The Best Retirement States for High-Net-Worth Individuals
For high-net-worth individuals, retirement doesn’t necessarily mean not working – it simply marks a shift to a more independent phase of life. No longer tied to a physical location, you can choose which state to retire in and how to spend your time.
In the case of the entrepreneurs and athletes we work with, this is even more true.
Retirement from active work comes early, sometimes unpredictably, and you’ll undoubtedly find ways to redirect that drive and passion in retirement. You’ll still earn money from investments, businesses you’ve built, or new ventures you started – and you’ll still pay taxes.
It’s essential that you have a wealth building strategy in place to make the most of the financial capital you worked so hard to build during your career.
That includes the question of when you should retire – and where you should retire. More specifically, which is the best retirement state for you as a high-net-worth individual?
It’s an important question, especially if you want to ensure lasting financial independence, avoid unnecessary taxes, and enjoy the best possible lifestyle.
Paying taxes in retirement is inevitable, but the amount you pay is going to differ, sometimes drastically, depending on the state in which you live.
And it’s not only about taxes and wealth. Access to quality healthcare, proximity to friends and family, and the lifestyle you envision for retirement also need to be taken into consideration.
Below, we discuss everything worth considering with regard to the best retirement states for high-net-worth individuals. We examine what you should take into account when deciding on a state and outline a few states that might just be the perfect fit for you.
Finding the Perfect Place to Retire
It’s difficult to say with certainty what the best state to retire in is. After all, best is an extremely subjective term.
The state that is right for you will depend on many personal factors, such as your personal preferences, your current financial situation, your family, and whatever businesses you may still have operating.
No matter where you choose to retire, there will be pros and cons and various tradeoffs.
For example, you might love the excitement of New York City – the culture, the food and the history – but it is also very expensive and has very high taxes.
You might love Texas for its non-existent income tax, but the sweltering heat might be too unbearable during the summers.
To narrow down the options that might be best for you, start by considering a number of important factors that will have a direct impact on your life, your net worth and your overall life satisfaction:
Quality of Life
You've worked hard for decades, and now it is time to enjoy the fruits of your labor. The quality of life that comes with any state will probably be the most important factor you take into consideration.
And it's up to you to decide what would make your quality of life higher. For some, that means living near their families or being able to golf year-round.
For others, it might be having great local sports teams, beautiful parks, or easy access to hiking trails.
Consider what enriches your life, and what you would like to be near to in order to make that happen.
The Housing Market
The current housing market is also an important variable to consider, especially since your home is likely to be a significant portion of your total net worth.
When retiring, you'll want to be able to find a home that meets all of your personal needs – for example, one that has a pool or an adequate number of bedrooms – while also being within your general budget, whatever that might be.
But you'll also want to think about the dynamics of the housing market, how it will change, and what the home you are considering buying will likely be worth in the future.
Buying a home with strong growth potential can help make your retirement even more secure.
Cost of Living
If you are currently retired, you ideally have a rough idea of how much money you have to work with. But there is no denying that the power of a dollar will be much stronger in some places than in others.
According to the Cost of Living Index, something that costs on average $100 can be expected to cost about $83 in Mississippi, the most affordable state, and $159 in Hawaii, the most expensive state.
That being said, Mississippi also has the highest poverty rates in the country and is rated as one of the worst states to live in, while Hawaii is famously tropical, affluent, and exciting.
So even though you might be getting more bang for your buck, you have to weigh it up against other factors that would affect your standard of living.
Taxes
Taxes are a major consideration for retirees because of how each state approaches taxes differently.
Taking some time to consider how a state’s taxes are structured can potentially save you millions of dollars over time.
Consider being in a tax-free or low-income state like Texas versus a state such as California which has a 13.3% income tax rate. If your income is in the seven-figure range, this could snowball into a huge tax burden in no time at all.
If you are generating regular income through a business venture or other investments, you'll want to choose states with lower income taxes. Currently, seven states have no income taxes at all – Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming.
Usually, states that have lower taxes in one area, such as low-income taxes, will have higher taxes, such as property taxes, in another. California’s average effective property tax rate, for example, is just 0.72%, while in Texas it’s 1.9%.
For this reason, it’s important to consider all taxes which you are liable to pay as a retiree, including:
Income taxes
Estate taxes
Inheritance taxes
Sales taxes
Healthcare
Health is wealth, so the old adage goes.
And if that’s true – which most believe it is – then healthcare is another essential facet to think about when planning your retirement.
There is no denying that, as we age, the need for quality healthcare becomes more frequent and necessary.
For high-net-worth individuals, having access to premium healthcare is likely to be near the top of their list of priorities when considering retirement.
Unfortunately, access to care and quality of care are not uniform throughout the country. If you want to avoid traveling to see specialists or access quality hospitals, consider your healthcare options before you choose a retirement state.
As it stands, the top states for healthcare are:
Hawaii
Massachusetts
Connecticut
California
New Jersey
Weather
There is a reason why many people tend to head south once they retire: warm climates are often much more desirable and temperate environments also typically involve less maintenance (such as shoveling snow).
However, the "perfect" weather isn't the same for everyone. Some people like having four seasons, others like having places with great skiing, and some people like to avoid the humidity.
Culture
The United States is a pretty big place, and there are a lot of cultural variations within it.
Depending on the things you like to do and even the food you like to eat, there are several different places you might consider living. Luckily, there is something available for just about everybody.
Additionally, you’ll want to consider how close you are to your existing friends and family, which might end up having a major impact on where you decide to live.
While you might want to live in Florida for the beaches and the flourishing art scene, it might not make sense if your loved ones live in Seattle.
Stating Facts: The Best Places to Retire Rich
As you can see, there are many different factors to take into consideration that will affect your overall quality of life after you retire. If you've taken the time to think about what matters most to you, narrowing down your options should be a little bit easier.
Before establishing residency in a new state, ensure you get qualified financial advice that includes tax planning as part of your overall wealth strategy in retirement.
When taking everything into account, here are some of the best retirement states for high-net-worth individuals:
Florida
There are quite a few reasons why more people choose to retire in Florida than in any other state.
Florida is one of seven states with no income tax, meaning it will be much easier to sustain and grow your wealth over time.
Additionally, Florida's subtropical climate and access to plenty of quality beaches make it an attractive option for a relaxing retirement lifestyle.
Plus, due to the high number of retirees in the state, there are a lot of places to live and things to do that are specifically catered to retirees.
New Hampshire
If maximizing your net worth and generational wealth is your top priority, then New Hampshire is likely to be the best state to retire rich.
With no sales tax, no estate tax, no social security tax, and no inheritance tax, it’s the best state in the country for stretching your dollars as far as they can go.
This lack of taxation is offset slightly by the high cost of living in the state, but you’re still likely to come out on top in the long run. New Hampshire also has an excellent healthcare system, and a wide variety of natural beauty including skiable mountains, stunning beaches, and breathtaking lakes.
Alaska
Though winters in Alaska are pretty cold, there are a lot of things that make the Last Frontier an excellent retirement destination.
When all taxes (income, property, and others) are taken into consideration, Alaska has the lowest average taxes of any state in the union.
And with an abundance of National and State Parks, hunting and fishing opportunities, and untouched wilderness, it truly is an outdoorsman's paradise.
Nevada
Nevada, like Florida, does not have any income taxes. And while the property taxes are notably higher, property in Nevada is still pretty affordable in quite a few places.
The Las Vegas metro area is one of the fastest-growing in the nation; in addition to the city's well-known casinos, retirees can also enjoy consistently warm weather without the humidity they'd find elsewhere.
Texas
Texas is the most populous state with no state income taxes. And as a truly massive state (second to only Alaska), there is a lot of room to grow and build a home to call your own.
Texas is also a very business-friendly state, which is ideal if you’re planning to establish a new enterprise and generate a secondary income.
Wyoming
Wyoming has some of the most beautiful landscapes in the country.
Northwest Wyoming—home to Yellowstone, Grand Tetons, and Jackson Hole—presents unprecedented beauty.
While the state itself doesn't have a lot of people, currently ranked 50th for population, it offers a great mixture of low taxes, things to do, and very affordable land.
Utah
Though Utah is near the middle for most tax categories, it has become an increasingly popular retirement destination.
Between 2010 and 2020, Utah grew at a faster rate than any other state in the nation. This bodes well for current and near-future property owners who would like to see a significant return on their investment.
Additionally, Utah has five excellent National Parks - Zion, Bryce Canyon, Canyonlands, Arches, and Capitol Reef - along with some of the most stunning landscapes in the country.
Are You Ready to Choose a State to Retire In?
At the end of the day, deciding on which state to retire in is going to be an extremely personal choice governed by the unique circumstances of your life and retirement.
If you’re thinking of relocating to a lower-tax state and would like some tax-saving advice from an experienced wealth management family office, don’t hesitate to contact us.
