunrise or sunset

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: Alaska is one of five states with no state sales tax. However, localities can levy sales taxes, which can reach 7.5%. Higher rates are found in locations that lack a property tax. But, according to the Tax Foundation, the statewide average is only 1.76%.

Income Tax Range: No state income tax.

Taxes on Social Security: Benefits are not taxed.

Property Taxes: In Alaska, the median property tax rate is $1,182 per $100,000 of assessed home value.

For more information on these and other Alaska state taxes, see the Alaska State Tax Guide for Retirees.

3 of 33

Arizona

Dozens of cactus seen in an Arizona desert at sunsetDozens of cactus seen in an Arizona desert at sunset

Overall Rating for Taxes on Retirees: Most tax-friendly.

Sales Tax: 5.6% state levy. Localities can add as much as 5.6% to that, but the average combined levy is 8.4%, according to the Tax Foundation.

  • Groceries: Exempt from state tax, but local taxes may apply
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Low: 2.59% (on up to $54,544 of taxable income for married filers and up to $27,272 for single filers). High: 4.5% (on $327,263 and over of taxable income for married joint filers and $163,632 and over for single filers).

Starting in 2021, Arizona imposes a 3.5% surtax on taxable income over $500,000 for joint filers and over $250,000 for single taxpayers. However, the surtax can’t increase the overall top rate above 4.5% (which effectively nullifies the surtax for the 2021 tax year).

Beginning in 2022, a two-bracket tax rate structure will be adopted. The rates will be 2.55% (on up to $54,544 of taxable income for joint filers and up to $27,272 for single filers) and 2.98% (on over $54,54 of taxable income for joint filers and on over $27,272 of taxable income for single filers). The rates will decrease to 2.53% and 2.75%, respectively, if certain state revenue amounts are reached. The state will then adopt a single flat rate of 2.5% if another state revenue amount is reached.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Arizona, the median property tax rate is $617 per $100,000 of assessed home value.

For more information on these and other Arizona’s state taxes, see the Arizona State Tax Guide for Retirees.

4 of 33

Arkansas

The Junction Bridge in Little Rock Arkansas at duskThe Junction Bridge in Little Rock Arkansas at dusk

Overall Rating for Taxes on Retirees: Most tax-friendly.

Sales Tax: 6.5% state levy. Localities can add as much as 5.125%, and the average combined rate is 9.48%, according to the Tax Foundation.

  • Groceries: Taxable (0.125% state rate; additional local taxes may apply
  • Clothing: Taxable
  • Motor Vehicles: Taxable (6.5% state rate, or 7% in Texarkana, on purchase price of $4,000 or greater; effective January 1, 2022, 3.5% state rate on used motor vehicles priced from $4,000 to $10,000)
  • Prescription Drugs: Exempt

Income Tax Range: Low: 2% (on taxable income from $4,500 to $8,899 for taxpayers with net income less than $22,200), 0.75% (on first $4,499 of taxable income for taxpayers with net income from $22,200 to $79,300), or 2% (on first $4,000 of taxable income for taxpayers with net income over $79,300). High: 3.4% (on taxable income from $13,400 to $22,199 for taxpayers with net income less than $22,200), 5.9% (on taxable income from $37,200 to $79,300 for taxpayers with net income from $22,200 to $79,300), or 6.6% (on taxable income over $79,300 for taxpayers with net income over $79,300).

Beginning in 2021, the top rate for taxpayers with net income over $79,300 will be 5.9% (on taxable income over $8,000). A “bracket adjustment” of between $40 and $440 is subtracted from the amount of tax due for taxpayers with net income from $79,301 to $84,600.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Arkansas, the median property tax rate is $612 per $100,000 of assessed home value.

For more information on these and other state taxes, see the Arkansas State Tax Guide for Retirees.

5 of 33

California

A California beach and pier as seen at sunsetA California beach and pier as seen at sunset

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.82%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Low: 1% (on up to $17,864 of taxable income for married joint filers and up to $8,932 for those filing individually). High: 13.3% (on more than $1,198,024 for married joint filers and $1 million for those filing individually).

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In California, the median property tax rate is $729 per $100,000 of assessed home value.

For more information on these and other California state taxes, see the California State Tax Guide for Retirees.

6 of 33

Colorado

A skier blast through snow powder skiing down a Colorado mountain with bright sunshine behind him on a Colorado mountainA skier blast through snow powder skiing down a Colorado mountain with bright sunshine behind him on a Colorado mountain

Overall Rating for Taxes on Retirees: Most tax-friendly.

Sales Tax: 2.9% state levy. Localities can add as much as 8.3%, and the average combined rate is 7.72%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Colorado has a flat income tax rate of 4.55% (the approval of Proposition 116, which appeared on the November 2020 ballot, reduced the rate from 4.63% to 4.55%). The state also limits the how much its revenue can grow from year-to-year by lowering the tax rate if revenue growth is too high. For example, in 2019, this resulted in a rate reduction to 4.5%.

Denver and a few other cities in Colorado also impose a monthly payroll tax.

Taxes on Social Security: Up to $24,000 of Social Security benefits taxed by the federal government, along with other retirement income, can be excluded for Colorado income tax purposes ($20,000 for taxpayers 55 to 64 years old).

Beginning in 2022, the $24,000 cap is removed for federally taxable Social Security benefits, which effectively makes all federally taxed Social Security income deductible for taxpayers 65 and over.

Property Taxes: In Colorado, the median property tax rate is $494 per $100,000 of assessed home value.

For more information on these and other Colorado state taxes, see the Colorado State Tax Guide for Retirees.

7 of 33

Delaware

The twin spans of the Delaware Memorial Bridge as seen during the evening hoursThe twin spans of the Delaware Memorial Bridge as seen during the evening hours

Overall Rating for Taxes on Retirees: Most tax-friendly.

Sales Tax: No state or local sales tax.

Income Tax Range: Low: 2.2% (on taxable income from $2,001 to $5,000). High: 6.6% (on taxable income above $60,000).

Wilmington also imposes a city tax on wages.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Delaware, the median property tax rate is $562 per $100,000 of assessed home value.

For more information on these and other Delaware state taxes, see the Delaware State Tax Guide for Retirees.

8 of 33

Florida

Palm trees and grass circle a Florida lake in daylightPalm trees and grass circle a Florida lake in daylight

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 6% state levy. Localities can add as much as 2%, and the average combined rate is 7.01%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable (additional county tax on first $5,000 of purchase price may apply)
  • Prescription Drugs: Exempt

Income Tax Range: Florida has no state income tax.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Florida, the median property tax rate is $830 per $100,000 of assessed home value.

For more information on these and other Florida state taxes, see the Florida State Tax Guide for Retirees.

9 of 33

Georgia

A cityscape of Savannah, Georgia, at sunsetA cityscape of Savannah, Georgia, at sunset

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 4% state levy. Localities can add as much as 4.9%, and the average combined rate is 7.33%, according to the Tax Foundation.

  • Groceries: Exempt from state tax, but local taxes may apply
  • Clothing: Taxable
  • Motor Vehicles: Exempt from state tax, but local taxes may apply
  • Prescription Drugs: Exempt

Income Tax Range: Low: 1% (on the first $1,000 of taxable net income for married couples filing jointly; on the first $750 for individual filers; and on the first $500 for married couples filing separately). High: 5.75% (on the first $1,000 of taxable net income for married couples filing jointly; on the first $750 for individual filers; and on the first $500 for married couples filing separately).

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Georgia, the median property tax rate is $875 per $100,000 of assessed home value.

For more information on these and other Georgia state taxes, see the Georgia State Tax Guide for Retirees.

10 of 33

Idaho

A lone senior hiker is seen in the mountains of IdahoA lone senior hiker is seen in the mountains of Idaho

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 6% state levy. Localities (typically resort communities) can add as much as 3%, but the average combined rate is just 6.02%, according to the Tax Foundation.

  • Groceries: Taxable
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Low: 1% (on taxable income up to $3,136 for married joint filers and up to $1,568 for individual filers). High: 6.5% (on taxable income of $23,520 or more for married joint filers and $11,760 or more for individual filers). (Note: Dollar amounts may still need to be adjusted for inflation for 2021.)

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Idaho, the median property tax rate is $633 per $100,000 of assessed home value.

For more information on these and other Idaho state taxes, see the Idaho State Tax Guide for Retirees.

11 of 33

Indiana

An open Indiana barn at sunsetAn open Indiana barn at sunset

Overall Rating for Taxes on Retirees: Not tax-friendly.

State Sales Tax: 7% state levy. No local taxes.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Indiana has a flat rate of 3.23% of state adjusted gross income after modifications. Counties also levy income taxes.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Indiana, the median property tax rate is $810 per $100,000 of assessed home value.

For more information on these and other Indiana state taxes, see the Indiana State Tax Guide for Retirees.

12 of 33

Kansas

Combines at work at sunset during the wheat harvest, Shields &amp; Sons Farming in Goodland, Kansas Combines at work at sunset during the wheat harvest, Shields &amp; Sons Farming in Goodland, Kansas

Overall Rating for Taxes on Retirees: Least tax-friendly.

Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.7%, according to the Tax Foundation.

  • Groceries: Taxable
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Taxable

Income Tax Range: Low: 3.1% (on $2,501 to $15,000 of taxable income for single filers and $5,001 to $30,000 for joint filers). High: 5.7% (on more than $30,000 of taxable income for single filers and more than $60,000 for joint filers). Kansas also has an “intangibles tax” levied on unearned income by some localities.

Taxes on Social Security: Social Security benefits are exempt from Kansas income tax for residents with a federal adjusted gross income of $75,000 or less. For taxpayers with a federal AGI above $75,000, Social Security benefits are taxed by Kansas to the same extent they are taxed at the federal level.

Property Taxes: In Kansas, the median property tax rate is $1,369 per $100,000 of assessed home value.

For more information on these and other Kansas state taxes, see the Kansas State Tax Guide for Retirees.

13 of 33

Louisiana

Close up of a man playing trumpet on Bourbon Street in New Orleans, Louisianaon sunny day.Close up of a man playing trumpet on Bourbon Street in New Orleans, Louisianaon sunny day.

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 4.45% state levy. Localities can add as much as 7%, and the average combined rate is 9.55%, according to the Tax Foundation.

  • Groceries: Exempt from state tax, but local taxes may apply
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt from state tax, but local taxes may apply

Income Tax Range: Low: 2% (on $12,500 or less of taxable income for individuals, $25,000 for joint filers). High: 6% (on more than $50,000 of taxable income; $100,000 for joint filers).

(Note: On October 9, 2021, Louisiana voters will decide whether to cap the maximum rate at 4.75% starting in 2022. If that ballot initiative is approved, Louisiana’s lowest personal income tax rate will be 1.85% and it’s highest rate will be 4.75% beginning in 2022. In addition, each personal income tax rate will be reduced beginning February 1, 2024, and each February 1 thereafter through 2034, if the prior fiscal year’s actual individual income tax collections exceed the actual tax collections for the fiscal year ending June 30, 2019, adjusted annually by the growth factor provided for in the state constitution.)

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Louisiana, the median property tax rate is $534 per $100,000 of assessed home value.

For more information on these and other Louisiana state taxes, see the Louisiana State Tax Guide for Retirees.

14 of 33

Michigan

Lake Michigan waves crash over a pier at Muskegon Channel South Pier Lighthouse in Muskegon, MichiganLake Michigan waves crash over a pier at Muskegon Channel South Pier Lighthouse in Muskegon, Michigan

Overall Rating for Taxes on Retirees: Not tax-friendly.

Sales Tax: 6% state levy. No local taxes.

  • Groceries: Exempt, but prepared food is taxable
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Michigan has a flat tax rate of 4.25%. Cities can levy income taxes as well, on both residents and non-residents (who are taxed 1/2 the rate of residents).

Taxes on Social Security: Social Security benefits are not taxed by the state. Although taxpayers born after 1952 can claim a $20,000 deduction ($40,000 for joint filers) in lieu of the Social Security exemption and other tax breaks.

Property Taxes: In Michigan, the median property tax rate is $1,448 per $100,000 of assessed home value.

For more information on these and other Michigan state taxes, see the Michigan State Tax Guide for Retirees.

15 of 33

Mississippi

The early morning light shines through at the Noxubee Wildlife Refuge in MississippiThe early morning light shines through at the Noxubee Wildlife Refuge in Mississippi

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 7% state levy. Only two localities, Jackson (1%) and Tupelo (0.25%) add to that. According to the Tax Foundation, that makes for an average combined rate of 7.07%.

  • Groceries: Taxable
  • Clothing: Taxable
  • Motor Vehicles: Taxable (5%)
  • Prescription Drugs: Exempt

Income Tax Range: Low: 3% (on taxable income from $3,001 to $5,000). High: 5% (on taxable income over $10,000).

Taxes on Social Security: Social Security benefits are not taxed for married couples with a federal adjusted gross income less than $100,000 and single taxpayers with an AGI of less than $85,000. Taxpayers who exceed those income limits may qualify for a partial exemption on their benefits.

Property Taxes: In Mississippi, the median property tax rate is $787 per $100,000 of assessed home value.

For more information on these and other Mississippi state taxes, see the Mississippi State Tax Guide for Retirees.

16 of 33

Missouri

The Gateway Arch in St. Louis, Missouri as seen in a cityscape at sunsetThe Gateway Arch in St. Louis, Missouri as seen in a cityscape at sunset

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: 4.225% state levy. Localities can add as much as 5.763%, and the average combined rate is 8.25%, according to the Tax Foundation.

  • Groceries: Taxable (1.225% state rate; additional local taxes may apply)
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

 Income Tax Range: Low: 1.5% (on taxable of income of $107 or more). High: 5.4% (on more than $8,584 of taxable income).

Kansas City and St. Louis also impose an earnings tax.

Taxes on Social Security: Social Security benefits are not taxed for married couples with a federal adjusted gross income less than $100,000 and single taxpayers with an AGI of less than $85,000. Taxpayers who exceed those income limits may qualify for a partial exemption on their benefits.

Property Taxes: In Missouri, the median property tax rate is $930 per $100,000 of assessed home value.

For more information on these and other Missouri  state taxes, see the Missouri State Tax Guide for Retirees.

17 of 33

Montana

Two women fly-fishing in the Gallatin River beneath the mountains in Cameron, MontanaTwo women fly-fishing in the Gallatin River beneath the mountains in Cameron, Montana

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: No state sales tax. Resort areas such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.

Income Tax Range: Low: 1% (on up to $3,100 of taxable income). High: 6.9% (on taxable income over $18,700). Starting in 2022, the top rate will be 6.75% on taxable income over $17,400. Then, beginning in 2024, the income tax rates and brackets will be substantially revised (there will only be two rates – 4.7% and 6.5%).

Taxes on Social Security: Social Security benefits are taxable. The method used to calculate the taxable amount for Montana income tax purposes is similar to the method used for federal returns. However, there are important differences. As a result, the Montana taxable amount may be different than the federal taxable amount. (Beginning in 2024, Social Security benefits will be taxed by Montana to the same extent they are taxed at the federal level.)

Property Taxes: In Montana, the median property tax rate is $831 per $100,000 of assessed home value.

For more information on these and other Montana state taxes, see the Montana State Tax Guide for Retirees.

18 of 33

Nevada

High angle view on the skyline of Reno, Nevada, at duskHigh angle view on the skyline of Reno, Nevada, at dusk

Overall Rating for Taxes on Retirees: Most tax-friendly.

Sales Tax: 6.85% state levy. Localities can add as much as 1.53%, and the average combined rate is 8.23%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Nevada has no state income tax.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Nevada, the median property tax rate is $533 per $100,000 of assessed home value.

For more information on these and other Nevada state taxes, see the Nevada State Tax Guide for Retirees.

19 of 33

New Hampshire

The historic fishing village of Portsmouth, New HampshireThe historic fishing village of Portsmouth, New Hampshire

Overall Rating for Taxes on Retirees: Not tax-friendly.

Sales Tax: No state or local sales tax.

Income Tax Range: New Hampshire doesn’t have an income tax. However, currently there’s a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).

(Note: The tax on dividends and interest is being phased out. The rate will be 4% for 2023, 3% for 2024, 2% for 2025, and 1% for 2026. The tax will then be repealed on January 1, 2027.)

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In New Hampshire, the median property tax rate is $2,050 per $100,000 of assessed home value.

For more information on these and other New Hampshire state taxes, see the New Hampshire State Tax Guide for Retirees.

20 of 33

New Mexico

Heavy wooden gates open at the pilgrimage site of El Santuario de Chimayo, a National Historic Landmark in Chimayo, New MexicoHeavy wooden gates open at the pilgrimage site of El Santuario de Chimayo, a National Historic Landmark in Chimayo, New Mexico

Overall Rating for Taxes on Retirees: Not tax-friendly.

Sales Tax: 5.125% state levy. Localities can add as much as 4.313%, and the average combined rate is 7.84%, according to the Tax Foundation. New Mexico’s tax is a gross receipts tax that covers most services.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4% excise tax
  • Prescription Drugs: Exempt

Income Tax Range: Low: 1.7% (on up to $5,500 of taxable income for single filers and $8,000 for joint filers). High: 4.9% (on taxable income over $16,000 for single filers and over $24,000 for married couples filing jointly).

Beginning with the 2021 tax year, the top rate will be 5.9% on taxable income over $210,000 for single filers and over $315,000 for joint filers.

Taxes on Social Security: Social Security benefits are taxed to the same extent they are taxed at the federal level.

Property Taxes: In New Mexico, the median property tax rate is $776 per $100,000 of assessed home value.

For more information on these and other New Mexico state taxes, see the New Mexico State Tax Guide for Retirees.

21 of 33

North Carolina

A North Carolina lake with a lone boater seen at sunsetA North Carolina lake with a lone boater seen at sunset

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: 4.75% state levy. Localities can add as much as 2.75%, and the average combined rate is 6.98%, according to the Tax Foundation.

  • Groceries: Exempt from state tax, but 2% local tax may apply
  • Clothing: Taxable
  • Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 3% highway-use tax
  • Prescription Drugs: Exempt

Income Tax Range: Low: 1.1% (on up to $40,125 of taxable income for singles and up to $67,050 for married couples filing jointly). High: 2.9% (on taxable income over $440,600).

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In North Carolina, the median property tax rate is $773 per $100,000 of assessed home value.

For more information on these and other North Carolina state taxes, see the North Carolina State Tax Guide for Retirees.

22 of 33

North Dakota

American Bison grazing on the prairieAmerican Bison grazing on the prairie

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: 5% state levy. Localities can add as much as 3.5%, and the average combined rate is 6.96%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 5% excise tax
  • Prescription Drugs: Exempt

Income Tax Range: Low: 1.1% (on up to $40,125 of taxable income for singles and up to $67,050 for married couples filing jointly). High: 2.9% (on taxable income over $440,600).

Taxes on Social Security: Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $100,000 or less and other taxpayers with a federal AGI of $50,000 or less. For taxpayers exceeding these thresholds, Social Security benefits are taxed by North Dakota to the same extent they are taxed at the federal level.

Property Taxes: In North Dakota, the median property tax rate is $986 per $100,000 of assessed home value.

For more information on these and other North Dakota state taxes, see the North Dakota State Tax Guide for Retirees.

23 of 33

Ohio

A farm in Ohio as seen at sunsetA farm in Ohio as seen at sunset

Overall Rating for Taxes on Retirees: Not tax-friendly.

Sales Tax: 5.75% state levy. Localities can add as much as 2.25%, and the average combined rate is 7.22%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Low: 2.765% (on taxable income from $25,001 to $44,250). High: 4.797% (on taxable income over $110,650).

Cities and school districts in Ohio can also impose local income taxes.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Ohio, the median property tax rate is $1,478 per $100,000 of assessed home value.

For more information on these and other Ohio state taxes, see the Ohio State Tax Guide for Retirees.

24 of 33

Oklahoma

Renovated building in downtown Guthrie, OklahomaRenovated building in downtown Guthrie, Oklahoma

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: 4.5% state levy. Localities can add as much as 7%, and the average combined rate is 8.95%, according to the Tax Foundation.

  • Groceries: Taxable
  • Clothing: Taxable
  • Motor Vehicles: Taxable (1.25%), and 3.25% excise tax applies
  • Prescription Drugs: Exempt

Income Tax Range: Low: 0.5% (on up to $1,000 of taxable income for single filers and up to $2,000 for married joint filers). High: 5% (on taxable income over $7,200 for single filers and over $12,200 for married joint filers).

Starting in 2022, the lowest rate will be 0.25% and the highest rate will be 4.75%.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Oklahoma, the median property tax rate is $869 per $100,000 of assessed home value.

For more information on these and other Oklahoma state taxes, see the Oklahoma State Tax Guide for Retirees.

25 of 33

South Carolina

The pineapple fountain in Charleston, South Carolina at historic Waterfront ParkThe pineapple fountain in Charleston, South Carolina at historic Waterfront Park

Overall Rating for Taxes on Retirees: Most tax-friendly.

Sales Tax: 6% state levy. Localities can add as much as 3%, and the average combined rate is 7.47%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 5% (up to $500) infrastructure maintenance fee
  • Prescription Drugs: Exempt

Income Tax Range: Low: 3% (on taxable income over $3,070). High: 7% (on taxable income over $15,400).

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In South Carolina, the median property tax rate is $545 per $100,000 of assessed home value.

For more information on these and other South Carolina state taxes, see the South Carolina State Tax Guide for Retirees.

26 of 33

South Dakota

The 19th century historic downtown of Deadwood, South DakotaThe 19th century historic downtown of Deadwood, South Dakota

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: 4.5% state levy. Localities can add as much as 4.5%, and the average combined rate is 6.4%, according to the Tax Foundation.

  • Groceries: Taxable
  • Clothing: Taxable
  • Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4% excise tax
  • Prescription Drugs: Exempt

Taxes on Social Security: Social Security benefits are not taxed by the state.

Income Tax Range: South Dakota has no state income tax.

Property Taxes: In South Dakota, the median property tax rate is $1,219 per $100,000 of assessed home value.

For more information on these and other South Dakota state taxes, see the South Dakota State Tax Guide for Retirees.

27 of 33

Tennessee

Neon signs on Lower Broadway at night in vibrant downtown Nashville, TennesseeNeon signs on Lower Broadway at night in vibrant downtown Nashville, Tennessee

Overall Rating for Taxes on Retirees: Most tax-friendly.

Sales Tax: 7% state levy. There’s also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined state and local rate of 9.547%, according to the Tax Foundation. Local taxes are limited, though: Only the first $1,600 of any single item is taxable.

  • Groceries: Taxable (4% state rate; additional local taxes may apply)
  • Clothing: Taxable
  • Motor Vehicles: Taxable (7% basic rate, plus 2.75% state tax on sales price between $1,600 and $3,200; additional local taxes may also apply)
  • Prescription Drugs: Exempt

Income Tax Range: Tennessee has no state income tax. But dividends and some interest are subject to the Hall Tax at a 1% rate. The first $1,250 in taxable income for individuals ($2,500 for joint filers) is exempt. 2020 is the last year for the tax, which is being phased out. Also, the tax is waived if you’re over 100.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Tennessee, the median property tax rate is $636 per $100,000 of assessed home value.

For more information on these and other Tennessee state taxes, see the Tennessee State Tax Guide for Retirees.

28 of 33

Texas

Cowboys and cowgirl in silhouette at sunrise in Weatherford, Texas.Cowboys and cowgirl in silhouette at sunrise in Weatherford, Texas.

Overall Rating for Taxes on Retirees: Least tax-friendly.

Sales Tax: 6.25% state levy. Localities can add up to 2%, with an average combined rate of 8.19%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Texas has no state income tax.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Texas, the median property tax rate is $1,692 per $100,000 of assessed home value.

For more information on these and other Texas state taxes, see the Texas State Tax Guide for Retirees.

29 of 33

Utah

One person looks out over the canyon of Canyonlands National Park in Utah during sunsetOne person looks out over the canyon of Canyonlands National Park in Utah during sunset

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: State levy is 4.85%, but mandatory 1% local sales tax and 0.25% county option sales tax are added to the state tax (for a 6.1% total rate). Plus, localities can add up to an additional 2.95%, making the average combined state and local rate 7.19%, according to the Tax Foundation.

  • Groceries: Taxable (1.75% state tax, plus mandatory 1.25% in local and county taxes)
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Utah has a flat tax of 5%.

Taxes on Social Security: Social Security benefits are included in Utah taxable income to the same extent they’re taxed at the federal level. However, beginning in 2021, a nonrefundable tax credit is available for Social Security benefits. The credit is calculated by multiplying the Utah income tax rate (currently 4.95%) by the amount of Social Security benefits included in federal adjusted gross income (AGI). The total credit amount is reduced by $.025 for each dollar by which the taxpayer’s modified AGI exceeds $25,000 for a married person filing a separate tax return, $30,000 for a single filer, and $50,000 for a married couple filing a joint return or a head-of-household filer. Taxpayers can’t claim both the Social Security credit and the general $450 credit for retirees.

Property Taxes: In Utah, the median property tax rate is $575 per $100,000 of assessed home value.

For more information on these and other Utah state taxes, see the Utah State Tax Guide for Retirees.

30 of 33

Virginia

View from a residential street in Old Town Alexandria, Virginia, featuring early 1800s townhousesView from a residential street in Old Town Alexandria, Virginia, featuring early 1800s townhouses

Overall Rating for Taxes on Retirees: Tax-friendly.

Sales Tax: 5.3% state levy, which includes a 1% tax allocated to local governments. Some local governments also impose additional taxes of up to 1.7%, making the average combined state and local rate 5.75%, according to the Tax Foundation.

  • Groceries: Taxable (1.5% state rate, plus 1% local tax)
  • Clothing: Taxable
  • Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4.15% excise tax
  • Prescription Drugs: Exempt

Income Tax Range: Low: Low: 2% (on up to $3,000 of taxable income). High: 5.75% (on taxable income over $17,000).

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Virginia, the median property tax rate is $804 per $100,000 of assessed home value.

For more information on these and other Virginia state taxes, see the Virginia State Tax Guide for Retirees.

31 of 33

West Virginia

Sunrise from high atop Dolly Sods Wilderness area in West Virginia with Sunbeams and reflectionsSunrise from high atop Dolly Sods Wilderness area in West Virginia with Sunbeams and reflections

Overall Rating for Taxes on Retirees: Mixed tax picture.

Sales Tax: 6% state levy. Municipalities can add up to 1% to that, with an average combined rate of 6.51%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Low: 3% (on up to $10,000 of taxable income). High: 6.5% (on taxable income of $60,000 or more).

West Virginia municipalities can also impose city service fees on people working in the city.

Taxes on Social Security: In 2020, 35% of Social Security benefits taxed by the federal government are excluded from taxable income for single taxpayers with federal adjusted gross income of $50,000 or less ($100,000 or less for joint filers). In 2021, 65% will be excluded for qualifying taxpayers. After 2021, qualifying taxpayers can exclude all Social Security benefits.

Property Taxes: In West Virginia, the median property tax rate is $571 per $100,000 of assessed home value.

For more information on these and other West Virginia state taxes, see the West Virginia State Tax Guide for Retirees.

32 of 33

Wisconsin

Red sandstone cliffs at the Apostle Islands National Lakeshore, Lake Superior, in winter. Lake is frozen and two small figures walking on the ice emphasize the height of the cliffs.Red sandstone cliffs at the Apostle Islands National Lakeshore, Lake Superior, in winter. Lake is frozen and two small figures walking on the ice emphasize the height of the cliffs.

Overall Rating for Taxes on Retirees: Least tax-friendly.

Sales Tax: 5% state levy. Municipalities can add up to 1.75% to that, with the average combined rate at 5.43%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Low: 3.54% (on up to $11,450 of taxable income for singles or up to $15,960 for married couples). High: 7.65% (on taxable income over $263,480 for singles or over $351,310 for married couples).

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Wisconsin, the median property tax rate is $1,684 per $100,000 of assessed home value..

For more information on these and other Wisconsin state taxes, see the Wisconsin State Tax Guide for Retirees.

33 of 33

Wyoming

Aspen grove in fall colors with snow covered mountains in the background, Grand Teton National Park, WyomingAspen grove in fall colors with snow covered mountains in the background, Grand Teton National Park, Wyoming

Overall Rating for Taxes on Retirees: Most tax-friendly.

State Sales Tax: 4% state levy. Municipalities can add up to 2% to that, with a combined rate of 5.39%, according to the Tax Foundation.

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Income Tax Range: Wyoming has no state income tax.

Taxes on Social Security: Social Security benefits are not taxed by the state.

Property Taxes: In Wyoming, the median property tax rate is $575 per $100,000 of assessed home value.

For more information on these and other Wyoming state taxes, see the Wyoming State Tax Guide for Retirees.

Source: kiplinger.com

Dear Penny: I’m 74 and My 24-Year-Old Boyfriend Is Awful With Money

Dear Penny,

I am 74 and have fallen for a 24-year-old. He says he wants to get married, but he has only the house he inherited. 

I’m self-employed but have only a meager income. It makes me uneasy that I have to pay for everything. He may be able to work eventually, but for now all he finds are part-time jobs. Should I break off this relationship due to poor finances?

-Too Much in Love

Dear In Love,

I’m going to attempt the impossible, which is to put aside this glaring age difference for a minute.

Here’s what I would have told you if you hadn’t mentioned your ages: You’re pulling all the weight here, and you don’t feel good about it. Your boyfriend doesn’t sound very responsible. Nine times out of 10, when someone writes to me, a stranger, to ask whether they should end their relationship, the answer is: “Yes! End this relationship.”

Now, let’s talk about this gaping age discrepancy. There’s no way I can make myself not worry that your boyfriend is taking advantage of your generosity here. Yes, plenty of people fall in love with someone way older or younger than they’d ever imagined. So I don’t want to make any sweeping generalizations about what constitutes too young for someone of 74.


But I think an age difference becomes too much when you’re in vastly different places in life. Even if you’re both in love with perfectly pure intentions, surely this is one of those times.

Aside from the fact that he’s dating a 74-year-old, your boyfriend doesn’t sound that unusual for someone who’s only 24. Most twentysomethings haven’t acquired much in the way of assets. It’s not unusual for someone this age to have a string of part-time jobs and side hustles instead of a career.

Meanwhile, you’re 74 and don’t have much income, which certainly isn’t unusual for someone who’s retirement age. You deserve to retire at some point. I’m afraid you can’t afford to wait for your boyfriend. You say he may “eventually” be able to work. Somehow, I think “eventually” will happen a lot faster when he has no choice but to pay his own bills.

You say you’re paying for everything, so I’ll assume he’s living in your home. Since you say he inherited a house, hopefully he can move in there and you can make a clean break.

Whenever you end a relationship, you need to act quickly to unmingle your finances. That includes closing any joint bank accounts and removing your boyfriend if he’s an authorized user on any of your credit accounts. If you’ve listed him as a beneficiary on a retirement account or life insurance policy, or included him in your will, be sure to remove him as well.

And yet, untangling the heart can be even more complicated than separating your money. There’s nothing I can say to make that part easier.

Just know that it’s not too late for you to fall in love all over again. But make sure that anyone you’d consider dating in the future is at a similar place in life as you are. That doesn’t mean you need to be the same age. But that person needs to be a mature and independent adult, not someone who mooches off you. Anyone who’s not willing to be your equal partner doesn’t deserve your time.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

Related Posts

<!–

–>

Source: thepennyhoarder.com

The 10 Least Tax-Friendly States for Military Retirees

If you spent your career in the military, you’ve probably lived all over the U.S. and around the world. But before you put down roots in retirement, find out how much of your hard-earned pension will be taxed. You’ll pay tax to the federal government on military retirement pay that’s based on age or length of service (disability pensions might not be taxed). With state taxes, though, it isn’t always so clear.

Many states provide special tax breaks for military retirees or for retirement income in general. And, of course, some states don’t even have an income tax. But some other states aren’t so generous when it comes to helping retired veterans at tax time.

We’ve identified the 10 states (including Washington, D.C.) with the least-friendly income tax rules for military pensions. These states can tax at least part of a veteran’s pension…and some tax the entire amount. We’ve listed the least tax-friendly of these states first. Take a look.

1 of 10

1. California

picture of veteran sergeant picture of veteran sergeant
  • Lowest tax rate: 1% (on up to $17,864 of taxable income for married joint filers and up to $8,932 for single filers)
  • Highest tax rate: 13.3% (on more than $1,198,024 of taxable income for married joint filers and $1 million for single filers)

California offers retired military members no way to escape its high tax rates. The Golden State taxes 100% of a resident’s income from military pensions, along with private, local, state, and other federal pensions. This applies to all military pension income received while a retiree is a California resident, regardless of where he or she was stationed while on active duty.

For more information about California taxes on seniors, see the California State Tax Guide for Retirees.

2 of 10

2. Vermont

photo of veteranphoto of veteran
  • Lowest tax rate: 3.35% (on up to $67,450 of taxable income for married joint filers and up to $40,350 for single filers)
  • Highest tax rate: 8.75% (on more than $248,350 of taxable income for married joint filers and more than $204,000 for single filers)

The Green Mountain State taxes 100% of income from military pensions, along with most other sources of retirement income. The state also has a steep top income tax rate that could nick military retirees who have other sources of income.

For more information about Vermont taxes on seniors, see the Vermont State Tax Guide for Retirees.

3 of 10

3. Washington, D.C.

photo of veteran at Vietnam Veterans Memorialphoto of veteran at Vietnam Veterans Memorial
  • Lowest tax rate: 4% (on up to $10,000 of taxable income)
  • Highest tax rate: 8.95% (on more than $1 million of taxable income)

Despite the large number of government workers who call it home, Washington, D.C., offers no tax breaks for those who decide to retire there. A $3,000 exclusion for government pensions, including military pensions, was repealed in 2015.

For more information about Washington, D.C., taxes on seniors, see the District of Columbia State Tax Guide for Retirees.

4 of 10

4. Utah

photo of veteran salutingphoto of veteran saluting
  • Tax rate: Flat tax of 4.95%

For residents still working on their 2020 state income tax return, Utah doesn’t offer any special tax breaks for military retirees, and its retirement-income tax credit is limited. Residents 65 and older are eligible for a retirement-income tax credit of up to $450 per person ($900 per married couple), but the credit is phased out at 2.5 cents per dollar of modified adjusted gross income that’s more than $25,000 for singles or $32,000 for married people filing jointly.

However, beginning with the 2021 tax year, a new tax credit is available for military retirement pay. The credit is calculated by multiplying the Utah income tax rate (currently 4.95%) by the amount of military retirement pay included in federal adjusted gross income.

For more information about Utah taxes on seniors, see the Utah State Tax Guide for Retirees.

5 of 10

5. Arizona

photo of veteran and his wifephoto of veteran and his wife
  • Lowest tax rate: 2.59% (on up to $54,544 of taxable income for married joint filers and up to $27,272 for single filers)
  • Highest tax rate: 4.5% (on more than $327,263 of taxable income for married joint filers and more than $163,632 for single filers)

For the 2020 tax year, Arizona offers a tax exemption for military pensions — but it’s a relatively small one. The exemption is only good for up to $3,500 of military retirement income. Other states with broad-based retirement income exemptions provide a better tax break for retired veterans. Fortunately, Arizona’s income tax rates are relatively low. That’s the bright side for 2020.

There’s even better news starting in 2021, though. Beginning with the 2021 tax year, all military retirement income is exempt from Arizona tax.

For more information about Arizona taxes on seniors, see the Arizona State Tax Guide for Retirees.

6 of 10

6. Montana

photo of veteranphoto of veteran
  • Lowest tax rate: 1% (on up to $3,100 of taxable income)
  • Highest tax rate: 6.9% (on more than $18,700 of taxable income)

The state provides an inflation-adjusted exemption for pension income (including military retirement pay), but veterans with a robust military pension probably won’t qualify. For the 2020 tax year, the maximum exemption is $4,370. However, the exemption doesn’t apply for veterans with federal adjusted gross income of $38,605 or more ($40,790 or more for joint filers). If both spouses receive pension income, married couples should check to see if each spouse could exclude $4,370 if separate returns are filed.

Beginning in 2024, the pension income exemption is repealed. Instead, taxpayers age 65 and older will be able to deduct up to $5,500 of any income (adjusted for inflation each year after 2024). In addition, starting in 2022, the top rate will be 6.75% on taxable income over $17,400. Then, beginning in 2024, the income tax rates and brackets will be substantially modified (there will only be two rates – 4.7% and 6.5%).

For more information about Montana taxes on seniors, see the Montana State Tax Guide for Retirees.

7 of 10

7. New Mexico

photo of veteran in front of American flagphoto of veteran in front of American flag
  • Lowest tax rate: 1.7% (on up to $8,000 of taxable income for married joint filers and up to $5,500 for single filers)
  • Highest tax rate: 4.9% (on more than $24,000 of taxable income for married joint filers and more than $16,000 for single filers) [Beginning with the 2021 tax year, the top rate will be 5.9% on taxable income over $315,000 for joint filers and over $210,000 for single filers.]

The Land of Enchantment affords no special treatment for military pensions. People who are 65 or older may receive an $8,000 general income exemption, but to qualify, their adjusted gross income must be less than $28,500 for singles or $51,000 for married couples filing jointly. If you’re at least 100 years old, all your income is exempt.

For more information about New Mexico taxes on seniors, see the New Mexico State Tax Guide for Retirees.

8 of 10

8. Oklahoma

photo of veteranphoto of veteran
  • Lowest tax rate: 0.5% (on up to $2,000 of taxable income for married joint filers and up to $1,000 for single filers)
  • Highest tax rate: 5% (on up to $12,200 of taxable income for married joint filers and up to $7,200 for single filers) [Starting in 2022, the lowest rate will be 0.25% and the highest rate will be 4.75%.]

Veterans in Oklahoma get some relief when it comes to state taxes on their pension. It just isn’t a lot. The Sooner State lets veterans exclude either $10,000 or 75% of their military retirement benefits, whichever amount is greater, from their taxable income. The exemption only applies, however, to the extent the military pension is included in the federal adjusted gross income.

For more information about Oklahoma taxes on seniors, see the Oklahoma State Tax Guide for Retirees.

9 of 10

9. Virginia

photo of retired Marine hold glass of beerphoto of retired Marine hold glass of beer
  • Lowest tax rate: 2% (on up to $3,000 of taxable income)
  • Highest tax rate: 5.75% (on more than $17,000 of taxable income)

Congressional Medal of Honor recipients don’t pay Virginia tax on income from a military retirement plan. However, other retired veterans do pay tax on their military pensions. The state does provide an age-based deduction against all income that is available to anyone who qualifies. Seniors born on or before January 1, 1939, can deduct $12,000. For those born after January 1, 1939, who are at least 65 years old, the deduction is reduced by $1 for every $1 that federal AGI exceeds $50,000 (or $75,000 for married filers).

For more information about Virginia taxes on seniors, see the Virginia State Tax Guide for Retirees.

10 of 10

10. Delaware

photo of two veterans shaking hands in front of American flagphoto of two veterans shaking hands in front of American flag
  • Lowest tax rate: 2.2% (on taxable income from $2,001 to $5,000)
  • Highest tax rate: 6.6% (on more than $60,000 of taxable income)

There are no special tax breaks in Delaware for military pensions. However, state law allows a modest exemption of up to $12,500 for pension and other retirement income paid to taxpayers age 60 and older (up to $2,000 for taxpayers younger than age 60). Eligible retirement income includes dividends, capital gains, interest, net rental income from real property and qualified retirement plans (e.g., IRAs, 401(k) plans, Keogh plans, and government deferred compensation plans). The general exemption is smaller than similar exemptions available in other states that do not fully exclude military pension income.

For more information about Delaware taxes on seniors, see the Delaware State Tax Guide for Retirees.

Source: kiplinger.com

10 Most Tax-Friendly States for Retirees

If you’re thinking of moving to a different state in retirement, you’ll want to consider climate, proximity to family and friends, access to quality health care, and a host of other important factors before picking a new location. But make sure you add taxes in the new state to the list of considerations. The total state and local tax burden in one place can be thousands of dollars more per year than in another. That can make a huge difference when you’re trying to stretch out your retirement savings.

To do a head-to-head, multistate comparison of state taxes on retirees, you can use Kiplinger’s State-by-State Guide to Taxes on Retirees. But if you’re just looking for the 10 states that impose the lowest taxes on retirees, check out the list below. Our results are based on the estimated state and local tax burden in each state for two hypothetical retired couples with a mixture of income from wages, Social Security, traditional and Roth IRAs, private pensions, 401(k) plans, interest, dividends, and capital gains. One couple had $50,000 in total income and a $250,000 home, while the other had $100,000 of income and a $350,000 home.

All but one of the states on our “most tax-friendly” list completely exempt Social Security benefits from state income taxes. Most also allowed an exemption for at least a portion of our hypothetical couples’ other retirement income, such as private pensions or IRA withdrawals. They tend to have low property tax rates and/or reasonable sales tax rates, too. Take a look and see for yourself. We list the most tax-friendly state for retirees last.

See the final slide for a complete description of our ranking methodology and sources of information.

1 of 11

10. Tennessee

picture of Tennessee map with pin in itpicture of Tennessee map with pin in it
  • State Income Tax Range: 1% on interest and dividends
  • Average Combined State and Local Sales Tax Rate: 9.55%
  • Median Property Tax Rate: $636 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

Residents of the Volunteer State pay no taxes on Social Security benefits, pensions or distributions from their retirement plans. That’s because there’s no broad-based income tax in Tennessee—only interest and dividends are subject to the state’s limited income tax. (Tennessee is one of a handful of states with no income tax.) Plus, anyone 65 years of age or older with total annual income of $37,000 or less ($68,000 or less for joint filers) is completely exempt from the 1% tax. It’s also waived if you’re at least 100 years old. On top of all that, the tax is being phased out at a rate of 1% per year. So it will be completely eliminated by 2021.

There are also no estate or inheritance taxes in Tennessee. That will put your heirs at ease.

Property taxes in Tennessee aren’t too bad, either. For instance, our hypothetical couple with a $250,000 home in the state would pay about $1,590 per year in property taxes ($2,226 for the couple with a $350,000 home). That’s well below the national average. There are also property tax relief programs in the state offering property tax reimbursements to income-eligible senior citizens. Tennessee also has a property tax freeze program for homeowners age 65 and older.

Watch out for Tennessee’s sales tax, though. The state’s 9.55% average combined state and local sales tax rate is the highest in the country. Tennessee is also one of the few states where groceries are subject to sales tax—they’re taxed at a 4% rate by the state (additional local taxes may also apply).

For more information, see the Tennessee State Tax Guide for Retirees.

2 of 11

9. Arkansas

picture of Arkansas map with pin in itpicture of Arkansas map with pin in it
  • State Income Tax Range: 0.75% (on taxable income up to $4,499 for taxpayers with net income from $22,200 to $79,300) to 6.6% (on taxable income over $79,300 for taxpayers with net income above $79,300)
  • Average Combined State and Local Sales Tax Rate: 9.51%
  • Median Property Tax Rate: $612 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

Arkansas usually isn’t one of the places you automatically think of as a retirement destination…but maybe it should be. At least from a tax standpoint, the Natural State has a lot to offer retirees. Let’s start with the state’s income tax rates—which are structured in a way that favors retirees with lower incomes (and the top rate for top earners is going down to from 6.6% to 5.9% in 2021). Social Security benefits are tax-free, and the state allows a broad-based exemption of up to $6,000 for other types of retirement income.

Another plus: Low property taxes. At only $612 per year, Arkansas’ median property tax rate is well below the national average ($250,000 home = $1,530 in tax; $350,000 home = $2,142 in tax). Plus, seniors in the state can have their property taxes “frozen” and annual increases are limited. There are no estate or inheritance taxes in Arkansas, either.

The state’s Achilles heel is its sales tax. The statewide sales tax is 6.5%, and local jurisdictions can add up to 5.125% of their own taxes. When you add it all up, Arkansas has the second-highest average combined state and local tax rate in the country.

For more information, see the Arkansas State Tax Guide for Retirees.

3 of 11

8. Arizona

picture of Arizona map with pin in itpicture of Arizona map with pin in it
  • State Income Tax Range: 2.59% (on taxable income up to $27,272 for single filers; up to $54,544 for joint filers) to 4.5% (on taxable income over $163,632 for single filers; over $327,263 for joint filers)
  • Average Combined State and Local Sales Tax Rate: 8.4%
  • Median Property Tax Rate: $617 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

The Grand Canyon State exempts Social Security benefits from state income taxes, plus up to $2,500 of income from federal and Arizona government retirement plans. Military retirement income is tax-free in Arizona, too. Income tax rates are also relatively low for most retirees. The state imposes a 3.5% surtax on taxable income over $500,000 for joint filers and over $250,000 for single taxpayers, but the surtax can’t increase the overall top rate above 4.5% (which effectively nullifies the surtax for the 2021 tax year).

The estimated property tax on our first hypothetical retired couple’s $250,000 home in Arizona is only $1,543 per year. For our second couple’s $350,000 residence, the estimated annual tax is only $2,160. Both those amounts are significantly below the national average. In addition, homeowners age 65 and older can “freeze” the value of their property for real estate tax purposes for three years if they lived in the home for at least two years and their annual income is below $37,584 (one owner) or $46,980 (multiple owners). Other property tax breaks are available for seniors, too.

Sales taxes in Arizona are above average, though. The average combined (state and local) rate is 8.4%, which is the 11th-highest in the nation. However, Arizona does not have an estate or inheritance tax, which makes it a more attractive retirement destination for wealthier seniors.

For more information, see the Arizona State Tax Guide for Retirees.

4 of 11

7. South Carolina

picture of South Carolina map with pin in itpicture of South Carolina map with pin in it
  • State Income Tax Range: 3% (on taxable income from $3,070 to $6,150) to 7% (on taxable income over $15,400)
  • Average Combined State and Local Sales Tax Rate: 7.46%
  • Median Property Tax Rate: $545 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

The Palmetto State extends some real southern hospitality to retirees by offering a charming collection of income tax breaks. To start, Social Security benefits are completely exempt. In addition, taxpayers age 65 or older can exclude up to $10,000 of retirement income (up to $3,000 for taxpayers under 65). Seniors can also deduct $15,000 of other taxable income ($30,000 for joint filers). Plus, veterans who are at least 65 years old can exclude up to $30,000 of income from a military retirement plan (up to $17,500 for veterans under 65).

Low property tax rates in South Carolina help retirees, too. The statewide average property tax on a $250,000 home in the state is only $1,363. It’s only $1,908 for a $350,000 residence. Those amounts are the sixth-lowest in the country for houses at those price points. Seniors can also claim a homestead exemption for the first $50,000 of their property’s fair market value. To qualify, you must have been at least 65 years old and a legal resident of South Carolina for one year, as of July 15 the year the exemption is claimed.

The lack of an estate or inheritance tax also makes South Carolina a desirable location for wealthy seniors.

There is some bad news, though. Sales taxes are on the high end in South Carolina. There’s a 6% statewide levy, and local governments can add as much as 3%. The average combined rate is 7.46%, which is well above average. Counties also impose an annual tax on your motor vehicle’s value.

For more information, see the South Carolina State Tax Guide for Retirees.

5 of 11

6. Colorado

picture of Colorado map with pin in itpicture of Colorado map with pin in it
  • State Income Tax Range: 4.55% (flat rate)
  • Average Combined State and Local Sales Tax Rate: 7.72%
  • Median Property Tax Rate: $494 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

Many retirees in Colorado feel a Rocky Mountain high when they see their low property tax bill. The state’s median property tax rate is the third-lowest in the nation. For our hypothetical retired couple with a $250,000 house, that comes to an estimated $1,235 annual property tax bill. It’s only $1,729 per year for our other couple’s $350,000 residence. Property tax exemptions, rebates and deferrals are also available for qualified seniors. Residents age 60 and older can also take advantage of a unique property tax “work-off” program, which lets them work for the city or county government to pay off a portion of their property taxes.

Income taxes are reasonable in the Centennial State, too. Colorado voters approved a measure on the November 2020 ballot that reduces the state’s flat income tax rate from 4.63% to 4.55%. The state also limits the how much its revenue can grow from year-to-year by lowering the tax rate if revenue growth is too high.

Wealthier retirees will also appreciate the fact that Colorado doesn’t impose an estate or inheritance tax. So, more of your money can be passed on to your family when you die.

Sales taxes will bring retirees back down to earth, though. Although the state sales tax rate is low—only 2.9%—local governments can tack on as much as 8.3%. As a result, the combined state and local sales tax rate is above the national average.

For more information, see the Colorado State Tax Guide for Retirees.

6 of 11

5. Nevada

picture of Nevada map with pin in itpicture of Nevada map with pin in it
  • State Income Tax Range: None
  • Average Combined State and Local Sales Tax Rate: 8.23%
  • Median Property Tax Rate: $533 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

Nevada is a good place to spend your golden years if you don’t want to gamble with your retirement savings. That’s because the Silver State offers retirees a jackpot of tax savings. There is no state income tax, so you can cash in your retirement plans and collect your Social Security checks without worrying about a big state tax bill. There are no estate or inheritance taxes in Nevada, either.

Nevada also has the fourth-lowest median property tax rate in the U.S. So, if our first make-believe couple retired to Nevada and bought a $250,000 home, they should expect to pay around $1,333 per year in property taxes on the residence. For our second imaginary couple, they would only pay about $1,866 annually on their $350,000 home. Unfortunately, however, Nevada doesn’t offer any special property tax breaks for seniors.

Sales tax is one area where Nevada could do better. The state imposes a 6.85% tax, and counties may tack on up to 1.53% more. As a result, the average combined state and local sales tax rate is 8.23% (that’s the 12th-highest combined rate in the country).

For more information, see the Nevada State Tax Guide for Retirees.

7 of 11

4. Wyoming

picture of Wyoming map with pin in itpicture of Wyoming map with pin in it
  • State Income Tax Range: None
  • Average Combined State and Local Sales Tax Rate: 5.33%
  • Median Property Tax Rate: $575 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

The Equality State is #1 in our rankings for the most tax-friendly state for middle-class families. So it should be no surprise that Wyoming is a tax-friendly place for retirees, too. The favorable tax climate for seniors starts with zero income, estate or inheritance taxes.

Sales taxes are low in Wyoming, too. The average combined state and local sales tax rate is only 5.33%, which is the eighth-lowest combined sales tax rate in the country.

You won’t pay high property taxes to own a home on the range, either. For a $250,000 home in Wyoming, the statewide average annual property tax bill comes to just $1,438. It’s only $2,013 for a $350,000 home. Those amounts are tied for the 10th-lowest tax totals in the nation for each price point. Plus, in tough times like these, it’s also good to know that eligible seniors in Wyoming can delay payment of up to 50% of their property taxes if money gets tight in retirement.

For more information, see the Wyoming State Tax Guide for Retirees.

8 of 11

3. District of Columbia

picture of Washington, D.C., map with pin in itpicture of Washington, D.C., map with pin in it
  • State Income Tax Range: 4% (on taxable income up to $10,000) to 8.95% (on taxable income over $1 million)
  • Average Combined State and Local Sales Tax Rate: 6%
  • Median Property Tax Rate: $564 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Estate tax

Although the general cost of living in Washington, D.C., is high, the average tax burden for retirees isn’t. When it comes to income taxes, there are two keys to a lower tax bill. First, how much of your income is from Social Security benefits is an important factor. That’s because the city doesn’t tax Social Security payments, but it does tax most other common forms of retirement income, such as pensions, 401(k) funds, and IRA withdrawals. Second, qualifying for the city’s income tax credit for property taxes paid can make a huge difference in the amount of tax you owe. The refundable credit is worth up to $1,200 (as a “refundable” credit, if it’s worth more than the tax you owe, the city will send you a refund check for the difference). Plus, certain seniors have a higher income threshold for claiming the credit. For 2020, residents age 70 and older are eligible for the credit if their federal adjusted gross income is $75,900 or less, while the threshold is $55,700 or less for younger residents.

Shoppers don’t get hit too hard with taxes in the District of Columbia, either. The city imposes a 6% tax on purchases…but that’s it. There are no extra “local” taxes to worry about. As a result, the overall sales tax rate in D.C. is well below the national average when both state and local taxes are considered.

Property taxes are low in D.C., too. The District’s median property tax rate is the eighth-lowest when compared with comparable data from all 50 states. For our hypothetical retired couples, their estimated annual property tax bills in D.C. would be $1,410 ($250,000 home) and $1,974 ($350,000 home). Plus, homeowners 65 and older may qualify for a 50% property tax reduction or deferral of property tax payments.

Here’s one important downside for wealthier retirees: For 2021, Washington, D.C., estates worth $4 million or more are subject to a city estate tax.

For more information, see the District of Columbia State Tax Guide for Retirees.

9 of 11

2. Hawaii

picture of Hawaii map with pin in itpicture of Hawaii map with pin in it
  • State Income Tax Range: 1.4% (on taxable income up to $2,400 for single filers; up to $4,800 for joint filers) to 11% (on taxable income over $200,000 for single filers; over $400,000 for joint filers)
  • Average Combined State and Local Sales Tax Rate: 4.44%
  • Median Property Tax Rate: $280 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: Estate tax

If your dream is to retire to a tropical island paradise, don’t let taxes get in the way. Hawaii has one of the lowest average state and local tax burdens in the U.S. Higher-income seniors may get caught in the Aloha State’s lofty income tax rates (the top rate is a whopping 11%), but most retirees won’t pay nearly that much. (Hawaii actually has 11 income tax rates below 11%.) Social Security benefits are completely tax-free. Employer contributions to other forms of retirement income are also exempt (e.g., traditional pensions and employer contributions to 401(k) plans).

Although housing prices are high in Hawaii, property tax rates are really low. In fact, the statewide median property tax rate is the lowest in the whole country (and by a pretty good margin). If our hypothetical retire couples moved to Hawaii, their estimated annual property tax bills would be only $700 ($250,000 home) and $980 ($350,000 home). Depending on where in Hawaii they live, senior could also qualify for some additional property tax relief.

Sales tax rates are low, too. The state imposes a 4% tax, but localities can add as much as 0.5%. The average combined state and local rate is only 4.44%, which is the seventh-lowest rate in the nation. Most things are taxable in Hawaii—including groceries and clothing—so residents typically end up paying more than the low rate suggests.

Hawaii also imposes an estate tax on estates worth $5.49 million or more. Tax rates range from 10% to 20%.

For more information, see the Hawaii State Tax Guide for Retirees.

10 of 11

1. Delaware

picture of Delaware map with pin in itpicture of Delaware map with pin in it
  • State Income Tax Range: 2.2% (on taxable income from $2,001 to $5,000) to 6.6% (on taxable income over $60,000)
  • Average Combined State and Local Sales Tax Rate: 0%
  • Median Property Tax Rate: $562 per $100,000 of assessed home value
  • Estate Tax or Inheritance Tax: None

Congratulations, Delaware – you’re the most tax-friendly state for retirees! With no sales tax, low property taxes, and no death taxes, it’s easy to see why Delaware is a tax haven for retirees. For beginners, you’ll have more disposable income in your golden years if you live in the First State, because you’ll pay zero state or local sales tax on your in-state purchases (Delaware is one of only a handful of states with no sales tax).

You’ll also have more money to spend on the grandkids because property taxes are so low. The estimated annual property tax bill in Delaware for our first make-believe retired couple is just $1,405 on their $250,000 home. It’s just $1,967 for our second imaginary couple’s $350,000 home in the state. Those property tax totals are the seventh-lowest amounts in the nation for homes at those prices. So, our make-believe retired couples will be quite happy in the state. Plus, some Delaware seniors qualify for a school property tax credit of up to $400 (you might have to live in the state for 10 years to get it, though).

Since there are no estate or inheritance taxes in Delaware, you can pass along more of your wealth to the grandkids, too (or to other family, friends or charities).

The only downside—and it really isn’t that bad—are middle-of-the-road income taxes. The rates are comparatively reasonable, and residents age 60 and older can exclude up to $12,500 of pension and other retirement income (including dividends and interest, capital gains, IRA and 401(k) distributions, etc.). Social Security benefits are also exempt. But, in the end, income taxes don’t add enough to a retiree’s overall tax burden to keep the state out of the top spot on our list.

For more information, see the Delaware State Tax Guide for Retirees.

11 of 11

About Our Methodology

picture of laptop with spreadsheet on screenpicture of laptop with spreadsheet on screen

Our tax maps and related tax content include data from a wide range of sources. To generate our rankings, we created a metric to compare the tax burden in all 50 states and the District of Columbia.

Data sources

Income tax – Our income tax information comes from each state’s tax agency. Income tax forms and instructions were also used. See more about how we calculated the income tax for our hypothetical retired couples below under “Ranking method.”

Property tax – The median property tax rate is based on the median property taxes paid and the median home value in each state for 2019 (the most recent year available). The data comes from the U.S. Census Bureau.

Sales tax – State sales tax rates are from each state’s tax agency. We also cite the Tax Foundation’s figure for average combined sales tax, which is a population-weighted average of state and local sales taxes. In states that let local governments add sales taxes, this gives an estimate of what most people in a given state actually pay, as those rates can vary widely.

Ranking method

The “tax-friendliness” of a state depends on the sum of income, sales and property tax paid by our two hypothetical retired couples.

To determine income taxes due, we prepared returns for both couples. The first couple had $15,000 of earned income (wages), $20,500 of Social Security benefits, $4,500 of 401(k) plan distributions, $4,000 of traditional IRA withdrawals, $3,000 of Roth IRA withdrawals, $200 of taxable interest, $1,000 of dividend income, and $1,800 of long-term capital gains for a total income of $50,000 for the year. They also had $10,000 of medical expenses, paid $2,500 in real estate taxes, paid $1,200 in mortgage interest, and donated $1,900 (cash and property) to charity.

The second couple had $37,500 of Social Security benefits, $26,100 of 401(k) plan distributions, $18,200 of private pension money, $4,000 of traditional IRA withdrawals, $2,000 of Roth IRA withdrawals, $2,000 of tax-exempt municipal bond interest (from the state of residence), $2,000 of taxable interest, $4,000 of dividend income, and $4,200 of long-term capital gains for a total income of $100,000 for the year. They also had $10,000 of medical expenses, paid $3,200 in real estate taxes, paid $1,500 in mortgage interest, and donated $4,300 (cash and property) to charity.

Since some states have local income taxes, we domiciled both our couples in each state’s capital, from Juneau to Cheyenne. We calculated their 2019 income tax returns using software from eFile.com.

How much they paid in sales taxes was calculated using the IRS’ Sales Tax Calculator, which is localized to zip code. To determine those, we used Zillow to determine zip codes with housing inventory close to our sample assessed value.

How much each hypothetical family paid (and deducted on their income tax return, if allowed) in property taxes was calculated by assuming a residence with a $250,000 assessed value for the first couple and a $350,000 assessed value for the second couple. We then applied each state’s median property tax rate to that appropriate amount.

Source: kiplinger.com

Can You Work and Collect Social Security? Yes, with Limits

So let’s dive into the particulars that allow you to work while you are retired and collecting Social Security. And then let’s consider some types of work you can do in retirement to bring in some extra income.
If you are not yet at full retirement age but are receiving Social Security benefits, you can make up to ,960 a year without penalty. That’s ,580 a month, or 4 a week. We get into more details later in this post of what happens when you go over that amount.

  • Is my retirement income and Social Security going to be enough for my preferred lifestyle?
  • What am I going to do with myself every day?

But get this: once you reach full retirement age, the money that was subtracted from your Social Security benefits previously are refunded to you. You never really lose those funds, they are just held from you until you reach that magic age.
According to the AARP, bookkeeping is the most popular part-time position for workers of a certain age. This makes some sense: it is not physical, requires patience, and is likely not a popular job among younger people.
The Penny Hoarder’s Work-From-Home Jobs Portal makes the remote-job hunt easy. Our journalists scour the web for the best gigs, vet the companies and aggregate the latest listings in one place.

How You Can Work and Collect Social Security

But Senior Centers are also one of the first places employers turn when looking for people to fill paid positions that require attendance and attention. Consider your local Senior Center as a resource for finding a position that suits your interests.

The Meaning of Retirement

If you were born after the 1959 date, your full retirement age is 67 years old. If you were born 1943 to 1952, your full retirement age is 66.
There may also be opportunity in a less structured way. If you have a friend, or a friend who has a friend, with an older family member or neighbor that needs assistance during the day, let them know you are looking for work. You can offer your services to dive them to medical appointments, make lunch or simply provide a few hours of companionship.
If you make more than that, your benefits are reduced by for every you make over the ,960.

Full Retirement Age

Safety and care are uppermost in the minds of school administrations, and they offer several positions for older people interested in part-time work.
Perhaps knowing that you may someday require healthcare assistance, it becomes attractive to offer help to those already in need. Older people are encouraged to apply for jobs as assistants to nursing homes and hospitals.
However, you can start taking Social Security benefits before 65, beginning at 62.
There is no such thing as “officially retired.” There is no legal definition, nor is there a legal designation.
Here are some suggestions of part-time jobs that can bring in some extra money. They may be more about what you want to do than what you have been doing. Check out these 13 ways to make money you might not have thought about. And more:
From cleaning parks to walking through wooded areas looking for environmental concerns (downed trees, unexpected flooding, etc.), being paid to take a walk in nature is not a bad way to spend a day.

Salary Restrictions

Every year earlier reduces the full retirement age by two months. Born in 1958, 66 years and 8 months. Born in 1957, 66 years and 6 months, and so on.
Certainly, certifications will make you more attractive as an employee, but there are jobs specifically for those people who want to help but did not originally work in healthcare and don’t have licenses or certificates.
Now that retirement is bouncing around in your mind, and you entertain the thought of giving up your day job, you ask yourself:

Your full retirement age: If you were born Jan. 2, 1959 through Jan. 1, 1960, your full retirement age for retirement insurance benefits is 66 years and 10 months.

Suggestions for Work Even Before You Reach Full Retirement Age

If you are at what Social Security deems full retirement age, you can collect and keep your full Social Security benefits and make as much money as you want.

A senior citizen woman does book keeping from home.
Getty Images

1. Indoor work

One answer responds to both questions. You can “retire,’’ collect Social Security, still work and be productive. The trick is there’s a limit to how much you can make depending on your age.
Your city or county leisure services or parks department may have work for you. If there’s a forestry department in your area, contact them.

2. Health Care

Source: thepennyhoarder.com
Many communities have Senior Centers that provide activities and services. Yes, there are people at Senior Centers playing bridge, canasta and chess.
The government has changed the full retirement age stipulations because people are living longer.

Pro Tip
The Social Security Administration website is clear and precise about making money while accepting benefits, but here is what you need to know:

3. Work with Children

You just decide one day you don’t want to work at the job or in the field to which you dedicated the first 30 or 40 years of your professional life. Often this coincides with your 65th birthday because that’s when you qualify for Medicare.
Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.

A senior citizen poses for a portrait with an axe and tree behind him.
Getty Images

4. Outdoor Work

And if you’re so inclined to start your own virtual bookkeeping business you could make up to a hour.
THIS IS IMPORTANT!: If you have reached your full retirement age and you work, you may keep all of your Social Security benefits no matter how much you earn. 

5. Helping Other Seniors

While “crossing guard’’ may be the first thing that comes to mind, schools, colleges and universities need staff that can provide some level of security for special events, and older people who may have grandchildren of their own have built-in radar for the well-being of children.
There are special rules depending on whether you receive a salary or are self-employed when you are working, but they differ based on when they are counted (when you earn the money versus when you get paid). The Social Security Administration website can address those particular items for you.
As simple words go, “retirement’’ carries a lot of weight and a lot of baggage.
If you are not yet at full retirement age but are receiving Social Security benefits, you can make up to ,960 a year without penalty. That’s ,580 a month, or 4 a week.

14 States That Won’t Tax Your Pension

Congratulations if you’re one of the lucky few who still have a traditional pension (a.k.a., a defined benefit plan). But once you’ve retired, remember that Uncle Sam generally taxes payments from pensions as ordinary income.

Will your state tax your pension income, too? It depends on where you live. Most states tax at least a portion of income from private sector defined benefit plans. Your state might have a pension exclusion, but chances are it’s limited based on your age and/or income. However, a handful of states don’t tax pension income at all, no matter how old you are or how much money you have. Good for you if you retire in one of those states!

But, of course, just because a state doesn’t tax your pension doesn’t mean it won’t tax some other form of income you’re counting on in retirement. Alabama, for example, doesn’t tax pensions or Social Security benefits, but it will tax distributions from a 401(k) plan. Bottom line: Make sure you check out a state’s overall tax environment for retirees before relocating there for your golden years.

Take a look at the 14 states that don’t tax pension income (states are listed alphabetically). It could end up saving you thousands of dollars if you’re thinking of moving to a new state when you retire.

1 of 14

Alabama

picture of Alabama small townpicture of Alabama small town

Pensions: Retiring to Alabama can be a smart move if you’ll be relying heavily on a pension in your golden years. If you’re retiring from the private sector, Alabama won’t tax your pension income if it comes from a defined benefit retirement plan. The state also exempts military retirement pay and income from a long list of government pensions.

401(k)s and IRAs: While the Yellowhammer State is pretty good to retirees when it comes to taxes, it doesn’t exempt all retirement income. Distributions from traditional IRAs and 401(k) plans are taxed as ordinary income (although certain distributions may only be partially taxable).

Social Security Benefits: Alabama doesn’t tax Social Security benefits, though. That’s another big plus for retirees in the state.

Income Tax Range: For 401(k) funds, IRA distributions or any other ordinary income, the lowest Alabama tax rate is 2% (on up to $1,000 of taxable income for joint filers and up to $500 for all others), while the highest rate is 5% (on more than $6,000 of taxable income for joint filers and more than $3,000 of taxable income for all others).

For more information, see the Alabama State Tax Guide for Retirees.

2 of 14

Alaska

picture of Alaska dog sledpicture of Alaska dog sled

Pensions: Up in Alaska, you don’t have to pay income tax on your pension—or on any income, for that matter. It’s one of a handful of states with no income tax.

401(k)s and IRAs: Ditto for 401(k) and IRA distributions. Alaska doesn’t tax these funds.

Social Security Benefits: Like most states, Alaska doesn’t tax Social Security benefits.

Income Tax Range: Not applicable (no income tax).

For more information, see the Alaska State Tax Guide for Retirees.

3 of 14

Florida

picture of a path to a Florida beachpicture of a path to a Florida beach

Pensions: If you’re looking for a warmer climate, there’s always Florida. But there’s more to like as a retiree than just the palm trees and sandy beaches. It’s well known that the Sunshine State doesn’t have an income tax, so your pension won’t be taxed there.

401(k)s and IRAs: Florida is good to seniors when it comes to 401(k)s and IRAs, too. There are no state taxes on distributions from these retirement savings plans.

Social Security Benefits: As you may have guessed, the Sunshine State doesn’t tax Social Security benefits, either.

Income Tax Range: Not applicable (no income tax).

For more information, see the Florida State Tax Guide for Retirees.

4 of 14

Hawaii

picture of Hawaii jungle with waterfall and rainbowpicture of Hawaii jungle with waterfall and rainbow

Pensions: Feel like taking up surfing in your later years? If so, the Aloha State might be the place for you to retire. Want to avoid taxes on your pension? Hawaii can help you out with that, too. Retirement distributions from a private or public pension plan are tax-free in Hawaii—that is, as long as you didn’t make contributions to the plan. You will be taxed on any portion of your pension income attributable to employee contributions you made.

401(k)s and IRAs: Distributions from 401(k) plans and IRAs are generally treated the same for Hawaii tax purposes as they are for federal tax purposes. However, if your employer made matching contributions to your 401(k) plan, an additional state deduction may be available for the employer-funded portion of distributions from the plan. In addition, if a lump-sum distribution from an otherwise tax-free pension plan is rolled over into an IRA, distributions out of the rollover IRA are tax-free as well.

Social Security Benefits: Hawaii does not tax Social Security benefits.

Income Tax Range: For income that is taxed, the lowest Hawaii tax rate is 1.4% (on taxable income up to $4,800 for joint filers and up to $2,400 for single filers). The highest rate is 11% (on more than $400,000 of taxable income for joint filers and more than $200,000 for single filers).

For more information, see the Hawaii State Tax Guide for Retirees.

5 of 14

Illinois

picture of Chicago skylinepicture of Chicago skyline

Pensions: The Prairie State completely exempts private pension income from tax as long as it’s from a qualified employee benefit plan. You won’t pay tax on payments from government or military pensions, either.

401(k)s and IRAs: Illinois is very taxpayer-friendly when it comes to 401(k) plans and IRAs, too. Distributions from a 401(k) plan are tax-free if the plan is a qualified employee benefit plan. IRA distributions are not taxed, either.

Social Security Benefits: Illinois also doesn’t tax Social Security benefits.

Income Tax Range: The Illinois income tax rate is a flat 4.95%.

For more information, see the Illinois State Tax Guide for Retirees.

6 of 14

Mississippi

picture of cannons at Vicksburg, Mississippipicture of cannons at Vicksburg, Mississippi

Pensions: The Magnolia State is a fairly taxpayer-friendly state for retirees. One reason is that the state doesn’t tax private or government pension income — as long as it isn’t for early retirement (that is, before age 59½).

401(k)s and IRAs: The same goes for 401(k) plan and IRA distributions. Mississippi doesn’t tax them as long as they aren’t early distributions.

Social Security Benefits: Mississippi doesn’t tax Social Security benefits, either, so you can spend more of your retirement check on catfish and Mississippi mud pie.

Income Tax Range: Mississippi’s lowest tax rate is 3% (on taxable income from $4,001 to $5,000), and its top rate is 5% (on taxable income of more than $10,000).

(Note: Starting in 2022, the lowest rate will be 4%, which will be applied to taxable income from $5,001 to $10,000.)

For more information, see the Mississippi State Tax Guide for Retirees.

7 of 14

Nevada

picture of Las Vegas strippicture of Las Vegas strip

Pensions: Retirees in Nevada are always winners when it comes to state income taxes. The Silver State won’t tax your pension income—or any of your other income, for that matter, because it doesn’t have an income tax.

401(k)s and IRAs: With no income tax, there’s also no tax on 401(k) or IRA distributions.

Social Security Benefits: Social Security benefits are not taxed in Nevada, either. That means you’ll have more money for the slots or blackjack tables … if you’re into that sort of thing.

Income Tax Range: Not applicable (no income tax).

For more information, see the Nevada State Tax Guide for Retirees.

8 of 14

New Hampshire

picture of river in New Hampshire in the fallpicture of river in New Hampshire in the fall

Pensions: New Hampshire is the only New England state without a general income tax. The state imposes a tax on interest and dividends instead. That means no tax on your pension income if you retire to the Granite State.

401(k)s and IRAs: With no income tax, your 401(k) and IRA distributions are tax-free, too.

Social Security Benefits: Same goes for Social Security benefits … no New Hampshire tax on them.

Income Tax Range: A flat 5% tax on interest and dividends only.

For more information, see the New Hampshire State Tax Guide for Retirees.

9 of 14

Pennsylvania

picture of Pittsburgh, Pennsylvania from hill on other side of riverpicture of Pittsburgh, Pennsylvania from hill on other side of river

Pensions: There’s plenty of good news for retirees in Pennsylvania. For one thing, the Keystone State doesn’t tax pension income you receive from an eligible employer-sponsored retirement plan (except if you retire early).

401(k)s and IRAs: As with pension income, money you receive from a 401(k) plan or IRA after retiring (except in early retirement) is not taxed by Pennsylvania.

Social Security Benefits: Your Social Security benefits aren’t taxable in Pennsylvania, either.

Income Tax Range: Pennsylvania has a flat income tax rate of 3.07%. However, municipalities and school districts can tax your income, too.

For more information, see the Pennsylvania State Tax Guide for Retirees.

10 of 14

South Dakota

picture of Mount Rushmore in South Dakotapicture of Mount Rushmore in South Dakota

Pensions: South Dakota is a pretty good state for retirees. With no income tax, there’s no tax on your pension income.

401(k)s and IRAs: Making things even better, there’s also no South Dakota tax on withdrawals from your 401(k) or IRA.

Social Security Benefits: And, of course, no income tax means no tax on Social Security benefits, either.

Income Tax Range: Not applicable (no income tax).

For more information, see the South Dakota State Tax Guide for Retirees.

11 of 14

Tennessee

picture of Smoky Mountains in Tennesseepicture of Smoky Mountains in Tennessee

Pensions: Retirees in the Volunteer State don’t pay tax on their pension income, because there’s no income tax in Tennessee. There used to be a tax on interest and dividends, but 2020 was the last year for that tax.

401(k)s and IRAs: There’s also no Tennessee tax on money taken out of your 401(k) account or IRA.

Social Security Benefits: Tennessee retirees also collect Social Security without paying a state tax on it.

Income Tax Range: As mentioned above, there was a tax on interest and dividend income before 2021. For 2020, it was a flat 1% tax. But the rate was reduced to 0% in 2021 and later.

For more information, see the Tennessee State Tax Guide for Retirees.

12 of 14

Texas

picture of river in Texas with mountains in the backgroundpicture of river in Texas with mountains in the background

Pensions: Everything’s bigger in Texas … except the tax bills. You can tip your ten-gallon hat to the Lone Star State, because it doesn’t have a personal income tax. That means the state will keep its hands off all your pension income.

401(k)s and IRAs: Texas won’t touch your 401(k) or IRA withdrawals, either. So spend some of that money on a nice pair of cowboy boots or some Texas barbeque instead of state taxes.

Social Security Benefits: Of course, because there’s no income tax, there’s no tax on your Social Security benefits in Texas, either.

Income Tax Range: Not applicable (no income tax).

For more information, see the Texas State Tax Guide for Retirees.

13 of 14

Washington

picture of Seattle skylinepicture of Seattle skyline

Pensions: In the great Northwest, Washington State is a terrific place to retire if you’re living off a pension. You can sit back, relax and enjoy your cup of coffee without having to worry about the state taking a bite out of your pension, because the Evergreen State doesn’t have an income tax.

401(k)s and IRAs: In fact, none of your income from retirement funds is going to take a state tax hit, including income from your 401(k)s and IRAs.

Social Security Benefits: Social Security benefits escape Washington taxes, too.

Income Tax Range: Not applicable (no income tax).

For more information, see the Washington State Tax Guide for Retirees.

14 of 14

Wyoming

picture of buffalo in Wyoming with mountains in backgroundpicture of buffalo in Wyoming with mountains in background

Pensions: Wyoming doesn’t have an income tax, so you don’t have to worry about a state tax hit on your pension. That makes retiring to a home on the range a pretty smart move.

401(k)s and IRAs: The Cowboy State is also very taxpayer-friendly when it comes your retirement savings plans—no taxes on withdrawals from 401(k) plans and IRAs.

Social Security Benefits: Like most other states, Wyoming doesn’t take a share of your Social Security benefits, either.

Income Tax Range: Not applicable (no income tax).

For more information, see the Wyoming State Tax Guide for Retirees.

Source: kiplinger.com

Dear Penny: Can I Kick My Sister Out of the House We Inherited?

Dear Penny,
In a perfect world, you could do what’s called a cash-out refinancing. You’d receive your half of the equity as cash, while your sister would take on a mortgage for 50% of the home’s value.
Get the Penny Hoarder Daily
Related Posts
“Most lenders would typically approve such financing to even borrowers with low credit scores and limited income or assets because 50% loan-to-value provides very low risk to the lender,”  said David Reischer, attorney and CEO of LegalAdvice.com who specializes in real estate and mortgage law.
The extreme approach is to her sister to court. “When a co-owner of a house wants to sell and the other person does not, most state laws allow the co-owner who wants to sell to force the sale of the house by petitioning the court for a sale,” Reischer said. “The court supervises the sale of the property, ending in division of the sale proceeds.”
Privacy Policy
The house was left to the both of us in a trust. She has been living there rent-free for 11 years, covering the property taxes and repairs.
If your sister still refuses to budge, you’ll have to decide whether to actually take her to court. Ultimately, you’ll have to choose whether to sacrifice your relationship with your sister to get your stake in this home. I hope that’s a decision you won’t have to make.

I love my sister, but I do not feel responsible for the fact that she has never acquired equity in anything in 70 years. She says, “This house is all I’ve got.”
I have put down roots since buying my first home at the age of 23, so I now live in a paid-off home. She does not recognize my needs for the proceeds of selling the house. 
We are both living on our Social Security, which is tight for me, but impossible for her to live on, as steady employment was not her forte, and moving around a lot was. The house is worth somewhere between 0,000 and 0,000. Proceeds from the sale would split this between us. 
I don’t think your only two options here are to make your sister homeless or let her live rent-free forever. She would have 0,000 or 0,000 from her half of the home sale. Real estate prices may be out of control right now, but not so much that she couldn’t afford a modest one-bedroom apartment.
-Sibling


I think you should let her know that you’re at least considering taking the matter to court if she won’t work with you. Tell her you really don’t want that to happen. But tell her that after 11 years, you’re afraid that may be your only option.
I feel that I’ve been very patient for 11 years, but I’m feeling the financial squeeze of old age. I do not want my sister to be homeless and I don’t want to alienate her, but I am at a loss for what to do next.
Try not to focus on your sister’s poor choices when you have this discussion. Focus instead on what you need, which is your half of the equity in the home your father left you both. Hold firm when she says the house is all she’s got. Perhaps that’s true. But she can also walk away with half the proceeds from selling a home in a red-hot real estate market. If she insists she’ll have nowhere to go, point her to some Zillow listings that would be within her budget.
My mother died in 2006, leaving my father who could not very well take care of himself. My sister had been living in Hawaii, but costs of living there had grown and income opportunities had shrunk, so she moved in with my father in Oregon in 2008 to help him until he died in 2010. 
The big problem, of course, is that your sister lives off what sounds like a meager Social Security income. She may not be able to afford even a small mortgage payment.

She keeps finding reasons that the house is not suitable for selling. This delay has moved us into rising real estate costs, meaning that she cannot afford anything with her half.
Ready to stop worrying about money?
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

This process can typically take anywhere from six to 12 months. Of course, the damage to your relationship could last forever.

<!–

–>


Perhaps with some pressure, your sister will be more motivated to either sell or find a way to make a small mortgage payment. Could she rent out a room in the home for income? Or could she take a part-time job?