Military retirees have unique concerns when compared with their civilian counterparts, especially as it relates to getting the most out of their retirement life. You’ve got one year after your active duty separation date to plan your final move, but make sure you spend plenty of time researching before your official military retirement.
Whether you’re entering retirement with a military pension alone or coupled with other retirement or spousal savings, here’s what to keep in mind when making what’s hopefully your last move (and maybe even your first one where you get total choice in where to go!)
General lifestyle goals for military retirement
As a military family, you’ve had the chance to live in at least a few different places, so there’s a good chance you know what climate you like by now. When determining your post-retirement resident state, make sure you’re picking an area of the country you either loved living or have always wanted to live. If being close to family post-PCS life is important for you, chart out driving distances or flight costs, too.
Cost of living can factor into the equation, too. How affordable are housing, childcare, groceries, and utilities in your chosen city?
State income tax
Nine places don’t require residents to pay any statewide income taxes: AK, FL, NV, NH, SD, TN, TX, WA, and WY. Depending on if you’re still earning any form of income or your spouse is still actively working, this could influence your decision about where to live.
Sales tax and property tax
While most people turn first to state income tax as the primary factor for determining where to live in retirement, sometimes the sales and property tax landscape could offset any savings on the state income tax side. Certain states will exempt food or medications from sales tax, others have no sales tax, and others will apply sales tax to everything.
Just as cities can also assess sales taxes on their own, property taxes can vary a lot from one state and town to another.
At the federal level, most pensions and retirement plans will be taxed. But not every state has an additional tax requirement for these funds.
There are 14 states that won’t tax your pension income. They are AK, FL, NV, SD, TN, HI, MS, IL, AL, WY, NH, TX, WA, and PA. New York excludes federal pensions from their tax scheme but not all private pensions are exempt. For TSP funds, most states do tax these with the exception of AK, FL, NV, NH, SD, TN, TX, WA, WY, IL, MS, and PA.
Corporate income tax
Did you start a business after leaving service or do you plan to do so? Some states level high corporate income taxes that could influence your budget. If a business is part of your retirement earnings plan, consider how corporate income taxes influence your earnings from self-employment since rates in the 44 states that charge this tax range from 2.5% in North Carolina to 11.5% in New Jersey.
General quality of life for veterans is another factor you can’t miss in your evaluation. Check out WalletHub’s recent evaluation of the best states for military retirees. Consider things like:
- Proximity to VA health centers
- Number of veterans per capita
- Veteran homelessness or unemployment numbers
- Percentage of veteran-owned businesses
- State, regional, or local veteran support groups or nonprofits
If you’re used to only a few options from a billet, making all these decisions can be harder than expected. Using these factors will help you make the right decision for you and your family.
PCSgrades helps connect military families with a military-friendly real estate agent so you can make the best choices for your family after military retirement.
AmeriForce Media is a service-disabled, veteran-owned small business founded in 1999. The company utilizes talent from the military community to produce print and digital offerings that inform, entertain, and support today’s warfighters and their families.
Its flagship products, Military Families Magazine and Reserve & National Guard Magazine, are delivered direct to active-duty and reserve component units across the globe. In 2020, AFM partnered with the Military Influencer Conference to create a new publication called the Military Influencer Magazine.