Whether you are working to retire or have already reached that life goal, you may be thinking about just how much of that will go back to the Government. Have you ever considered the idea of settling into a new city where your hard-earned cash stays in your pocket? Believe it or not, there really are tax havens both in the US and abroad where you can keep most, if not all of your pension, savings and social security. So it’s time to consider packing your bags! Let’s start with the US and then overseas. There are some amazing places to consider retiring – and saving on your taxes is the icing on the retirement cake!
1. Alaska, USA
Alaska is one of America’s greatest and most profitable states to retire in. It is hugely popular among retirees and because of this there are many retirement communities. There is plenty of recreation, fishing, boating and scenic touring. It is also one of the most picturesque of US states. It may be a slightly cooler climate but on the plus side, it’s residents pay no income or sales taxes, nor does the state tax the pensions or Social Security income for retirees. Some localities do have sales taxes, but when you become a permanent resident you can look forward to a yearly check from the state thanks to its vast oil wealth.
2. Florida, USA
If the short spring and dark winters of Alaska don’t interest you, then Florida would be a fantastic choice. There is no state income tax and your Social Security and pension income are off-limits. The state sales tax rate is six percent and you can enjoy a warm climate (albeit with the possible threat of tropical weather!).
3. Mississippi, USA
Mississippi is another of many Southern states that are very friendly towards retirees. Social Security income, annual retirement account income, withdrawals from retirement accounts and public or private pension income is not taxed. You may also consider Texas, Illinois, Nevada, Pennsylvania, South Dakota, Washington and Wyoming for their exclusion of taxes on retirement income. A few of these states do levy higher property and sales taxes to make up the difference.
4. Costa Rica
Costa Rica has to be one of the most inviting countries for retirees from all over the world. The cost of living is one of the top factors, you can live in luxury here for a fraction of what you would in North America, Canada or Europe, paying up to 50% less for the same amenities! The tropical climate and beauty of the country is also tempting. If you buy a home there, property tax will run you about .25 percent and there’s no capital gains tax if you sell. According to CostaRica.com, ex pats can live simply on a budget of about $1,500 a month. When you consider you can hire a housekeeper for $2 an hour, living simply just got a whole lot simpler.
This beautiful Asian country would make the perfect place to retire, with it’s fantastic blend of sandy beaches, lush rainforests and a vibrant cosmopolitan city. The country offers excellent and affordable health care as well as a very low cost of living. Even a luxury city apartment with amenities could cost as little as $500 per month. Retirees can keep most of what they earn since there is no tax on retirement income. If you choose to work there, however, you will pay up to 26 percent in taxes. Buy a home and pay just five percent for property tax and there is no capital gains tax. National sales tax is a low 5%.
Panama is another Central American country that would make the perfect place to retire. It would suit someone who would prefer the vibrancy of a city to the tranquility of a beach state. Panama city itself is full of skyscrapers, casinos and a bustling nightlife. It is no surprise it is home to almost half of the country’s four million residents.
Retirees can enjoy a low cost of living and many other perks, the biggest being no taxes on retirement income. Property taxes will run you up to 2.1 percent and there’s a 10 percent tax on capital gains. The country’s sales tax rate is 7 percent. Retirees get discounts of 20 to 50 percent on air fare, bus and train tickets and other perks such as lower movie, restaurant and concert prices as well as healthcare.
The Latin American country has many diverse living options for retirees to choose from, including the tropical climate of the Amazonian jungles, the urban sprawl of the colonial cities and the pastoral Southern valleys. Retirees and ex pats can live the luxurious life with weekend getaways on beautiful beaches, Galapagos Island retreats and dinners in world-class restaurants on a budget of about $1,000 per month. The country has a tax on worldwide income of up to 35 percent but does not levy taxes on retirement income. It’s cheaper to buy than to rent in Ecuador, where the property taxes are in the range of .25 to .5 percent. There’s a sales tax of 12 percent and capital gains are taxed as ordinary income.
Which of the 7000 or more idyllic islands in the Philippines will you choose to live out your days in exotic luxury? For a budget of around $800 per month you may find yourself with a sumptuous apartment with every possible mod con, plus maid service. The cost of living is extremely low compared to that in the US, Canada and Europe. If you have a pension of as little as $1,000 a month, you can get permanent residency in the country where retirement income is not taxed at all. There are even retirement options for people as young as 35. Sales taxes are on the high side at 12 percent, but property taxes will only cost you between 1 and 2 percent and the capital gains tax rate is just 6 percent. Seniors struggling to get by in the U.S. on a meager Social Security income could enjoy the luxury of a car, fuel, repairs and a driver for about $100 a month. Amazing!
Thailand is probably the most popular Asian countries for ex-pats and retirees. The cost of living is extremely low and it is also a central location for travel to Australia, America and China.
Thailand has what is called a remittance tax of up to 37 percent on money that is brought into the country. In other words, you can have millions in banks outside Thailand and pay nothing in taxes as long as you don’t move it into a bank in Thailand. Retirement income is not taxed and there is no tax on owner-occupied properties. The country’s sales tax is just 7 percent, so you can shop until you drop.
If you want to live a hassle-free life in retirement, then head to this Latin American country. It’s a smart choice, literally. The literacy rate is 98 percent in this country, where 88 percent of its 3.3 million residents is of European descent. There is no taxation of retirement income in this paradise but worker bees pay as much as 30 percent of their income to the tax man. It doesn’t take a whole lot to retire and relax here since a pension of $500 a month is all that is required for permanent residency. What’s more, you can keep you American passport when you get one from Uruguay. The country is very stable both economically and politically and corruption is virtually unheard of. The country boasts very good infrastructure, modern phone and internet services and a high overall quality of life. For as little as $1,000 to $2,500 a month you can live a really nice life here.
There are certainly thousands of options for living comfortably during retirement. The ones listed above are not the only places, just the best ones with the lowest tax burdens. Within each state or country there may be taxes and fees that vary by location. If you want to get the absolute most from your retirement income, just do a little research, then pack your bags.