We have only purchased annuities from 401k funds, so taxed all around.
If purchased with Roth funds, Roth rules.
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IDK if referring to Municipal or other securities that have some tax-free benefit, be it from state and/or federal taxation.
Article about ātax burdenā came up - here is some āmeatā of the article:
"The differences in the total tax burden among the 50 states, as a proportion of personal income, can make a significant impact on a household budget.
A study by WalletHub measured the share of personal income paid by residents in individual income taxes, property taxes, and sales and excise taxes (those levied on goods and services), and ranked every state by its total tax burden. The data for the rankings were drawn from the Urban-Brookings Tax Policy Center, a nonprofit that analyzes tax issues.
New York Stateās tax burden was highest, over 12 percent. Hawaii, Vermont, Maine and California followed, each topping 10 percent. At the other end of the scale, Alaska has a tax burden less than half of New Yorkās, or slightly below 5 percent. New Hampshire, Wyoming and Florida followed, all roughly six percent.
Important to homeowners, Maine, Vermont and New Jersey were found to have the highest property taxes. Sales and excise taxes combined were highest in Washington, followed by Nevada and Hawaii ā exceeding 5 percent of personal income in each."
With the listing of states, the other low tax states were (going up from AK, NH, Wyoming) were FL (6.05%), TN, Del, SD, ND, OK, NV, SC, and Montana (7.5%). Then AL, 7.52%, TX 7.56%, and GA 7.65%. Certainly considering lots of factors between the taxation along with other personal costs (and conveniences) important to retirees.
On a recent airline flight, I spoke with a fellow who was planning on building a home in Costa Rica in a few years. I related to him about my brotherās surgery there (he was living FT in Costa Rica for a number of years) - and how brother later decided to utilize his dual Swiss citizenship and move to Switzerland to have better medical care. He had hernia surgery in CR, was the 2nd of the 9 surgeries done that day by the lone surgeon in that hospital ā he had a big midline incision followed by surgeon ācorrectingā anything he saw wrong before closing him up. I prayed that he would not have an infection - and indeed he did not, but very long healing, and due to adhesions and possibly another hernia issue, brother decided he needed much better surgical care for second go-round. Once established in Switzerland under their health care, he had surgery and very good outcome. I certainly wanted my fellow airline passenger to think about his health and health care in CR. When working in a specialty medical practice, I had a fellow that was on a drug study who resided mostly in CR, and he was comfortable flying back to the US for some of his health care (and for this drug study). This fellow was flying with his GF to visit her parents - dad who is in veteranās memory care unit with dementia. To me, it is one thing to have some foreign travel - and taking out insurance for any emergent medical care coverage, and another to not think about getting away from good health care.
Here is the link for article:
Do You Wish You Lived in a Low-Tax State? - The New York Times (nytimes.com)
Iāve seen some retirees flee to a lower tax state but then spend a lot of money coming back to visit friends. grandkids. When cost of housing significantly lower too, it could make financial sense. But there can be trade offs.
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Agree with the trade-offs, Colorado_mom.
A couple I know moved from a town right outside NYC to a more southern area down the eastern seaboard - somewhat rural.
It was sad to see them miss their many friends, food, shopping, support network. And the folks in the new town didnāt get their NY vibe, plus they were hours from grandkids.
They could afford a big, fancy house in new state, but it seemed very much not worth it (as an observer)ā¦
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Canāt read the article. Is it possible to do a gift link?
You are so smart, and so kind, to start the conversation with your DS about your aging. Truly a gift!
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I think I gifted it
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Agree!
We never moved from the original house we bought 28 years ago - and I am very thankful for that!
We are not high income, but always paid extra on our mortgage, refinanced a couple of times (the 2nd time, going down to 15 years) and paid it off early. Which helped us pay for college for our kids (what we hadnāt saved in a 529). After that last semester payment for youngest, it was a very freeing feeling knowing college and a mortgage was behind us. SWAN for us!
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As far as moving after retirement, thereās no size fits all.
We live in a different state than our children but they both live in urban areas, that are considerably more expensive than the one we live in. Not areas we are frankly interested in living in. Or affordable to us.
Would I miss my neighbors here? Not sure. They are nice people but are older and have different political opinions than we do. And the longer we live here, the more the divide feels to us.
But where to move to? I donāt see a place to find like minded people that is affordable.
So here we stay. Feeling an increasing divide but not wanting to spend considerable money to find another place to move to.
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Looking at the state tax chart made me think about cheaper/different states, and the question - is it really worth say $3,000 (on a $100,000 income) to move away from family, friends, etc. to save on taxes? So far in our case we have said no.
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Life is a series of choices. I sited way back on this thread about a single lady moving to NM from CO in retirement, but Covid shut down some of what she moved there for, and also some of the friends no longer in NM. Decided to move back to CO, but could no longer afford the area she had previously lived in, but did find a community in CO to move to. So she spent a good chunk of her nest egg money with the moves, but her pension gave her the cash flow. She was able to purchase her new home with no mortgage. I believe the source was a home show on HGTV, where they show 3 choices of homes in the new location and she selects what is best for her.
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I just talked last week to a gal whose parents moved from N AL to Dallas where they had previously lived. After some time there, they moved back to N AL because they said it was too expensive to live in Dallas. I suspect they needed ancillary care, and the logistics in the much bigger city made that difficult. He had a long career in N AL; their daughter and grandson lived in Dallas (while son and family live in N AL) but I suspect they missed what QOL they had in N AL and used the money situation as their primary reason for return to N AL. It may also have been the big city things they wanted to do in DFW in their go-go years were no longer relevant in their slow-go years. There are many really nice things going on in mid-sized city in N AL, and many things do not cost a lot of money.
Yes or no?
āMunnell and Biggs point out that 401(k) tax treatment costs the government nearly $200 billion in annual revenue. They suggest these funds would be better served supporting the Social Security system, increasing the guaranteed income received by future retirees.
The authors assert that the 401(k) tax treatment hasnāt had a significant impact on savings rates, and that the tax incentives disproportionately help high income earners. They argue that the tax policy didnāt achieve its intended goals, and that regulators should pivot to address the widespread shortfall in retirement savings before it turns into a national crisis.ā
I agree.
We moved to a high tax area (and we knew that going in). But we can afford it, the weather suits us (we are NOT hot weather people), our D,SIL and GD are here, we like the politics, lots to do and closer to where we grew up (Hās sisters and their families are still there).
For us it is worth it.
This.
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Rightā¦ and retiree income usually lower than that. I will point out that when people move āto save on taxesā (at least in my original state of NY) it can mean fleeing high state tax AND high property taxes.
In my mind, the main thing is to have a place that is affordable and maximizes the quality of life factors that are most important to the person/couple. (Now if there is disparity of opinions on this between husband and wifeā¦. that is trickier, requires some compromise). It may or may not be the cheapest option, just the most appropriate.
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Just wow. The government runs nothing well. To utilize a quote from the article if this idea actually gained traction: There will be a lot of resistance among workers to remove a popular tax benefit, limit personal control over retirement saving, and divert additional funds to a Social Security system that most workers/taxpayers regard as poorly run.
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The idea doesnāt come from the government. It is just a bunch of professors on both sides who came together and are making some waves.
I understand itās coming from academia. But itās directed at the government.
Just a surprisingly bipartisan idea about how to keep SS from running out of $$. Chances this will happen are really low. And we should probably stop at that. 
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