Saturday, April 16, 2011

Don't Tread, or tax, on me in Retirement

Ever since I retired a little over two years ago, I've thought about where I would spend my time in retirement.  I was content to stay here in Michigan for the time being.  I say 'for the time being' because I knew that at the age of 70-1/2, when I must make mandatory withdrawals from my IRAs, I would not want to be here.  Why?  Because Michigan would tax that money.  And I do not like paying taxes for no services received (assuming I don't get locked up, where a good chunk of our taxes to the state are spent).

I really never understood people complaining about local property taxes to support local schools.  Yes, folks with no children may not see a benefit, but there is an overall benefit to the community as a whole by having educated members of said community.  No young men selling drugs and young women selling their bodies on street corners.  But I digress, as usual.

With a Michigan proposal to tax any part of my pension, I am looking at moving up the date of relocation.  Today's Detroit News has a really good map of states with no income tax and/or no pension tax. 

Prior to the tax on seniors proposal by the State's Governor, I considered Texas, where my oldest son lives.  Also on the list, because IRAs are not taxed, is Pennsylvania.  A Chicago suburb is also appealing, as is the rest of Illinois.  I enjoyed my vacation in Seattle, I can deal with gloomy weather, and it is close to Vancouver, another favorite vacation spot.  And then there is Tennessee, which I also like.

We seniors are not without choices.  We no longer need the three-bedroom homes with the higher property taxes.  Most of my disposable income is spent on travel and services, so sales tax is not a big issue.  And even if I did pay more sales or property tax, at least it is based on what I spend and becomes my choice.  Not a tax just because of what I spent my lifetime working for.

My only concern at this point is the ability to sell my home for what it would cost to rebuild it, not what some person looking for a real bargain is willing to pay.  Or I could do as my neighbors' have done and rent it out to a nice family.

Anyway, for those of you who may be in the same situation, here is a really nice map to go along with my other retirement living posts.

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