Sometimes it’s the warmer weather. Sometimes it’s a decision to live closer to children and grandchildren, to reduce the cost of living, change lifestyle or improve access to healthcare. Whatever the motivation, Americans frequently move specifically for retirement, with over 250,000 people making such a decision in 2024.[i]
Crossing a state border can change far more than scenery, however. It can affect taxes, healthcare access, estate planning, insurance costs and ultimately, the long-term sustainability of a retirement plan. When someone decides to move for retirement, they are making not just a lifestyle decision but also a set of important financial planning decisions.
Taxes are often where retirees begin their research, and understandably so. Currently, nine states levy no broad state income tax:[ii] Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Those states frequently appear on lists of popular retirement destinations because eliminating state income tax can meaningfully improve after-tax cash flow.
But income tax is only one piece of a much larger planning equation.
A state with no income tax is not necessarily a low-cost state. Property taxes, sales taxes, homeowner’s insurance premiums and estate tax rules can all shift the financial picture. Texas, for example, has no state income tax but is well known for comparatively high property taxes. Meanwhile, Oregon[iii] has no statewide sales tax but does impose a state income tax. Looking at only one category can lead to an incomplete conclusion.
The same principle applies to retirement income itself. Social Security benefits, pension income, IRA withdrawals and 401(k) distributions are not taxed uniformly across the country. Some states exempt certain types of retirement income, while others tax them more broadly. These rules frequently change. In recent years, both Missouri and Nebraska eliminated state taxation of Social Security benefits,[iv] demonstrating that retirement tax laws are not static.
For that reason, comparing total tax burden (not just income taxes) often provides a much clearer picture of how a move could affect retirement finances.
Residency rules deserve equal attention, particularly for retirees who expect to divide time between two homes. Purchasing property in another state does not automatically establish tax residency. States often consider a variety of factors, including where you spend most of your time, where you vote, maintain your driver’s license, bank, register vehicles and conduct day-to-day life. Without careful planning, some retirees may discover they have not fully established domicile in their new state, potentially creating unnecessary tax complications.
Healthcare is another major cost variable. Lower taxes may look attractive on paper, but retirement is also the stage of life when access to physicians, specialists, hospitals and long-term care resources often becomes increasingly important. Recent migration data show that health was the primary reason for relocation for approximately 13% of retirees who moved in 2025,[v] a clear sign that quality of care can be just as influential as financial considerations. Medicare coverage, supplemental insurance options, provider networks and long-term care costs can all vary by location and should be evaluated before making a permanent move.
Relocating should also prompt a review of your estate plan. State laws can affect wills, trusts, powers of attorney, healthcare directives, probate procedures and other estate planning documents. A plan that functioned well in one state may benefit from review after establishing residency in another, particularly if the new state has different estate or inheritance tax rules.
Finally, there are family considerations. Being closer to children or grandchildren is one of the most common reasons retirees relocate, and for many families, those relationships outweigh financial considerations. At the same time, moving farther away from longtime friends or maintaining two residences can introduce recurring travel costs and logistical challenges that should be considered in a long-term spending plan. Retirement should support financial security along with the relationships and experiences that give those financial resources purpose.
None of these factors should dictate your decision on their own. But together, they show why relocating for retirement is a major planning process, not just a real estate transaction.
A successful move is rarely defined by finding the state with the lowest taxes or the warmest winters. Instead, it comes from understanding how every piece of your life (taxes, healthcare, housing costs, family priorities) works together to support the retirement you envision.
Before making a permanent move, it is critical to model the financial implications with your advisory team. Comparing your projected cash flow, travel budgets and state-specific tax rules side by side provides a clear picture that a simple online ranking or listicle can never match.
Retirement is ultimately about creating the freedom to live where and how you want. By evaluating the complete financial picture first, you ensure your new home strengthens both your net worth and your quality of life for years to come.
Sources:
[i] https://qz.com/us-states-retirees-move-leave-retirement-1851766873#the-5-states-in-america-that-retirees-are-leaving-the-most–and-the-5-theyre-going-to
[ii] https://www.fool.com/retirement/2024/11/10/13-states-that-wont-tax-your-social-security-401k/
[iii] https://www.retirementliving.com/taxes-by-state
[iv] https://money.com/social-security-tax-states/
[v] https://qz.com/us-states-retirees-move-leave-retirement-1851766873#the-5-states-in-america-that-retirees-are-leaving-the-most–and-the-5-theyre-going-to
IMPORTANT DISCLOSURES
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. In addition, information presented in this presentation is believed to be factual and up to date, but Newport Capital Group, LLC does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.
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