Found this on the outflow of very high income folks from high tax states: https://www.modbee.com/opinion/article226101685.html.
More complicated than that. People who do not use state or local related services much (e.g. Medicaid, schools) or are in situations where their income depends on where they live (e.g. living where their type of job exists or pays more than in other places) may be more focused on lower tax states than those who do consider such other things. Retirees in the capitalist class or whose income is from pensions that are invariant with respect to where they live, and who no longer have children in any kind of school (and have Medicare so that Medicaid is not an issue), would be more likely to be focused on lower taxes if they are choosing states to move to. In contrast, if people in the labor class move to another state, they may consider state or local related services and job/income opportunities related to location, in addition to taxes.
I would think to feel the new tax law effect, one would belong to top 0.1 or 0.01%. For more moderately high income people, maybe in the 1-10%, the AMT would have cancelled out SALT deduction in the new tax law change.
So the options are to retire to a poor other country or Arizona/Florida? Says a lot about this place. I will take door #3 which is neither of those.
And I have no interest in living in states will large numbers of red state/blue state people. And for those who live in a red state/blue state bubble and may not know this, there are a lot of people who are not red state/blue state people. At this point in my life, anytime someone mentions red state or blue state, I just say thats nice and walk away. Have found over the years, if I talk with them it eventually will get to the point of saying thats nice and walking away so why waste the time.
@Iglooo, I used to be plagued by AMT ā a tax designed to make sure really rich foods paid some tax but has become a hidden tax on what I suspect is the upper middle class generally and maybe the middle class in high tax States. If Iām not mistaken, it doesnāt stop the really rich from paying very little in tax if they arrange their affairs properly.
I havenāt been caught in the AMT in a few years and Iām pretty sure I havenāt hit the top 0.1%. At least they havenāt sent me my exclude membership card. Even though I live in a state with high property values, I didnāt go into AMT this year either. Not sure why
@saillakeerie, didnāt mean to touch a ner on red v. blue States. I am fortunate to travel all over the country and world and am not suck in the bubble you mention but know folks in places like San Francisco, Portland, Boston, Gillette, Houston, Florida and Dallas who are. Just a useful way to distinguish States that are directing spending to social services, health and education from those that are not. The lines are rough as Wyoming and Washington are no tax States that arenāt typical. You can easily find low cost of living States to retire in. For the ten lowest cost of living States, see https://www.homesnacks.net/cheapest-states-to-live-in-1211594/. But I think one can find lower cost of living even in more expensive States.
AMT doesnāt hit the 0.1%, because their income is high enough that their overall rate is higher than the AMT rate. Because it hasnāt been indexed to inflation since it started, itās trickled down into the upper middle/middle class taxpayer.
I live in a high tax state and have been plagued with AMT for years, until this last year. Even with the SALT deduction limitation, the changes to the AMT brackets took me out of AMT.
I met a gal that was from Seattle - and retired in my state after traveling around a year to see how she liked various places and to decide where to live. She is not in rural/rural, but in the largest community in that particular county. Certain things drew here there besides cost friendly. She has lived there a while already and likes it/glad she made the move.
H and I both grew up in the largest town in our county in WI (but largest town for him was less than 6,000 population, and mine was 10,000 population.) We currently live in a pretty upper mid class area in a larger community (metro area is over 300,000, suburb town is 65,000).
Hard to paint a whole state with a particular set of characteristics beyond some of the general things on the state. For example, in WI, Milwaukee and Madison are liberal/democratic while the rest of the state tends to be more conservative/republican. I donāt think our primary residence will be in WI, but may spend some months there.
We havenāt decided where to live in retirement - in part because we donāt know where DD/SIL with two kids will end up (currently they are 100 miles from us). We know we will sell our home and downsize, but wonāt plan to buy another property here. It will take some time to get āorganizedā and do all the work to get a house show ready. Plus want to have a clear idea where we do want to live. Maybe spend time in two places and travel some within the US. Sorting out our thoughts on the retirement count down.
Thatās what I meant in my post. 0.1% doesnāt pay AMT and losing SALT deduction probably cost them. Until last year, 10%ers were most likely paying AMT which would negate SALT deduction they were claiming. They werenāt getting much benefit from SALT deduction any way if they were subject to AMT.
@shawbridge I have no idea where the exact divide is to be subject to AMT. Weāve been paying AMT as long as I remember except one year when we converted our IRAs to Roth and taxable income shot up. That year we got AMT credit 
My goal is 1.2 Million, but Iām less than 15 years out and donāt even have half that, so I donāt think Iāll make it. Oh well. Whatever I have is what Iāll have. Iāll figure out a way to make do. The house will be paid off, the kids will be gone, and Iām pretty low maintenance.
@shawbridge Not really striking a nerve as much as it is identifying someone with whom I likely wonāt like to communicate/be around. Its actually helpful in that way.
As you note, its not easy to identify which state falls into which camp (which is a big issue I have with the concept in addition to people who think along the red/blue state lines). And even with an identification, will it stay that way? May not. And with the levels of under/unfunded-ness of state pensions, I think there will be a lot of changes in many states in terms of taxes and services.
Ultimately I expect my location decisions in retirement will be based on where my kids end up rather than whatever social/health/education/etc services may or may not exist there or anywhere else.
One tax related thing to consider when trying to see if your investments are enough to retire on is what kind of accounts they are in: regular, traditional IRA/401k, Roth IRA/401k. And if regular, what kind of investment income they give and how much unrealized capital gains/losses they have.
$x in Roth IRA/401k accounts are effectively more than $x in traditional IRA/401k accounts, because actually using the latter means paying taxes on the money first.
Hmmmm, H just had a chat with 70+ year old brother. Brother is concerned about what life insurance to buy as his term is running out. Heās also concerned about this expenses, high mortgage and overhead for his dental practice. He has very little cash at the end of every month after paying all his expenses. He has a lovely 3 bedroom, 2 bath home in SF that he lets his D and SIL live in. They arenāt paying him any rent and are SUPPOSED to be fixing it up (but arenāt).
He also has a lovely, huge 5 bedroom 5 bathroom home in the bay area that appears to have a mortgage; he lives there with his adult S. He pays rent on his dental practice and the salaries of his staff. He has no pension and I guess his SS isnāt going very far. Heās starting to be concerned about long term care and his future needs. Their sister died at age 72 and left both of them significant assets.
Itās hard to know where to start suggesting what he may wish to do. I have sent my husband a link to bogleheads.org āgetting started,ā for him to share with his brother. I donāt want to step on any toes or hurt anyoneās feelings but am rather concerned for my BIL. Heās very nice but I really feel his D and SIL are taking advantage of his good nature. As far as I know, heās had no financial planning and I have no idea what he even wants life insurance for at this point in his life.
I figure heās best off trying to track his expenses so he can figure out what heās spending money on as well as what his sources of income and assets are. Until he has that well understood, he canāt really do much of anything. Iām just glad he has some significant assets.
@saillakeerie, one of the interesting things Iāve observed among my friends is that a number have chosen to locate full- or often part-time where their kids are. These tend to be fairly short folks who are fully or partially retired. My parentsā generation did not do that, except possibly near the end.
@ucbalumnus , my rough assumption is that $$ in a pre-tax account are worth 60% of $$ in a post-tax account. I donāt know how sensible that is but doesnāt seem seem crazy.
I agree that it wasnāt common for my parents generation to relocate in retirement to be near kids. Though my siblings and I and my wife and her brother all live in the same state as we were born and in which our respective parents live. Much more common than it is today. My son already lives out of state (first job post-college). Daughter attends college out of state and is talking about moving out of state post-grad school. I think that is more the norm now. As a result, if you want to see your adult kids/grand kids more often than at holidays, moving often needs to be on the table.
@shawbridge, your post about āfairly short peopleā made me laugh (darn auto correct?).
I have been trying to figure out if we should do Some serious Roth conversions in the next year or so. I donāt see the difference as really 60 vs 100% though - I was as thinking more like 100% - the tax rate you pay on the conversion is an important thing to consider, and how long will it take you to āearn backā the money you pay in taxes is the other important thing to consider. Does anyone have a good way to determine whether you should do it or not? My husband and I will both earn pensions, so we wonāt have any really low earning years (which is a nice problem to have, I know).
Iāve been thinking about actually posting on Bogleheads forum to try and figure out if itās smart for us to convert or not.
Is he considering the daughter and son-in-law to be financial dependents of his income and therefore the intended beneficiaries of a life insurance policy? Or the son? If not, is anyone else financially dependent on income (or expenses avoided) from his labor, and any estate assets would be insufficient to replace that income (or cover expenses currently avoided)?
This is a great point when everyone is tossing around the numbers. I need $1MM, $2MM, $10MM, etc. If we are taking our cue from others online, here or Bogleheads or any other forum or articles, are we taking pre-tax or post-tax nest eggs. It is so very easy to fall into the trap of reading every post from your own perspective and experience. If @Shawbridgeās numbers are accurate and he says he has $1MM and I feel like I am way behind with my $600k, but his are 100% pre-tax and mine are 100% post-tax, then, depending on tax rates, we are in the same place. Or, if we are reading online about peopleās projected nest egg minimum, their versus our future tax rate is an important consideration.
In most cases it would seem life insurance no longer needed 70+ (weāve gotten rid of all of ours, except a whole life policy that annually grows in cash value by more than we contribute). I agree that his kids should be paying rent! Or moving out on their own so he can sell the place.
I think looking online at what people say they have saved for retirement. Its easy to say you have more saved than you do and there is some pressure if you think you have save too little to avoid by just saying you have more. Not saying anyone here is or ever would do that. Just that I think it does happen. And can
And I think some of the retirement calculators aim too high. Part of it may be with an eye towards aiming too high and if you fall short you will still be ok. Some of it also is the people who put out retirement calculators often have vested interests in people saving more. I have seen sites saying people at my income level need 85-90% of pre-retirement income in retirement. Given I wonāt be paying for college, saving for retirement or paying a mortgage, I just donāt see it. Not even close.
And I think there is some danger in overstating what people need in that it scares many people away from even trying. If you look at what average retirement savings are stated to be at various ages, the vast majority of people will fall woefully short of retirement needs.
And at one point not that long ago, $1 million was stated to be what was needed for a comfortable retirement. Now the number is $2 million. Didnāt go to $1.2 million, then $1.5 million and then $1.7 million before hitting $2 million? Seems odd to me.
Figuring out how much you need should include figuring out you actual monthly expenses. Stating whatās hopefully obvious, there is not a one size fits all number people need for retirement.