Monthly Archives: June 2015




Where you Retire has a price!

Monday, June 1, 2015

During the past six months, in addition to meeting clients in Indiana and Illinois, I’ve logged flight and car miles visiting clients in Florida, Washington, Tennessee, Michigan and Oregon. Yes, I still make house calls! I’ve also held meetings via Skype with clients in California, Georgia and Arizona. I recently traveled to Palm Desert, California, a very popular place for retirees, and I can understand why. Palm Desert is warm, dry, and surrounded by mountains and national parks, and it’s an easy drive (depending on traffic) to Los Angeles, Phoenix or Las Vegas.

 Gone Fishing!

I can’t visit these popular destinations without my “recovering accountant” DNA wondered how expensive these places are for retirees relative to other places my clients have selected. One of my goals is to be a resource for clients and to offer them independent and comprehensive advice. Cost certainly isn’t the only issue when choosing retirement destinations, but it is something I need to factor into each client’s unique plan and my own future with Nancy.  As our children locate across the country, living so close to two major airports with direct flights is wonderful, especially as the Northwest Indiana winters seem to lengthen each year.

 

I discovered part of the cost equation this weekend when I read a WalletHub.com report using data from the Institute on Taxation and Economic Policy (ITEP) to identify where high income earners spend the most and least on sales and excise taxes, property taxes and income taxes. Based on that data, ITEP created its list of the best and worst states to live in for combined tax cost.

 

As a starting point, I looked at Illinois and Indiana, the origins of most of my clients. Illinois is #44 out of our great states with an average cost of 9.83%, while Indiana is in the middle of the pack at #24 with a cost of 8.19%. I was surprised to see Wisconsin slightly higher than Illinois at 9.89%.  I wasn’t too surprised to see New York earned the most expensive designation at 12.4%, explaining part of the reason for the migration down the East Coast to Florida which is #7 at 5.56%. (Okay, the weather might have something to do with the southern flight, too.)  With California at 9.35% and Oregon only a slight discount at 8.78%, I can see why retiring Californians and Silicon Valley tech firms are migrating through Oregon right to Washington at 6.38%

 

Certainly, expenses are not the only rationale for choosing where to live, but the additional cost requires advanced planning.  If you need $6,000/month after tax cash flow to retire, then living in New York vs. Florida will require an additional $5,500 per year from your IRA to cover taxes, an estimated additional $140,000 in your retirement nest egg when you retire.  If you are age 50 and need to make up that difference, you should increase your 401k contributions now by $4,000 to $5,000 per year just to cover the additional tax!

 

Whether you are playing in a Pickle-Ball league in The Villages, walking the beach or golf course in Ft. Meyers, hiking in Colorado, fishing in Canada, listening to the ships in Astoria,  or shoveling snow in Valparaiso, Indiana (let’s hope not!), costs of living including taxes need to be part of your plan.

 

Tim Scannell, CPA, CFP TM provides Personal and Business Tax Planning, Estate Planning, Investment Management, and Generational Wealth management to his clients. “Clients work with us because we don’t sell products – we create customized plans based on each client’s unique goals, and we continuously reevaluate client plans to ensure they are aligned with changing needs. Our clients rely on us to protect their futures, and we take their trust to heart.

 




Scannell Wealth Management Group is registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. Scannell Wealth Management Group and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of Scannell Wealth Management Group, and do not represent those of HighTower Advisors, LLC, or any of its affiliates.