feb 2015

FINANCE
By Rodger Alan Friedman
In retirement, many want
to move to a state where
they can enjoy the same
or an even better lifestyle
with less money.
THREE TIPS FOR RETIRING OUT OF STATE
A Little Planning Can Save Money
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Retirees flock to Florida and Arizona
for year-round sunshine and golf, but all
things considered, they’re not the best
states for happy golden years, according
to a new survey. Along with average
number of sunny days, factor in cost of
living, residents’ sense of well-being,
quality of health care, crime and, yes,
humidity, and the best destination is
(surprise!) South Dakota, according to a
2014 Bankrate report.
As this report correctly suggests, preretirees
need to consider a lot more than
snow days and tradition. Different states
have different tax laws and other regulations
that can have a major impact on
your retirement funds. You need to be
aware of these as you plan for where you
want to live and how you want to live.
Whether you’re considering one of the
other top four “best states to retire” –
Colorado, Utah, North Dakota and
Wyoming, in that order – here are five
tips for planning ahead:
1. New state – new income tax rules.
Get to know them! Familiarize yourself
with the tax laws of the state you’re
considering for your new home. Two of
the top five on Bankrate’s list – South
Dakota and Wyoming -- have no state
income tax, along with five others:
Nevada (No.18 on the list), Texas (19),
Washington (22), Florida (39), and
Alaska (48). Also, an itemized deduction
in one state may not be an itemized
deduction in another. If you use the long
form (1040) to file federal income taxes,
hire a reputable, experienced CPA for
guidance.
Look into how your new state taxes
retirement income. States differ on
taxing interest income from tax-free
municipal bonds. Some states give tax
credits; treat public and private pensions
differently; or offer federal, military or
blanket exclusions.
2. If you’re married, are you moving
to a community property state? There
are nine community property states –
those that divide all maritally-acquired
assets and debts 50:50 in the event of
divorce. (Exceptions include an inheritance
or gift received by one spouse and
maintained separately in that spouse’s
name.) Community property states are
Idaho, New Mexico, Texas, California,
FEBRUARY 2015
Arizona, Wisconsin, Nevada, Louisiana,
and Washington. Speaking with an
estate planning attorney regarding how
this issue could affect you may be money
very well spent.
3. Have a lawyer review your estate
planning documents. Your existing
estate planning documents should be
reviewed by a lawyer in your new state
of residence because statutes differ on
the types of documents required and the
powers bestowed upon each. For example,
states are all over the map regarding
the validity of a power of attorney document
and the powers that may or may
not be conveyed.
During their careers, their acquiring
wealth years, many people live in places
that have lots of jobs – and the higher
cost of living that goes along with that.
In retirement, many want to move to a
state where they can enjoy the same or
an even better lifestyle with less money.
For that, it’s essential to consider not
only the cost of living but the state laws
that affect your accumulated wealth and
income. P
Rodger Alan Friedman is a wealth manager
at Steward Partners Global Advisory
and author of “Forging Bonds of Steel.”