Where Should I Retire?
The Sunshine State
Third in a Series on This Important Topic
By Peter Needham, MBA, CFP®
This is the third in a series of articles that will examine various aspects of possibly
moving to another state in retirement. Every major decision entails weighing a number
of plusses and minuses, financial and personal reasons to move or not. Hopefully these
articles will at least stir some thoughts on the topic.
According to our unofficial AEPG Wealth Strategy poll, the most popular state to move
into for retirement is Florida. We will cover other states in subsequent articles. We
have had a number of conversations with our clients asking the reasons for the move to
Florida, the benefits and the attributes of the various sections of the state.
Not
surprisingly “the weather” weighed heavily in the decisions as year-round outdoor
activities were preferred over snow and the ensuing potholes found in New Jersey.
After clients stop gushing about the weather and asking how cold it was in New Jersey,
taxes were mentioned as a major benefit of living in the Sunshine State:
Personal Income Taxes: there are no personal income and retirement income tax
in Florida. Pension income and IRA distributions are not subject to state tax.
Property Taxes: based on a sampling of clients, Florida property taxes are only
25% to 33% of the amounts due in New Jersey using comparable square footage.
If a family is downsizing their home, the savings can be even greater.
Inheritance and Estate Taxes: There is no inheritance tax and only a limited
estate tax in Florida. However, there is considerable time and expense associated
with probating a will in Florida. When someone passes away in New Jersey with
a valid will, probating the will can take only a couple hours and a few hundred
dollars.
Conversely, Florida probate is costly in terms of time and money.
Clients living in Florida are strongly encouraged to put their probate assets in a
living trust to avoid Florida probate.
State Sales Tax: 6%
Other: Florida does have a number of other taxes including taxes for
communication services, documentary stamps and “gross receipts of utility
services”. www.myflorida.com has details of these taxes under the Department
of Revenue.
Cost of living was a frequently mentioned benefit of living in Florida. As mentioned in
a prior article, New Jersey has a cost of living 25% to 31% above the national average
based upon the U.S. Census Bureau data for selected urban areas. Florida has four
cities captured in this data. The cost of living in Ft. Lauderdale is 16% above the
national average but still lower than New Jersey.
Panama City on the Florida
panhandle has the lowest cost of living in the state at 12% below the national average.
Gainesville and Palm Coast (just north of Daytona Beach) come in right at the national
average for cost of living. Anecdotally clients tell us they are saving big time on
everything from season hockey tickets ($3,600 center ice for the Tampa Bay Lighting
versus $12,500 for the Devils) to landscaping to garbage collection. The one exception
we heard was that potable water is more expensive in Florida.
Florida is a large state and our clients have moved to a number of different areas
ranging from the more developed east coast to the least developed panhandle.
Surprisingly Key Largo all the way out to Key West has not attracted many clients due
to concerns over costs and vulnerability to storms. An excellent suggestion is to rent in
various parts of the state to develop an understanding of the differences of the various
communities. Each area will differ in activities, access to the arts and sports as well as
health care facilities.
In general clients have settled in the following areas:
East Coast: The Atlantic coast of Florida ranges from the relative quiet of Amelia Island
in the north and builds amplification until reaching Miami in the south. Surprisingly
Jacksonville is the largest city in the state with Miami at #2. As you travel from north to
south St. Augustine, Daytona Beach, Port St. Lucie, Palm Beach, Pompano Beach and Ft.
Lauderdale represent the larger population centers. Similar to New Jersey, barrier
islands run along most of the coast. Transplants can find a rich assortment of arts and
entertainment as well as professional sports (Jaguars, Dolphins, Jaguars, Heat and
Panthers). In general the East coast has attracted clients that are part-time residents or
“snow birds” and relatively few year-round residents.
Gulf Coast: The Florida Gulf Coast is very popular with clients who live there full-time
as well as on a part-time basis. In general, the area is less crowded than the East Coast
even though it covers approximately half the mileage from the Tampa Bay area south to
Marco Island.
The Bradenton/Sarasota area including Siesta Key is particularly
attractive due to access to outstanding beaches, comprehensive medical facilities,
various arts, golf (of course…pun intended) and professional sports teams (Lightning,
Rays and Buccaneers).
Panhandle: The Florida Panhandle spans roughly 200 miles from Pensacola east to
Tallahassee. The “Redneck Riviera” is much less developed but offers stunning beaches
and turquoise water. Here you can find nine aquatic preserves, 36 state parks, two
major wild life preserves and giant 500 year old saw palmettos. There is the attraction
of moving to “Margaritaville” but there is the risk of unwanted development over time.
Thus far our clients do not appear this adventurous.
Central Florida: Central Florida is roughly defined as Gainesville south to Orlando.
The former is attractive due to being the home of the University of Florida while the
latter offers all the amenities of a major city and a very competitively priced airport.
“The Villages” (http://www.thevillages.com/) located northwest of Orlando is very
popular and growing fast.
The concept is multiple “census designed places”
(unincorporated towns) that provide lifestyles centered on town squares.
The
infrastructure provides live entertainment, movies, shopping, dining, golf, health care
facilities and houses of worship. The Villages are still expanding with new homes being
offered at $150k to $500k while “pre-owned” homes can be found in a wider range of
$80k to $650k.
Central Florida also includes some small towns along the St. John River which runs
over 300 miles north from Lake George to Jacksonville and the Atlantic Ocean. This is a
slow moving river which intersects numerous other waterways. Fishing is a major
attraction as well as the opportunity to view assorted wildlife.
The next article will cover the Carolinas and the attractions of living in The Blue Ridge
Mountains and the coastal islands.