Last Updated on January 23, 2020
An important aspect of retirement planning is deciding where to live during your golden years. There is no set amount one should save for retirement, as it depends on the individual so, accordingly, there is no “best state to retire.” That determination is based off of the individual and how much he/she saved for retirement. But if you know your retirement nest egg is smaller than you would like, it’s important to compare your retirement funds against the cost of living by state, taking property taxes into consideration. As we all know, property taxes can get steep, often competing with one’s mortgage.
Below is a list of the five best states to live in for the lowest property tax rate. The list was created by Investopedia after reviewing the mean effective property tax rates in all 50 states. The list also shows the median home value and household income, providing a clearer picture of the fiscal demands if you plan to retire in one of these states.
5 Best States to Retire for the Lowest Property Taxes
From lowest to highest, you will see where the five best states rank in terms of the lowest property taxes.
Effective property tax rate: 0.29%
Median home value: $620,400
Annual taxes on home priced at state median value: $1,799
Median household income: $74,923
Effective property tax rate: 0.40%
Median home value: $130,500
Annual taxes on home priced at state median value: $522
Median household income: $46,472
- Effective property tax rate: 0.51%
- Median home value: $147,200
- Annual taxes on home priced at state median value: $751
- Median household income: $46,710
4. West Virginia
- Effective property tax rate: 0.53%
- Median home value: $97,600
- Annual taxes on home priced at state median value: $517
- Median household income: $44,061
- Effective property tax rate: 0.55%
- Median home value: $226,300
- Annual taxes on home priced at state median value: $1,245
- Median household income: $60,938
Even though Hawaii ranked as the number one state with the lowest property tax rate, you can see that the median home value is $620,400, the highest on the list of all ten states. As a result, even though your property tax rate will be 0.40%, you still end up paying a considerable tax fee. This is why determining the best state to live during retirement is a crucial factor.
If you look at Investopedia’s list in its entirety, you will see that Mississippi comes in last place with a tax rate of 0.64%. However, the median home value in Mississippi is $127,300. And as you may already know, your retirement funds will go a lot farther in Mississippi than in Hawaii. For example, if you have $100,000 saved for retirement (and we hope you have much more than that), your funds will translate to $116, 690 in Mississippi. But the same $100,000 nest egg in Hawaii would only be worth $84,390.
Find the full Investopedia list here.
Start Saving Today
If retirement is still many years down the road, you have time to save if you haven’t already started. By establishing a Self-Directed IRA LLC with IRA Financial, you gain the ability to save for your retirement tax-deferred or tax-free if you open a Self-Directed Roth IRA. By self-directing your retirement plan, you can start investing your way. Whether through traditional investments, such as stocks; alternative investments, like real estate and cryptocurrency, or more preferably, through both traditional and alternative investments.
If you start early and make consistent contributions, you will be able to retire wealthy. Rather than determining the best states to retire based off your wallet, you can make the decision based off of your heart.