The best state to retire? Take a close look.

Geoffrey Schmidt is a CPA and retirement planning expert with a YouTube channel called HolySchmidt. In a recent video “The Map is Wrong” he analyzed the five best and worst states to retire and challenged the idea that the best choice was states with no income tax. He based his analysis on median home values and retiree incomes. He used the estimated combined spending on property taxes, sales taxes, income taxes and property insurance. When added together the results showed no income tax is sometimes a misleading criteria, especially in places like Florida and along the Gulf Coast, even in parts of the Midwest where property insurance tipped the scale because of tornado alley. Equally interesting, he showed how in some cases retirees in states with an income tax don’t actually pay such tax anyway because of deductions and exclusions applied to seniors. NJ is a high tax state, especially property taxes. But in NJ for example, there is no tax on SS benefits and most seniors can exclude up to $100,000 of pension income (including distributions from IRAs and 401k plans) from income tax. In addition, there are several property tax relief programs including the ability to freeze property taxes from increases if your income is $176,870 or less. The median household in for age 65 and older is $69,102. I doubt many retires are planning to retire to New Jersey, (actually we are paid to stay). No matter, I’m stuck, my family has been here since the 1840s at least. In any case the Schmidt exercise makes it clear it is a good idea to look at the big picture.

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