Many retirees make the decision to move in retirement but should no income tax be main reason for relocation? While it might save you money in taxes, the move might not benefit you as much as you think. In this episode of the Money Wisdom Podcast, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® talk taxes in Massachusetts and Connecticut and the considerations that go into moving to another state in retirement.

The conversation is aimed at answering a question we recently received: Is moving to a state without income tax a wise financial decision? Let’s start with examining the broader picture of retirement, which is that while tax savings are important, they are not the only factor to consider. We need to understand the full scope of your financial situation, including income sources like pensions, Social Security, and rental income, and how these will be taxed both federally and at the state level.

Jake and Nick also emphasize the significance of lifestyle considerations. Moving to a new state can affect your quality of life in unexpected ways. We want you to have a vision for retirement that goes beyond finances. Factors such as proximity to family, access to healthcare, and community engagement play crucial roles in ensuring a fulfilling retirement. Loneliness and isolation are significant threats to retirees, underscoring the need for a supportive community.

We also discuss the nuances of state taxes in Connecticut and Massachusetts, providing a detailed comparison of tax rates and recent legislative changes that could impact retirees. For instance, Connecticut’s upcoming tax exemption for certain retirement incomes could influence decisions for those considering a move. Massachusetts already rolled out their Millionaires Tax, which retirees need to be aware of.

Ultimately, you’re best off when think holistically about your retirement plans, considering not only the financial benefits of living in a tax-free state but also the potential costs, such as higher real estate taxes or increased travel expenses to visit family. Retirement planning is a deeply personal process, requiring careful consideration of both financial and lifestyle factors.

To help you get started on your retirement journey, we offer a free resource, the “Are You Ready to Retire?” Starter Kit, available by texting KIT to 800-757-0436. This kit provides valuable tools to help individuals assess their readiness for retirement and plan accordingly.

Here’s what we discuss in this episode:

0:00 – Intro

0:52 – Reasons people move

2:47 – Ask yourself these things

3:59 – Taxes in Massachusetts

7:20 – Millionaires tax

9:51 – What to think about