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For retirees in what we call the 2% Club — those with both a pension and $1 million or more saved — the question is not can you move in retirement, it’s should you?
At this level of financial security, the decision to relocate isn’t just about chasing lower taxes. It’s about optimizing income, preserving wealth and designing a lifestyle that truly feels like retirement. If you’re weighing a move, here’s the ultimate checklist to help guide your decision:
1. Don’t just look at state income tax, look at retirement income tax
It’s easy to be drawn to states that have no income tax: Florida, Texas, Tennessee and others. But for retirees, that’s only part of the story.
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What really matters is how your retirement income is taxed:
- Pensions. Some states fully tax them, others partially and a few not at all
- IRA/401(k) withdrawals. These can be taxed differently from wages
- Social Security. While benefits are exempt from taxes in most states, they are taxed in some
For example, states such as Pennsylvania and Mississippi don’t tax many forms of retirement income, while states like California may tax multiple income streams.
Bottom line: A “no-income-tax” state isn’t automatically better if another state offers more favorable treatment for your specific income sources.
2. Watch for the ‘hidden taxes’
States need revenue, and if they’re not collecting it through income tax, they’re collecting it elsewhere.
Three big areas to evaluate:
- Property taxes. High in states such as Texas, Illinois and New Hampshire
- Sales taxes. Elevated in places like Tennessee, Nevada and Washington
- Home values. Higher property values can quietly increase your total tax burden
A move that looks like a tax win on paper can end up being a wash — or worse — once these areas are factored in.
3. Compare total cost of living (not just taxes)
Cost of living plays a major role in how far your retirement dollars will go. Higher-cost states often include Hawaii, California, New York, Massachusetts and Alaska.
Lower-cost states include Mississippi, Arkansas, Oklahoma, Missouri and Tennessee.
For those with substantial assets, this isn’t about survival — it’s about lifestyle efficiency. Spending less in one state may allow for:
- More discretionary travel
- Greater gifting to family
- Increased charitable giving
4. Factor in healthcare costs (especially long-term care)
Healthcare is one of the largest and most variable expenses in retirement. Costs can differ significantly based on:
- State-level healthcare pricing
- Availability of providers
- Long-term care costs (which vary widely by region)
Tools such as Genworth’s Cost of Care survey can help you compare the cost of living across states before you decide to move.
Here’s a key question to consider: Will living in your chosen new state improve or strain your long-term care plan?
5. Don’t ignore estate and inheritance taxes
This is where high-net-worth retirees often get caught off guard. While most retirees won’t owe federal estate tax, some states impose their own:
- Oregon. $1 million exemption, up to 16% tax
- Minnesota. $3 million exemption, up to 16% tax
- Illinois. $4 million exemption, up to 16% tax
A $2 million estate in the “wrong” state could trigger a meaningful tax bill. Consider inheritance taxes, which are paid by beneficiaries and vary based on who receives the assets.
States such as Maryland even impose both estate and inheritance taxes. If legacy is important to you, your state choice matters more than you might think.
6. Plan around Roth conversions
Where you live can directly impact your tax strategy, especially if you do Roth conversions.
For example:
- Moving from a high-tax state (like California) to a no-income-tax state (like Tennessee) may mean you should consider delaying conversion
- Moving in the opposite direction may mean you should consider accelerating them
With today’s relatively low federal tax rates, timing matters. We recommend coordinating your relocation and tax strategies at the same time, rather than focusing on taxes after the fact.
7. Consider the most popular (and least popular) retirement states
While working with retirees across the country, this is what we see:
Popular states to move to:
- Florida (no income tax, retiree-friendly policies)
- Texas (tax advantages, but higher property taxes)
- Tennessee (no income tax, higher sales tax)
- North Carolina and South Carolina (lifestyle-driven moves)
Popular states to move from:
These trends are largely driven by tax burden and cost of living, but lifestyle also plays a big role.
Each state can have different rules related to wills and trusts, powers of attorney and healthcare directives.
If you relocate, it’s wise to:
A clean update can prevent confusion and costly mistakes later.
9. Lifestyle might matter more than taxes
Here’s the reality for those in the 2% Club: You likely have the financial flexibility to live where you want. So, the better questions are:
- Do you want warm weather year-round?
- Do you want to be near family?
- Do you value community or access to activities, such as golf?
- Do you prefer familiarity or a fresh start?
Some retirees even split time between two states, optimizing both taxes and lifestyle. Saving a few percentage points in taxes isn’t worth it if you’re less happy day-to-day. (I wrote a book all about the 2% Club that you can request here.)
Relocation for those with pensions
Relocating in retirement can absolutely improve your financial picture, but for those with a pension and significant assets, the decision is more nuanced than “low-tax state = better.”
The best move balances tax efficiency, long-term planning and lifestyle fulfillment. Because, at this stage, retirement isn’t just about protecting wealth — it’s about using it to build the life you want.