When considering a place to retire, most people in the retirement age tend to think of places like N. Carolina and Florida. However, Texas is one of the hidden gems that are outside the ordinary. It has everything you need for you to enjoy your golden years.
To retire in Texas, you need to consolidate your finances, come up with a spending plan, talk to a retirement consultant, and determine the best place to settle in. Retiring in Texas has some benefits like a low cost of living, affordable housing, and plenty of cultural and historical experiences.
Retiring takes a lot of planning and seeking advice. You need to decide if you’ll be working part-time, the amount of money you may spend in retirement, and determine if you’re eligible for the age pension. In this detailed guide, we will cover some topics like:
- How to navigate Texas as a retiree
- Why you should consider retiring in Texas
- Some of the best places to retire in Texas
- An approximate cost of retiring in Texas
Understand Where You Are in Your Finances
Experts advise on the need to get your finances in order. That will help you determine how much you have to live on and spend. Organizing your finances will also allow you to decide on areas to reduce your spending, which will make it easier to adjust as you get into retirement. You can get your finances in order by checking what benefits you are entitled to, track down any pensions, and claim your state pension.
At this point, it’s also critical to involve your spouse and discuss how much you should spend in retirement. Being on the same page about your retirement spending will help you plan accordingly.
Factor in Inflation and Taxes
While you may have saved for retirement, it’s essential to plan for inflation. That’s because the rising costs could affect the buying power of your funds. When estimating your retirement savings, account for inflation to ensure you manage your spending.
Taxes are another thing seniors in their retirement years forget to account for in their financial planning. One mistake on your taxes could disrupt your retirement calculations. Each percentage error in the tax rate introduces an 8% error in the final savings balance.
That’s why it’s essential to know your retirement tax rates and calculate them to estimate the amount you’ll pay in capital gains tax and other taxes. Fortunately, if you’re moving to Texas, you don’t have to worry about retirement, pension, or any other taxes as this state doesn’t impose these taxes.
Don’t Stop Investing in Pre-Retirement
Sometimes when your finances are not in order, you may feel like taking a back seat and not investing. Remember, one wrong step can take years to recover from. Successful investment requires consistency, stick to the plan regardless of the market volatility.
Having diversified investments is also essential. Remember, you don’t want to put all your eggs in one basket. If you have one investment that is performing poorly, you may have to deal with the consequences. However, a diversified portfolio reduces the risk of loss. You can opt to have mutual funds, add stocks, or consider getting an IRA as part of your investment portfolio.
Reduce Your Debts
Experts advise seniors to be debt-free by the time they hit their retirement years. Unlike things like travel and dining costs that you can cut down, reducing your debts takes more time, especially when you don’t have an income.
If you have any pending mortgage, ensure you pay it off early or sell in the right market. You can also consider downsizing to a smaller home to reduce your debt. Credit card debt is another debt that can affect you in your retirement years. Use cash for your purchases to curb this debt. Limiting new debt and reducing existing debt will help you spend less retirement income on paying interest.
Have a Saving and Spending Plan
The amount you have to invest is equal to the amount you can afford to save. That means the more you spend, the less you have to keep. Having a saving plan leads to better saving habits, which means you can build an asset base that will come in handy during your retirement years.
Learning how to control your spending pre-retirement is something that will come in handy even in retirement. That’s because most of your income will come from investments and your pension if you have one. Learning to minimize your spending pre-retirement will help you optimize it once you retire.
Don’t Forget About Your Health
Healthcare accounts for most of the money spent in retirement. The problem is that most people do not factor these costs into their retirement planning. Taking care of your health, both physically and mentally, will help you enjoy your retirement years. Start by eating healthy, walking, gardening, and participating in some community activities to stay healthy. Get in touch with your doctor and go for your annual checkup.
You should also consider getting a health savings account to pay for your healthcare expenses. An HSA account is for people covered under high-deductible health plans and is designed to help them save for medical expenses above the HDHPs coverage limits or exclusions. Contributions are by the individual or the individual’s employer. These contributions can cover medical costs like dental, medical, vision care, and cover prescription drugs.
Do Your Homework on the Best Places to Retire
While you could be living in a place that feels comfortable, you’ll be surprised to learn that there could be a better place for you to spend your golden years. Some states like Texas could help you save more money for your retirement expenses due to the reduced taxes and low cost of living. There are also retirement communities where you can find people with similar interests.
Enjoy Your Retirement Years
Don’t get too caught up in your financial situation that you forget to enjoy your retirement years. Remember that this is the time to relax, make your travel dreams a reality, and spend time with your family.
Why You Should Consider Retiring in Texas
If you compare the options for the best places to enjoy your golden years, Texas is one of the fantastic places to consider.
Below are a few reasons why you should consider retiring in Texas.
Favorable Weather
You won’t have to deal with dreary weather and unbearable snowy conditions when living in Texas. That makes it ideal for anyone looking for a calm environment. Texas is famous for its hot weather, but places like Dallas experience all four seasons with temperatures ranging from 39 °F (4°C) to 96°F (35.5°C).
Other cities like Houston, Austin, and San Antonio also experience high humidity during summer and lots of annual rainfall. The Northern Plains and South Texas enjoy a semi-arid climate, and most of Western Texas has a desert climate.
With this favorable weather and pleasant temperatures, you get time to explore the state both indoors and outdoors.
Friendly Taxes
Although Texas is a heavily populated state, it’s one of the states that does not have taxable income. You won’t have to worry about your Social Security income being taxed or your 401(k), working, or pension income. All these incomes are not taxed at the state level.
The best part is that if you decide to work part-time, the sales tax will be 8.25 at the maximum. Texas doesn’t subject medications or groceries to sales tax, which is a plus. The state’s low balances the higher than average property taxes than average housing prices. There are significant homestead exemptions. There is no estate or inheritance tax in Texas.
When it comes to property taxes, Texas has an average property tax rate of 1.86%. That is the sixth-highest average in the United States. The best thing is that housing costs are below average despite the high property taxes. Seniors can also take advantage of property tax relief programs.
If you have a Texas property as your principal residence, you can claim the Texas homestead exemption. That exempts you from taxation of at least $25,000 of the appraised value. Retirees aged 65 or older also get an extra $10,000 exemption. Both exemptions will save you $650 in annual savings.
However, you should note that Texas has sin taxes on Tobacco and alcoholic beverages. These are the only taxes that could affect your retirement budget.
Cost of Living
When thinking of a place to retire, you want it to be affordable and not to charge much in taxes. Fortunately, Texas falls under this category as its cost of living is below the national average. The cost of living is 10% lower than average based on statistics. The state doesn’t tax retirement income, and you won’t have to deal with state income tax.
The sales tax ranges from 6.2%-8.25%. According to the Texas Quarterly Housing Report, 45% of homes cost about $199,999 or less, while the average home price stands at $214,000. Moreover, Texas has one of the booming economies and is ranked as the 12th best state economy based on high-tech industries, GDP growth, and startup activity.
Asset Protection Laws
Texas has the best asset protection laws. Creditors cannot access most of your assets due to state law. In individual states, you could end up losing your home and your retirement savings due to a frivolous situation.
Rich History and Culture
You should also consider moving to Texas for your retirement because the state has plenty of things to do and many areas to explore. The state combines the modern city lifestyle with Texas traditions to form a unique all-inclusive blend perfect for all ages.
The Texan society is primarily made up of cowboys. You’ll see hats, cowboy boots, and rancher attitudes in most parts of the state. Bars play country music, and most meals have beef as the main ingredient.
Texas also has a strong Hispanic presence, which adds to the state’s cultural diversity. When it comes to arts and crafts, the state produces some famous crafts like ceramics, quilts, wrought-iron crosses, raffles, pinatas, and shrines. Different Texan cultures inspire all these.
You’ll enjoy the diverse range of music. Apart from country music, the state also features blues music, rock music, and traditional Mexican music. Austin is also home to live music festivals if you would like to attend one. Rodeos are another part of Texas’s charm. These events attract people from different states, and they are worth watching whenever you are around.
If you love visiting museums to learn more about Texas history and culture, you’ll find plenty of options available. Some of the notable places include the Museum of Fine Arts Houston, Modern Art Museum of Fort Worth, The Kimbell Art Museum, and the San Antonio Museum of Art. You may want to explore other sites, including the 90 state parks, the state fair, and the 13 national parks.
Food is another cultural aspect of Texas. Apart from the regular American food, you’ll find Tex-Mex cuisine, which borrows heavily from the Mexican culture.
Land to Build
You need to consider Texas as a place to retire to build your home to live out your retirement years. The populous state has plenty of space to build on, and the best part is that land in this lone star state is affordable and more comfortable to get compared to other states.
Job Opportunity
Texas is home to plenty of fortune 500 companies, with a few examples being AT &T, Gametop, and ExxonMobil. More startups are also coming up in this state. That makes Texas an excellent place to retire if you’re looking to start a second career after retirement or work part-time.
Plenty of Cities to Choose From
Texas is vast and home to some of the largest cities. Places like Dallas, Houston, and San Antonio are rich with culture, history, and entertainment. However, if you’re looking for a quiet life in a smaller city, you may want to check out Austin.
Quality Healthcare
Retirees in Texas have access to some of the best medical facilities. The state offers high-quality health care in more than 600 hospitals. Most of the hospitals are ranked nationally in specialties like cancer, cardiology, and gastroenterology. The Houston Methodist Hospital is top-ranked as an adult specialty hospital in Texas.
Presence of Go Texan Certified Retirement Communities
Texas has a certified retirement community program known as the GO TEXAN. For a community to become retirement certified, it must complete an application process that includes a retiree desirability assessment.
The stamp of approval shows that the community has demonstrated its capacity to meet its visitors and citizens’ living, health, employment/volunteer, education, entertainment, and safety needs. All these aspects make Texas an excellent state to retire in.
The Best Places to Retire in Texas
Texas is considered the second most populous state in the U.S. Once you’ve decided that moving to Texas to retire has lots of benefits, you need to figure out the right city to live in. You’ll need to evaluate factors like employment rate, city-life, affordability, preferences, among others.
Here are some of the best places to live in Texas based on some of the listed factors above. Note that the list is in no specific order, and the list is not exhaustive.
San Antonio
San Antonio is the second-largest city behind Houston. Interestingly, the city is affordable compared to Austin and Dallas. That’s mostly due to the affordable housing rates. The town is ideal for families looking for more space on a budget.
You’ll love the diverse culture that San Antonio brings, especially with its events. The whole family can participate in cultural events like the Texas Folklife Festival and Fiesta San Antonio. You can also go for long walks or take a bike ride on the bike lanes. There are plenty of outdoor activities to explore.
Austin
Austin is famous for its food, great music, and vibrant nightlife. The U.S. News and World Report ranked Austin as the best place to live based on the quality of life, affordability, and job prospects. The city has been referred to as a hotbed for Technology, with some big tech companies setting up space here.
Austin is also famous due to its music, the reason most people refer to this city as the live music capital of the world. People with a liberal or eclectic lifestyle will find this city an excellent place to live. The capital is also safe and an ideal place for baby boomers looking for a combination of the urban and suburban lifestyles.
Austin’s central location makes it simple to drive to other cities in Texas. However, you can get out of state via Austin-Bergstrom International Airport.
Dallas
Dallas has over a million people, which makes it the fourth largest metro area in the country. One of the reasons why Dallas is regarded as the big city is its home to the country’s largest urban arts district. What’s more, Dallas has plenty of sports activities, and you’ll find teams like the Stars, Mavericks, Rangers, and Dallas Cowboys here.
If you’re looking for a culturally-prominent place, you’ll love how Dallas has various galleries, museums, and art district houses. You can also visit the Dallas Theatre Center or enjoy some orchestra at the Dallas Symphony Orchestra.
Retirement years should be fun, and Dallas has plenty of outdoor activities like recreational boating, fishing, and skiing in the 13 lakes. The city’s central location allows you to access other towns like Oklahoma, Houston, and Austin.
Houston
Houston is the fourth largest city in America with a fantastic food scene, thriving job market, and ethnically and culturally diverse people. Its affordable cost of living and lots of activities make it a great place to live in.
With over 20 Fortune 500 companies calling this city home, Houston is one of the best places to live if you’re thinking of working part-time or pursuing another career. Healthcare is a massive concern among seniors. Luckily, Houston understands the need for quality healthcare, and it has a more prominent medical center than downtown Dallas.
Some of the best Houston neighborhoods include the East Downtown, The Heights, and River Oaks. You can purchase a house in Houston on a modest income as the median house price is under $200,000. Transportation options include the light rail system, a bus that connects downtown and midtown, bike paths, and car-sharing services like Zipcar.
Seabrook
Apart from being one of the best medium-sized cities in America, Seabrook is highly ranked for its amenities, lots of dining options, entertainment, recreation, and more. The coastal town is found on the Atlantic ocean’s shores and features plenty of fishing, boating, and other games.
Although the cost of homes is higher than the state average, the crime rate is lower than the state average. That makes this a fantastic place to live alone or with family.
Corpus Christi
Corpus Christi is a laid-back seaside city that is affordable to retire in. Apart from being near the Gulf of Mexico, the city has low housing prices, with the median home average being $114,600. It costs $814 per month to rent an apartment. Moreover, homeowners over 60 years pay a median of $448 for retirees who’ve paid their home and $1,230 per month if they have a mortgage.
Denton
Despite Denton being a small county, it’s one of the culturally vibrant, diverse, and progressive Texas places. Most of the residents are in the creative industry, work in tech, or are entrepreneurs.
If you’re looking to buy a house, Denton scores highly in housing as the median housing stands at $265,000. That makes it a livable place. The thriving art and culture scene is another reason why you may want to consider moving to Denton.
El Paso
El Paso is a fast-growing city with a population of over 800,000. The town is close to Mexico and borrows heavily from Mexican influences. One of the outstanding aspects is that El Paso has this family vibe and is ranked as one of America’s safest cities. The cost of living is also affordable, and there are lots of activities to do.
You can explore the upscale New American restaurants, get some coffee in a local coffee shop, or sample the Mexican food. However, El Paso has extreme weather where there is low humidity, which can get hot.
Plano
Plano is a hidden gem in the north of Dallas. Apart from being home to major companies like HP and Toyota Motors, the city is also home to some natural preserves for retirees who enjoy the natural scenery and wildlife. The Arbor Hills Nature Preserve has walking trails and provides an excellent escape from the urban noise.
Apart from being one of the safest places to live, Plano has an active sports community of softball and flag football teams. Downtown Plano has an impressive nightlife scene, plenty of restaurants, and various cultures.
Galveston
Suppose you’re looking for a less populated area that boasts a lively cultural scene with lots of art. You may want to check out Galveston, Texas. The city has affordable real estate prices, with condos ranging from $200,000 and single-family homes averaging at $300,000.
When it comes to healthcare, Galveston residents can access specialized care at the University of Texas Medical Branch with over 600 hospital beds. Galveston has lots of activities as it attracts lots of visitors during the weekend. There are an annual food and wine festival, the Brewmasters Craft Beer Festival, and the annual Mardi Gras celebration.
Granbury
Granbury has the lowest tax burden in Texas, meaning you can protect your retirement savings. The town is an hour away from Dallas and is west of Fort Worth. Gnarly, 30% of the population in Granbury is made up of seniors. It’s easier to find inbuilt retirement communities in this area if you’re looking to settle for the long term.
The town’s rich historical and cultural influence can be found in the museums, Granbury Square, and different musical venues. During the spring and summer, you can check out Lake Granbury that has become a famous spot for visitors from around the country and globe.
How Much Does It Cost to Retire Comfortably in Texas?
The average cost of living in Texas is 3% less than average. You need about $900,000 in estimated savings to retire. Typical annual spending in retirement is close to $45,671. However, Texas is one of the best places to retire on a budget due to its low cost of living.
Conclusion
Planning for retirement doesn’t have to be complicated. Texas has some of the best towns that you can retire in and live comfortably with your family. The state has no state or individual income taxes, which leads to a low cost of living. The Lone Star States’ rich cultural and historical heritage makes this a perfect place to spend your golden years.