A Senior Living Marketing Video That Works (And Why) -

A Senior Living Marketing Video That Works (And Why) -

This is a wonderful video that helps take you through many of the difficult issues that face all of us when we are trying to make the best decision about assisted living care. Unfortunately, the facility that produced it does not have a local assisted living facility in the central California area. However, I am affiliated with several high quality assisted living facilities that follow very similar care regimins as those referenced in the video.

Please contact me with any questions you may have regarding assisted living care plans and available facilities in the central California area. I will be happy to help you at no cost to you or your loved one.

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What Is The Overall Tax Burden Where You Plan To Retire

The first thing you must be aware of, is that I am not a tax professional. I have taken the time to research the tax issues set forth below, but you should do your own research and consult with qualified tax experts before making any decisions regarding finding a relative tax haven in the U.S.

That being said, the Federal tax rates do not very based on locality. However, each state has its own tax structure, which may be weighted either against retirees interests or treat retirees better tax wise than other states.

The tax structure in each state may include the following types of taxes:

1. Property Taxes;
2. Sales Taxes;
3. Income Taxes;
4. Estate/Inheritance Taxes;
5. Use/Specific Item Taxes;

Property taxes may be the biggest threat to retirees living on a fixed income, because they are based on the value of the property owned and bear no relationship to the annual income the retiree is receiving.  They also are subject to reassessment which over time will increase the burden on a fixed income retiree. One strategy is to rent rather than own your home, but you have to remember that the rents will often reflect the property tax bill that your landlord is facing.

Sales taxes very greatly in the states that impose them, but a few states do not impose them at all. Income taxes also very widely, with some states giving retirees special tax breaks, and others taxing every category of income, including social security income.  The category of estate and inheritance taxes sounds redundant, but some state define them in such a way that excludes either the defined "estate"  taxes but impose "inheritance" taxes on defined categories of property, or visa versa.

Use/Specific Item Taxes are those taxes imposed on certain consumer items. These may include cigarett sales taxes, fuel sales taxes, alcohol sales taxes, and/or automobile registration fees with a vehicle value component. I have not researched or provided any information on these types of taxes, and you should consult your tax expert if any specific item or use applies to you personally.

Using information from the Tax Foundation, several sources have compiled lists of the "10 Most Tax-Friendly States For Retirees", and the "10 Least Tax-Friendly States For Retirees." They all seem to agree that Alaska is the most tax friendly state for retirees. However, they vary on the specific rankings on the top and bottom 10, depending on how they rate each category.  The following is a good general list of top 10 and bottom 10. Each retiree should consult with local tax experts to fill out a list of the pros and cons of choosing each listed state they are considering as a retirement haven.

Top 10 Most Tax-Friendly States For Retirees:

1. Alaska: No State Income Tax; No State Sales Tax (Some cities impose sales taxes); No Estate/Inheritance Taxes; Property Taxes are assessed, however seniors over 65 get an exclusion of the first $150,000 of assessed value; In addition, residents get an annual dividend from the state's oil reserves which is distributed to each permanent resident;

2. Nevada: No State Income Tax; Sales Tax at 6.85% plus some local additional sale taxes; No Estate/Inheritance Taxes; Property taxes are assessed, but are relatively low compared to other states; For the most part, the state relies on income produced from out of state tourists and gamblers rather than taxing its residents;

3. Wyoming: No State Income Tax; Sales Tax is 4% plus some local sales tax additions of up to 2%; No Estate/Inheritance Taxes are imposed; Property taxes are very low, with only 9.5% of market value being subject to tax;

4. Mississippi: State Income Tax is 3% to 5%, but exclusions are given for most retirement income; Sales Taxes are 7%;  No Estate/Inheritance Taxes; Property taxes are relatively low and those 65 and older get an exemption of the first $75,000 of property value;

5. Georgia: State Income Taxes 1% to 6%, with good exemption for retirees; State Sales Taxes are 4%, with local increases of up to another 4%; No Estate/Inheritance Taxes; Property Taxes are at about the national average;

6. Alabama: State Income Taxes are 2% to 5%, with generous exemptions for seniors; Sales Taxes start at 4%, however local cities and counties can impose their own sales taxes, and can reach 10%; No Estate/Inheritance Taxes; Very Low Property Taxes with no state level property taxes for those over 65, however, some cities do assess property taxes on their own;

7. South Carolina: State Income Taxes are 3% to 7%, with good senior exemptions; State Sales Taxes 6%; No State Estate/Inheritance Tax; Property Taxes are very low, with additional exemptions for seniors; Sales Taxes However, are pretty high, 6% to start, with local governments adding up to 3%. Prescription drugs are exempted from sales taxes, but significantly, food sales are taxed;

8. Louisiana: State Income Taxes 2% to 6% with generous senior exemptions; Sales Taxes are 4% at the state level and local governments can add substantial amounts, with the statewide average being 8.86%; No Estate/Inheritance taxes; Property taxes are among the lowest in the country.

9. Delaware: Income taxes are 2.2% to 6.75% with good senior exemptions; No state sales taxes; Estate taxes are imposed, but no inheritance taxes; Property taxes are very low;

10. Pennsylvania: Income taxes are at a flat rate of 3.07%, and all retirement income is exempted; Sales Taxes are 6% with exemptions for food, clothing and medicine; No Estate Taxes, but Inheritance Tax is imposed against the heirs, and it can be a significant percentage of the inheritance; Property taxes are relatively high, especially near the larger cities.

The 10 Least Tax-Friendly Sates For Retirees Are:

1. Connecticut: Income Taxes 3% to 6.7% with only breaks for lower income seniors, and most retirement income is subject to taxation; Sale Taxes are 6.35% to 7 % for luxury items; There are Estate Taxes, but no Inheritance Taxes; Property Taxes are the second highest in the U.S., but 65 year olds and older can apply for tax credits and rent rebates;

2. Vermont: Income Taxes3.55% to 8.95% with almost no exemptions for retirees; Sales Tax 6%, with separate categories for prepared foods and restaurant meals at 9%, and alcohol served in restaurants at 10%; Estate Taxes are imposed, but there is no Inheritance Tax; Property Taxes rank in the highest 10 among the 50 states;

3. Rhode Island: Income Taxes are 3.75% to 5.99%, and retirees are not given any breaks as investment income is taxed at the full income tax rate with no preferential treatment for capital gains and dividends; Sales Taxes are 7%, with exemptions for food, prescriptions, nonprescription drugs, and some clothing; Property Taxes are high, being in the top 5 highest rates in the country, with only low income seniors being eligible for a small amount of relief;

4. Montana: Income Taxes are 1% to 6.9%, with the 6.9% rate being imposed on anyone or couple earning more than $16,000, with very little in the way of exemptions for retirees; Sales Taxes are the only bright spot, as Montana has not instituted a sales tax system; No Estate or Inheritance Taxes are imposed; Property Taxes are relatively high, with a modest tax credit being allowed to 62 year and older person with incomes less than $45,000 annually;

5. Minnesota: Income Taxes are 5.35% to 7.85% with no exemptions for retirees; Sales Tax is 6.875% plus local additions getting it up to as high as 9.53%, with food, clothing, prescription & nonprescription drugs exempt; Estate Taxes are imposed, but no Inheritance Taxes; Property Taxes are among the 20 highest in the country, with some newly enacted breaks and a "property tax deferral program" for lower income seniors who can defer paying a portion of their property tax bill which is then treated as a low-interest loan which eventually has to be paid off;

6. Nebraska: Income Taxes are 2.56% to 6.84% with no exemptions for social security income or out of state government pensions, and the top rate starts at the $27,000 level for individuals and $54,000 level for married couples; Sales Taxes are 5.5% with exemptions for food and prescription drugs; No Estate Taxes, but an Inheritance tax is imposed on transfers of property and annuities; Property taxes are assessed on 100% of fair market value with a senior exemption set at the state homestead exemption level;

7. Oregon: Income Taxes are 5% to 9.9%, the second highest in the nation, and most citizens are taxed at the highest rate, which is applied to all income over $7,950 for individuals and $15,900 for married couples. Social Security benefits are exempted, but other forms of retirement income are taxed, with a partial credit for those 62 and older with incomes below $22,500 for individuals and $45,000 for married couples; No Sales Taxes imposed; Estate Taxes are imposed on estates over $1,000,000, but no Inheritance Taxes;

8. California: Income Taxes are 1% to 10.3%, with only Social Security income being exempt for seniors but other forms of retirement income are not exempted, and the top rate starts for individuals at $48,942 and at $97,884 for married couples. Millionaires pay an additional 1% tax on income. Californians pay some of the highest income tax rates in the country; Sales Taxes are 7.25% and can reach 9.25% in some cities; No Estate or Inheritance Taxes; Property Taxes are assessed on 100% of market values, but are capped at 1% of assessed value with reassessment usually only on sale of the property or new construction;

9. New Jersey: Income Taxes are 1.4% to 8.97% with local taxes also imposed raising the rate to as high as 12% when property taxes are added in, the highest in the nation. The state ranks number 1 in both amount of property taxes paid and percentage of home value assessed. Social Security benefits and military pensions are exempted, and 62 or older residents with income under $100,000 get to exclude up to $15,00 for individuals and $20,000 for married couples; Sales Taxes are 7%, with groceries, medicines, and clothing exempted;

10. New York: Income Taxes are 4% to 8.82% for millionaires, with generous exemptions for retirees. even so, New Yorkers pay over 12% of their income in state and local taxes according to the Tax Foundation; Sales Taxes are 4%, but balloon to as high as 9% when local taxes are included. However, food and prescription & nonprescription drugs are exempted; Estate Taxes are imposed, but no Inheritance Taxes; Property Taxes are near the highest in the nation, but seniors 65 and older can qualify for reduced property taxes subject to overall income restrictions.

The morale of this story is: if you wish to move to reduce your overall cost of living, focus on the top 10 most tax friendly states listed above depending on your individual retirement fund structure, and always consult with tax professionals to make sure you are going to a tax friendly state under your personal circumstances.

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Buying A Retirement Home vs. Renting

Once you make the decision to retire, one important issue becomes retirement housing. This decision requires a look at your monthly cash flow and budget to determine where your money is best spent in the retirement context. The options include:

 1. Remaining in your current city in your current home;

 2. Downsizing either into a newly purchased smaller home or rented apartment in your current city;

 3. Moving into a retirement community within your current city;

 4. Moving to a new community and either buying a new home, renting a home or apartment, or moving into a retirement community;

The issue becomes how your probably fixed retirement income can best be put to work for you. Many people believe that just staying in their current home is the best solution. This may or may not be true depending on a number of factors. The way to get to the truth of the matter is to prepare a budget on your current home expenses and compare it to the alternatives of downsizing by purchase or rental, or moving into a retirement/assisted living community. The point of doing this is to get past the general assumption that aging in place in your current home is cheaper and better for your health than any other alternative. Often the reality is shown in the numbers, and remember, numbers do not lie.

There are at least four types of home expenses. Those directly associated with ownership of your home, those that you choose to pay as a result of owning your home, those that you cannot realistically avoid as you age in place in your home, and outside services and activities you choose to participate in off premises. Taken together, these expenses often far exceed what you believe off the top of your head. A calm, cool, and direct evaluation of these numbers often surprises those who take the time to thoroughly evaluate them. After all, the goal is to reduce your monthly retirement expenses to a sustainable level for what may be an extended period of time. We are all living longer than our ancestors did, and we therefore need to rethink our retirement planning to allow us to live comfortably for an extended period of time on our now fixed income.

Here is a budgeting tool to get you started on this evaluation. The point is to include everything home ownership entails, compare it to what reductions in budget we can expect from renting, and/or compare it to the reductions we can expect if we choose to move into a retirement/assisted living community. We start with a living at home expense budget column, followed by a renter's budget column, which is followed by a retirement/assisted living community budget column. The list of expense responsibilities shrinks as we progress down this line of inquiry.

OWNING YOUR HOME:

EXPENSES DIRECTLY ASSOCIATED WITH OWNERSHIP OF YOUR HOME:

1. Mortgage Payment:
2. Condo/Association Fees:
3. Property Taxes:
4. Property Insurance:
5. Utilities: Gas:
                  Water:
                  Electric:
                  Garbage Collection:
6. Household Maintenance:                       _______________
TOTAL:                                                  $_______________

EXPENSES YOU CHOOSE TO PAY AS A RESULT OF OWNING YOUR HOME:

1. 24-Hour Security System:
2. Lawn Care:
3. Housekeeping/Maid Services:
4. Cable TV:
5. Telephone Service:
6. Meals/Food/Beverages:
7. General Transportation Costs:                 _______________
TOTAL:                                                    $_______________

EXPENSES THAT YOU CANNOT REALISTICALLY AVOID AS YOU AGE IN PLACE IN YOUR HOME:

1. Emergency Call System:
2. Caregiving Fees:
3. Transportation Services Due To Aging:  _______________
TOTAL:                                                    $_______________

EXPENSES FOR OUTSIDE SERVICES AND ACTIVITIES YOU CHOOSE TO PARTICIPATE IN OFF PREMISES:

1. Health Club/Exercise Classes:
2. Social/Cultural/Recreational Events:
3. Restaurant Meals:                                   _______________
TOTAL:                                                   $_______________

GRAND OWNERSHIP TOTAL:          $_______________


RENTING RATHER THAN OWNING YOUR HOME:

EXPENSES DIRECTLY ASSOCIATED WITH RENTING A HOME/APARTMENT:

1. Rent:
2. Condo/Association Fees:                    (Included)
3. Property Taxes:                                   (Included)
4. Renter's Insurance:
5. Utilities:  Gas:
                   Water:
                   Electric:
                   Garbage Collection:
6. Household Maintenance:                     (Included)                 
TOTAL:                                                   $_______________

EXPENSES YOU CHOOSE TO PAY AS A RESULT OF RENTING YOUR HOME/APARTMENT:

1. 24-Hour Security System:
2. Lawn Care:                                          (Included)
3. Housekeeping/Maid Service:
4. Cable TV:
5. Telephone Service:
6. Meals/Food/Beverages:
7. General Transportation:                          _______________
TOTAL:                                                   $_______________

EXPENSES THAT YOU CANNOT REALISTICALLY AVOID AS YOU AGE IN PLACE:

1. Emergency Call System:
2. Caregiving Fees:
3. Transportation Services Due To Aging:   ______________
TOTAL:                                                     $______________

EXPENSES FOR OUTSIDE SERVICES AND ACTIVITIES YOU CHOOSE TO PARTICIPATE IN OFF PREMISES:

1. Health Club/Exercise Classes:
2. Social/Cultural/Recreational Events:
3. Restaurant Meals:                                    ______________
TOTAL:                                                    $______________

GRAND RENTAL TOTAL:                   $______________

EXPENSES IF MOVE INTO A RETIREMENT/ASSISTED LIVING COMMUNITY:

EXPENSES DIRECTLY ASSOCIATED WITH LIVING IN A RETIREMENT/ASSISTED LIVING COMMUNITY:

1. Rent:
2. Condo/Association Fees:                      (Included)
3. Property Taxes:                                     (Included)
4. Renters Insurance:
5. Utilities:  Gas:                                       (Included)
                   Water:                                    (Included)
                   Electricity:                              (Included)
                   Garbage Collection:               (Included)
6. Household Maintenance:                       (Included)_______
TOTAL:                                                   $_______________

EXPENSES YOU CHOOSE TO PAY AS A RESULT OF OWNING OR RENTING YOUR HOME BUT DO NOT HAVE TO PAY IN A RETIREMENT/ASSISTED LIVING COMMUNITY:

1. 24-Hour Security System:                     (Included)
2. Lawn Care:                                           (Included)
3. Housekeeping/Maid Services:               (Included)
4. Cable TV:                                             (Included)
5. Telephone Service:                               (Partially Included)
6. Meals/Food/Beverages:                         (Included)
7. General Transportation Costs:                (Included)_______
TOTAL:                                                    $_______________

EXPENSES THAT YOU CANNOT REALISTICALLY AVOID AS YOU AGE IN PLACE IN YOUR HOME OR APARTMENT:

1. Emergency Call System:                        (Included)
2. Caregiving Fees:                                     (Included)
3. Transportation Services Due To Aging: (Included)_______
TOTAL:                                                    $_______________

EXPENSES FOR OUTSIDE SERVICES AND ACTIVITIES YOU CHOOSE TO PARTICIPATE IN:

1. Health Club/Exercise Classes:                (Included)
2. Social/Cultural/Recreational Events:       (Included)
3. Restaurant Meals:                                    (Included)_______
TOTAL:                                                     $_______________

GRAND TOTAL ASSISTED LIVING:  $_______________

If you make realistic entries in this budget comparison, you will have a better tool to help you make the money smart choice of how you can best utilize your retirement funds. Most people are surprised to learn just how expensive aging in place can be. This Budgeting exercise can be modified to include the cost of purchasing a new home as part of your retirement plan, as the home ownership column can be used prospectively to compare with the other options.

It is also important to realize that under some circumstances, the medical care component of assisted living costs can be tax deductible to the senior, or to their children if they are able to claim the senior as a dependent and are paying the cost of such care. This can significantly reduce the cost of assisted living when the tax effects are taken into account. This is a complicated area, and requires the help of a tax expert to figure out your best options. I will expand on this issue in later posts to my Blog Site. For our purposes here, keep in mind that depending on the amount of your care plan that is a medical expense may reduce the cost factor for moving into assisted living even further than it appears here on an after tax basis.

All of us facing retirement must also recognize that our health and safety are of paramount importance. The choices we make on whether to age in place rather than move into a retirement or assisted living community can come back to haunt us. When we age in place at home, the chances of being injured and unable to call for immediate medical help are much higher than if we are in an assisted living community. In addition, the probability that we will get injured trying to do our home chores or maintenance are much higher as we age in place. We can gain peace of mind by doing realistic self evaluations, and plan for our best financial as well as health and safety needs now, when we are capable of making our own rational decisions. Waiting for the future to sort itself out will only put us at greater risk.

If you have any question or comments please contact me through the numbers at the top of the Blog Site, or through the social media sites in the right hand column of the Blog Site.

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Local Area Cost Of Living Comparisons

As a followup to my previous post, when deciding where to live during our retirement, one of the important factors is: What Is The Local Area Cost Of Living?

 There are several sources on cost of living data. Sperling uses food costs, utilities, and a miscellaneous category to arrive at an overall score for each city or metropolitan area. The individual items are weighted to take the proportion of each dollar normally spent on each into account. The national average is expressed as 100, with each location being compared so as to come in with a cost of living under 100 and therefore less expensive to live in than average, or over 100 and therefore more expensive to live in than average.

Using this method, the following representative cities qualify as the least expensive to live in:

Des Moines, Iowa: Overall Score: 84
San Antonio, Texas: Overall Score: 86
Batesville, Arkansas: Overall Score: 86
Wichita, Kansas: Overall Score: 87
Danville, Virginia: Overall Score: 87
Houston, Texas: Overall Score: 89
Rhinelander, Wisconsin: Overall Score: 90
Green Bay, Wisconsin: Overall Score: 90
Elizabeth City, North Carolina: Overall Score: 90
Tucson, Arizona: Overall Score: 91
Savannah, Georgia: Overall Score: 91
Atlanta, Georgia: Overall Score: 94
Las Vegas, Nevada: Overall Score: 94
Kansas City, Missouri: Overall Score: 94
Lawrenceville, Georgia: Overall Score: 94
Champaign, Illinois: Overall Score: 96
Greeley, Colorado: Overall Score: 96
Shacklefords, Virginia: Overall Score: 96
Johnstown, New York: Overall Score: 99

It is possible to find similar data on almost every city in the US. This information gives us a chance to incorporate the cost of living into our analysis on which area we favor to retire to. Although the cost of living gives us an opportunity to review places that we can live in for less, other factors often mean more to us than others. The following list covers areas that are more expensive than the average of 100 to live in. However, some of them also possess characteristics that make them more desirable places to live in, even though more expensive than average. They are also considered by many as ideal places to live:

Pendleton, Oregon: Overall Score: 101
Surry, Virginia: Overall Score: 102
Hampton, Virginia: Overall Score: 102
Wauwatosa, Wisconsin: Overall Score: 104
Vancouver, Washington: Overall Score: 104
Austin, Texas: Overall Score: 105
Chicago, Illinois: Overall Score: 105
Olathe, Kansas: Overall Score: 106
Sacramento, California: Overall Score: 108
Denver, Colorado: Overall Score: 110
Pullman, Washington: Overall Score: 110
Carmel, Indiana: Overall Score: 114
McFarland, Wisconsin: Overall Score: 114
Scottsdale, Arizona: Overall Score: 120
Bellingham, Washington: Overall Score: 125
Hilton Head, South Carolina: Overall Score: 135
Seattle, Washington: Overall Score: 143
Washington, DC: Overall Score: 143
San Diego, California: Overall Score: 145
Cape Cod, Mass: Overall Score 145
Naples, Florida: Overall Score: 160
Walnut Creek, California: Overall Score: 167
South San Francisco, California: Overall Score: 170
New York, New York: Overall Score: 170
Honolulu, Hawaii: Overall Score: 185

In general, the states with the lowest cost of living are not thought of by most as the ideal places to retire to. This is reflective of the fact that they often have less desirable overall climate characteristics, fewer social and entertainment opportunities, and in general less access to health care. The top ten states chosen by Bankrate's as the best to retire to are:
1. Tennessee
2. Louisiana
3. South Dakota
4. Kentucky
5. Mississippi
6. Virginia
7. West Virginia
8. Alabama
9. Nebraska
10. North Dakota

This is a good starting point for your analysis, but many more factors need to be considered, and will be discussed in future articles.

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