Retirement savings goals differ depending on your age and the type of lifestyle you wish to have in retirement. One guideline is to have at least the equivalent of one's annual salary set aside by the time you're 30 years old, according to Fidelity. This should double by the time you’re 35 and triple by the time you're 40. That means that a 30-year-old making $50,000 per year should have around $150,000 put away by the time they turn 40.
Of course, retirement savings goals should also take into consideration the state in which you live or intend to relocate. States have different tax considerations, and seven of them have no state income taxes, which makes them attractive destinations for retirees. Consequently, retiring in a high-tax state such as New York or California might require that you save more than if you settled in Florida or Texas. Here are five states in which you can achieve a financially comfortable retirement:
Alaska
While Alaska might not be the first state that comes to mind when people are nearing retirement, it has no state income taxes and the lowest tax burden among all 50 states. Retirees can move to Alaska and feel comfortable knowing that they will get the most out of their savings. According to WalletHub, Alaskans spend on average 3.71 percent of their income on property taxes. While this is relatively high compared to other states, Alaska has the fifth-lowest total sales and excise tax burden at 1.45 percent. The total tax burden in Alaska, then, is 5.16 percent. Only one other state—Delaware—falls below 6 percent.
There is a disproportionately smaller number of seniors in Alaska as compared to other states, although that segment of the population has been increasing in recent years. Alaska also ranks high in regards to services and employment opportunities for seniors. While housing can be expensive, it is possible to find relatively cheap one-bedroom apartments to rent. Retirees looking to purchase a home can even receive partial property tax exemption in some cities.
Delaware
Delaware ranked second on WalletHub's list of total tax burdens per state at 5.52 percent. While the state has the 18th highest individual income tax burden, it maintains a top-five ranking in regards to the property tax burden (1.85 percent) and total sales and excise tax burden (1.20 percent). Moreover, the gas tax in Delaware is lower than the national average, and people age 65 and older receive an additional standard deduction of $2,500. State income taxes also allow individuals to exclude up to $12,500 in retirement income from 401(k) plans and other savings accounts.
The First State is not only an attractive retirement option due to its tax benefits. It has long been a popular vacation or second home market for baby boomers and has an abundance of senior living communities. In addition, it is centrally located near major cities such as Baltimore; Philadelphia; and Washington, D.C.
Tennessee
Tennessee is an ideal state in which to retire for people who might not have met or exceeded their savings goals. According to a study conducted by 24/7 Wall St., Tennessee is one of 13 states where retirees spend less than $1 million during their retirement years. The state also has the third-lowest individual tax burden at 6.18 percent. Its individual income tax burden is a minuscule 0.08 percent, and the state is abolishing the tax for 2021.
A recent online survey conducted by U.S. News & World Report highlighted Chattanooga and Nashville as among the top 25 cities in which to retire in the US. Chattanooga has a population of more than 550,000, 24 percent of whom are older than 60.
Wyoming
According to WalletHub, Wyoming has the fourth-lowest overall tax burden at 6.47 percent. It is one of the seven states devoid of income tax and, while it has a relatively high property tax burden, it ranks favorably in regard to the total sales and excise tax burden at 2.66 percent. The personal finance site Kiplinger, meanwhile, ranked Wyoming as the most tax-friendly state for retirees. In addition to tax breaks, the state has a relatively low cost of living, access to quality health care, and an abundance of national parks. Moreover, around 24 percent of the state's population is older than 60.
Florida
The U.S. News & World Report survey lists Florida municipalities—Naples, Port St. Lucie, Fort Myers, and Sarasota—as the top four locations in the US for retirees. Seniors comprise at least 33 percent of the population in these cities, all of which offer outdoor and water recreation activities. Nine other cities in Florida qualified for the list.
Meanwhile, WalletHub lists Florida as the fifth-best state in terms of the overall tax burden at 6.82 percent. The state has a relatively high total sales and excise tax burden (4.03 percent), but makes up for it with no income tax and average property taxes as compared to other states. When you also consider factors such as quality of life and health care, WalletHub ranks Florida as the best state in which to retire.