By Silvia Ascarelli
I’d like to retire in a no (or low) state-income-tax state near water and a state or national park. I want red politics but with (hopefully) legal pot (medical or recreational), and weather that isn’t too cold. I’d compromise on the pot for Texas, if necessary.
I don’t want to be in New Hampshire, Florida or Washington or too close to California.
We’ll have a budget of about $5,000 a month and are selling a house worth $300,000-ish. I’d love a place with a college vibe and affordable food, too. One of the things that seems to be overlooked in these “where to retire” conversations is how much fresh food costs. I am vegetarian so access to fresh fruits and vegetables is super important to me.
Only eight states don’t levy an income tax: Alaska, Florida, Nevada, South Dakota, Texas, Tennessee (sorry, forgot it joined the list on Jan. 1!) Washington and Wyoming. You don’t want Florida or Washington, and Alaska, South Dakota and Wyoming are likely “too cold.”
That leaves Nevada, a purple state where marijuana is legal, and Texas and Tennessee, red states where only medical CBD is allowed. Within Nevada, Las Vegas, Reno and Carson City may all be too close to California for your comfort.
How about red states that do have state income tax but where marijuana is legal ? Only 15 states plus the District of Columbia have legalized marijuana as of early 2021 (though the changes have yet to take effect in two of them), according to pro-marijuana advocacy group Norml, and they tend to be blue. Laws of course can change.
One possible match for you is Arizona, though it is looking bluer. Illinois is redder outside of the Chicago area, and southern Illinois would be warmer. The Carbondale area, suggested here , may be an option.
Colorado is purple, has popular national parks — but doesn’t come cheap. Pot is also legal in Montana — but this red state has long, cold winters and may be even less tax-friendly than Colorado.
If you can accept just medical marijuana, Oklahoma, Missouri, Arkansas and Mississippi are among your possibilities. (Mississippi voted in 2020 to allow medical marijuana, though the law has yet to be implemented.) Utah makes the medical marijuana list and has the national parks but unfortunately isn’t that tax-friendly.
But before I make any suggestions, let’s talk more about taxes. Please look beyond whether a state has an income tax. Far more don’t tax Social Security payments , for example. Some offer tax breaks to retired military; others on pension payments. Your sources of income in retirement likely looks far different than when you are working. A free state tax calculator like this one may help you compare your situation across states.
Given how important this is to you, please talk through your findings with a tax professional.
And regardless, state and local governments must find money to pay for services (think property taxes and sales tax) — or leave it to you to pay for them, directly or indirectly, such as through HOA fees.
So where could you go? Your budget gives you many options, as the MarketWatch “where should I retire” tool shows. Here are three possibilities that won’t leave you cash-poor.
You’ll like Mississippi’s tax-friendliness toward retirees: not only are Social Security benefits free of state tax but so are payments from your 401(k), your IRA or pension.
Mississippi also passed a ballot measure in 2020 to legalize medical marijuana, though it still needs to be implemented.
The two big college towns are Oxford (University of Mississippi, also known as Ole Miss) and Starkville (Mississippi State University), but I’m going with Hattiesburg, home to the University of Southern Mississippi. It’s a bigger town — nearly 46,000 people, and 75,000 across Forrest County — so you’re likely to have more choice in produce prices (plus two farmers markets, one downtown, and one for Forrest County). It’s the South, so humid summers are a given. But you’re also less than 90 minutes from the Gulf of Mexico and beaches.