What are the most expensive states to retire in the US in 2023?

It is important that workers, in addition to making it one of their financial priorities, are well informed about their retirement. That is why it is essential to consider several factors so that your money goes further so that you can enjoy your golden years. For example, finding out what the cost of living is where you live and if it is compatible with your budget.

In the country, there are some states that represent better options in terms of cost of living, as well as taxes for retirees, while others, in addition to high tax rates, have a high cost of living. We’ll share with you the states that you should avoid in your retirement, especially if you’ll be living on a tight budget.

The 10 states where it is most expensive to retire in 2023

According to an analysis by financial portal Insider Monkey, these are the most expensive states to retire based on taxes and cost of living.

Hawaii

Cost of living: 179

The worst state to retire in is Hawaii for taxes and cost of living, as it is nearly double the national average, exceeding it by 79%. In the state, retirement savings accounts and private pensions are fully taxed.

District of Columbia

Cost of Living: 148.7

Although the District of Columbia is not a state, Insider Monkey included it in its list, as the cost of living is 48.7% above the national average. On the other hand,with the exception of Social Security benefits, most other income from retirement accounts is taxable.

Massachusetts

Cost of Living: 148.4

In Massachusetts, although Social Security retirement benefits are completely tax-exempt, most other forms of retirement income are taxable. In addition, the cost of living is 48.4% above the national average.

California

Cost of Living: 134.5

In California, Social Security payments are also not taxable. However, the cost of living is high, 34.5% above the national average. On the other hand, pensions and income from retirement accounts are fully taxed at one of the highest state income tax rates. In addition, the state also has some of the highest sales taxes in the United States.

This may interest you: Social Security: what is the COLA, how is it calculated and how will the payments be in 2024

New York

Cost of Living: 125.1

Living expenses are 25% above the national average and residents also have a significant tax burden. In the state, Social Security benefits, military retirement plans, and New York state and local government retirement income, as well as the federal government pension income, are tax-exempt. On the other hand, private pensions and income from retirement accounts are deductible up to $20,000.

Maryland

Cost of Living: 119.5

Although Social Security benefits and 401(k) distributions are not taxed in Maryland, other types of retirement income are taxable at the state income tax rate. On the other hand, the cost of living is also high, at 19.5% above the national average.

Washington

Cost of Living: 115.5

In the state, cost of living expenses are 15.5% above the national average. The state has no income tax, which means that all income from Social Security, retirement accounts, and pensions is tax-free. However, sales tax rates are high with an average combined rate of 8.86%.

Oregon

Cost of Living: 115.1

Oregon has a cost of living 15.1% higher than the national average. The lowest income tax rate in the state is 4.75%, while the highest is 9.9%. Although Social Security is not taxed, income tax on retirement accounts such as IRAs or 401(k)s is taxed at the full state income tax rate.

New Hampshire

Cost of living: 115

New Hampshire has a cost of living that is 15% higher than the national average. While there is no tax on wages and salaries, dividends and interest are taxed at 4%. Retirees with investment income will therefore have their income taxed.

Vermont

Cost of Living: 114.9

In Vermont, most retirement income is taxed. The cost of living is 14.9% higher than the national average, but on the other hand, sales taxes are below the national average.

According to WalletHub, the worst states to retire, based on affordability, quality of life, and healthcare, are: