When scoping out places to retire, general affordability is key. But look beyond how much it will cost to rent or buy a home or order a three-course meal. Take the matter of taxes, for example.
Some states tax pensions and Social Security benefits. Others might tax capital gains and dividends. Some states have high property taxes or income taxes, an important consideration if you plan on an encore career in the years leading up to retirement. Taking a number of such factors into consideration, we've put together an alphabetical list of some of the best places to spend your post-career years.
—By Ilana Polyak, Special to CNBC.com
Posted 9 May 2014
Culture vultures should head straight to Austin, home of the South by Southwest film, music and interactive festival. If they tire of the culture, retirees can explore the outdoors, wellness classes and lifelong learning at the University of Texas (Pictured: Darrel K. Royal-Texas Memorial Stadium)
The downside: Homes cost more here than in other Texas jurisdictions. Also, the weather can be sweltering in the summer: In 2011 the city endured 22 consecutive days of 100-degree-plus temperatures. But taxes are low.
"I have had clients in California with children in Texas, so they bought a house a few years before the transition, then sold their California business and didn't pay California income tax," said Thomas Murphy, a certified financial planner and partner at Murphy & Sylvest.
Median home price: $320,000
Taxes: No state tax on Social Security, pension or income tax. No state estate tax.
Medical facility: Seton Medical Center
For retirees leaving behind the daily grind, the gentle pace of South Carolina might be the kind of retirement idyll they aspire to. The streets drip with antebellum charm in this town of pastel-colored colonial homes and churches dating to the 18th century. The Civil War started here, with the shelling of Fort Sumter. The College of Charleston offers a Creative Retirement curriculum with field trips, meetings and study groups for older adults. (Pictured: Rainbow Row, Charleston)
Median home price: $216,000
Taxes: No tax on Social Security benefits, though capital gains and dividends are taxed.
Medical facility: Medical University of South Carolina
It isn't just fans of the Grand Ole Opry and country-and-western music who find a welcome in Nashville. Yes, it's still a music mecca, but retirees can also find lots of ethnic dining, thanks to a recent influx of immigrants, a large number of parks with 17.8 acres of open space per 1,000 residents and plenty of learning opportunities at the cluster of colleges in Music City.
Housing is varied, ranging from loft condos in downtown to Victorians and Craftsman in East Nashville to brightly painted stucco homes from the '30s and '40s in Little Hollywood. Buttressing all these charms, Tennessee has one of the lowest tax burdens in the country. On the downside, Nashville has higher crime rates than other retiree destinations. (Pictured: General Jackson Showboat)
Median home price: $157,100
Taxes: No tax on income, Social Security or capital gains, but 6 percent tax on dividends and interest.
Medical facility: Vanderbilt University Medical Center
Along with the sandy beaches and crystalline waters, retirees will find a range of affordable housing options and American-standard hospitals providing care for half the price and a U.S.-dollar-based currency. Retirees can participate in the Pensionado Visa Program for expats, which gives participants entertainment and travel discounts as long as they demonstrate income of at least $1,000 a month from a guaranteed source. The El Cangrejo neighborhood offers a good mix of cosmopolitan life and tropical tranquillity. (Pictured: Panama City skyline)
Average rent: $900/month
Taxes: Up to 30 percent on income earned in Panama only; 10 percent capital gains tax.
Medical facility: Hospital Punta Pacifica (affiliated with Johns Hopkins)
An urban feel with a small-town price tag is the main draw that Raleigh holds for retirees. Art, music and lifelong learning programs at the many nearby universities make North Carolina's capital city a place where retirees will find plenty to fill up their time. Raleigh, along with Durham and Chapel Hill, make up the state's Research Triangle. For those considering encore careers before making the plunge into full retirement, the strong local economy makes this possible. (Pictured: Downtown Raleigh)
Median home price: $184,200
Taxes: There's no tax on Social Security, but sales tax could run as high as 7.2 percent in some areas.
Medical facility: Duke University Medical Center (Durham)
Nestled in the Sierra Blanca mountain range in south central New Mexico, Ruidoso is an ideal location for active retirees who plan to hike, boat and ski. Though small by most metropolitan standards—there are fewer than 22,000 people in the town and surrounding areas—the population is growing, thanks to the alpine scenery and access to wilderness. Because of the elevation, summers in Ruidoso are comfortable. (Pictured: Downtown Ruidoso)
Median home price: $184,500
Taxes: New Mexico taxes Social Security benefits. Property taxes are assessed on 33 percent of market value, and sales tax is 5.12 percent.
Medical facility: University Medical Center of El Paso
Like to ski? Like to work? Salt Lake City has you covered on both fronts. Preretirees who want to start their retirement early, said Nancy Anderson, a certified financial planner in Park City, Utah, might consider making the move while they're still working. The city's 4 percent unemployment rate bodes well for those looking for a job. (Pictured: Downtown Salt Lake City)
From Salt Lake City, it's an easy jaunt to the ski resort of Park City. Unlike its ski bunny neighbor, however, SLC is more affordable.
Median home price: $250,000
Taxes: Social Security is taxed; state income tax is a 5 percent flat tax. There is 4.7 percent state sales tax, though total sales taxes can reach 8.08 percent, depending on jurisdictions.
Medical facility: University of Utah Medical Center
Perched in the northeastern corner of Florida, St. Augustine is not only appealing due to its beaches and sunshine but also a must for history buffs. Students of Spanish colonial history will be interested to learn that, according to folklore, explorer Ponce de León discovered the legendary Fountain of Youth here.
While living in St. Augustine may not wipe away your wrinkles, easy access to beaches, golf and fishing can certainly make for a good time. Live music events, water sports and fine dining render the city a good place to live year-round. (Pictured: Aviles Street)
Median home price: $182,600
Taxes: Along with no income or Social Security tax, Florida also doesn't have an estate tax.
Medical facilities: Flagler Hospital
Low taxes and warm weather make for a powerful combination, and St. Petersburg does not disappoint. Along with year-round access to the outdoors—even swimming in the Gulf of Mexico in the dead of winter—the town boasts some serious culture. Stroll through the Dali Museum to see works by the Spanish surrealist painter, take in other art galleries and eat in top-notch restaurants (Pictured: Al fresco dining downtown)
On the downside, property values are up 20 percent from just a year ago. But if you're coming from a Northeastern city or the Midwest, there's no telling how much you'll be willing to pay for sunshine in January.
Median home price: $126,000
Taxes: No state income tax; no tax on Social Security; state sales tax is 6 percent.
Medical facilities: Tampa General Hospital
Arizona retirement gets a bad rap due to its association with the sea of polyester leisure suits that is Sun City. But there are a couple of good reasons why retirees flock to the state: affordability and leisure activities. Tucson is the quieter cousin of Phoenix to the north and is chock-a-block full of championship golf courses (pictured), historical and archaeological sites and even skiing, at nearby Mount Lemmon. All of that—plus 350 days of sunshine a year.
Median home price: $130,200
Taxes: No tax on Social Security, but pensions and IRAs are taxed up to 4.54 percent; also, no state estate tax.
Medical facility: University of Arizona Medical Center