April 19, 2019
For decades, it has been a cliché: retirees pulling up stakes from harsher winter climes up north, and living out their golden years along Florida’s Atlantic or Gulf coasts, in the shadow of palm trees.
In 2019, the reality may be a little different. Substitute White Sands National Monument for beach sands and cacti for palm trees. A survey conducted by United Van Lines found that 42% of customers moving to New Mexico did so to retire, putting the Land of Enchantment ahead of the Sunshine State by four percentage points when it comes to inbound retirees.
Given that Arizona came in third among retirement destinations for United Van Lines customers, it stands to reason that some like a warm, dry climate while others prefer year-round humidity. Where these retirees have common ground, though, are their reasons for relocating.
Cost of living is a key factor. To retirees for whom the term “fixed income” carries a different connotation than it does in the securities market, housing and medical expenses may look more reasonable in another part of the U.S.
A more specific driver of outbound migration is taxes. California-based CPA Den Herron told CNBC that clients nearing the end of their working careers ask him about leaving California for Oregon, Colorado or Arizona. A comparison of these states’ tax rates helps to explain why.
California’s top individual income tax rate is 13.3%. Oregon’s marginal rate comes in at a more manageable 9.9%, while Colorado’s and Arizona’s are even lower at 4.63% and 4.54%, respectively.
On the East Coast, New York ranked highest in net population loss due to domestic migration over the 12 months that ended July 1, 2018, according to newly-released Census estimates. The Empire State also has the nation’s highest income tax burden at $2,249 per capita.
Neighboring Connecticut comes in a close second at $2,218, while New Jersey has the country’s highest property tax rate at 2.13%. It’s also experiencing the highest rate of outbound migration among the states, according to United Van Lines. Two-thirds of United’s state-to-state customers in New Jersey locations are moving out rather than coming in.
Pictured: Santa Fe, NM
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