Is Florida Still a Great Place to Retire?

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Is Florida Still the Best Place to Retire?

Planning for Retirement? Be Sure You Know the Facts About Retiring in Florida

Florida has long beckoned retirees. The state offers natural beauty, lifestyle perks, and financial advantages for seniors. From popular retirement cities like Miami and Sarasota to The Villages, regardless of where you choose to retire, you’ll enjoy the state’s tax-friendly environment.

The state maintains a 0% state income tax rate, which means retirement income—including Social Security benefits, pension income, and distributions from retirement accounts, such as 401(k)s and IRAs—remain untaxed, effectively stretching retirement savings further.  This law has cemented the state’s reputation as a tax haven for retirees.

We know the benefits Florida offers but it behooves anyone planning their retirement there to review the “cons” or “cautions.”

  • Cost of Living

Florida’s cost of living varies significantly by region, although recent years have seen sharp increases in housing costs across all regions. As is the case in most states, living in a major metropolitan area is more expensive. Yet there are tradeoffs that come with retiring to rural or smaller communities. Regardless of where you live in Florida, property insurance and utilities, particularly air conditioning costs, tend to be higher than national averages.

  • Housing

Florida housing prices–like housing prices across the country–have increased sharply since 2020. Many retirement communities and retirement-friendly metros are experiencing a housing crisis. Middle-income retirees, in particular, find it challenging to find available housing in their price range.

  • Property Tax

The state compensates for its lack of income tax through other revenue sources. Property taxes vary significantly by county and can be substantial in highly desirable areas. Additionally, it’s worth noting the state’s general sales tax of 6% (which can reach 8.5% with maximum surtax) is above the national average. While these costs don’t outweigh the benefits of zero state income tax, they should be factored into retirement planning.

  • Climate and Weather

Florida is especially vulnerable to climate-related risks such as hurricanes, flooding, and tornado threats. As a result, homeowners face higher insurance costs in Florida, especially in coastal areas where hurricane insurance is essential. Insurance premiums have increased sharply in the state over the past few years. Sadly, many major insurance carriers have reduced their coverage in Florida or left entirely, leading to higher premiums from the remaining insurers.

Flood insurance, which is required in some coastal areas of the state, can add thousands of dollars to annual housing costs. Even inland, some properties may require flood insurance, depending on elevation and their proximity to bodies of water. Additionally, you may have to spring for impact-resistant windows or hurricane shutters, increased maintenance costs due to salt air and humidity in coastal regions, and the potential need for backup power systems.

  • Health Care and Senior Services

Florida’s health care landscape reflects its large senior population, offering world-class hospitals, specialists, and outpatient facilities. The state has top-rated health care facilities, though accessibility can vary by location. In urban areas long-term care services can cost more because there are more people to serve. However, rural areas have a very hard time delivering health and long-term care services. Keep in mind that wait times for new patient appointments can be longer in popular retirement areas due to high demand.

For retirees with chronic conditions, Florida’s climate and health care infrastructure can be advantageous; there are numerous care centers for specific health conditions, including heart disease, cancer, and diabetes.

Florida consistently ranks as one of America’s top retirement states because of its unique combination of financial, lifestyle, and health care advantages. For many, the state’s most compelling draw is its favorable tax structure, most notably its lack of state income tax. However, higher property taxes and insurance costs can offset these benefits—so consider your full financial picture before you commit to retirement in the Sunshine State.

When you start planning your retirement, be sure to check in with us. We can help make sure you have all the facts and forms needed and that all your legal documents are up to date and accurate. Our team at Anthony J. Madonia & Associates, Ltd. provides the legal and tax guidance you need to protect your estate and preserve your financial legacy.