Retirees in These 13 States Risk Losing Some of Their Social Security Checks

Ideally, you’ll build yourself a nice retirement nest egg that will do a great job of paying the bills once you stop working. But that doesn’t mean you won’t end up relying on additional income sources.

One of those sources may be Social Security. While the amount you’re entitled to collect in benefits will hinge on factors like your wage history and filing age, there are steps you can take to lock in a higher benefit — like delaying your filing until your 70th birthday.

But if your goal is to get as much money as possible out of Social Security, then you’ll need to be careful about the place you decide to call home during retirement. That’s because some states impose taxes on Social Security benefits, and if you retire in one of them, you could risk losing a chunk of that money.

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The states that tax benefits

First, the good news — most states don’t impose a tax on Social Security income, either because they don’t feel compelled to or because they don’t have state income taxes at all. But if you retire in one of these 13 states, you could end up losing a portion of your Social Security benefits:

  1. Colorado
  2. Connecticut
  3. Kansas
  4. Minnesota
  5. Missouri
  6. Montana
  7. Nebraska
  8. New Mexico
  9. North Dakota
  10. Rhode Island
  11. Utah
  12. Vermont
  13. West Virginia

That said, you may not want to write off these states completely just because they happen to impose taxes on Social Security income. For one thing, most of these states happen to offer exemptions so that if you’re a lower or moderate earner, you can get out of paying those taxes.

But even if you don’t qualify for an exemption, there may be other perks you reap by retiring in one of these 13 states. Colorado, for example, is known for its fresh mountain air and glorious scenery. And if you’ve always dreamed of retiring there, you shouldn’t necessarily give that up because you don’t want to face state taxes on Social Security.

Meanwhile, some of the other states on this list happen to offer a relatively low cost of living. While you might lose some of your benefits to taxes, you might also stretch your Social Security income further by virtue of paying less for things like housing and food.

The point, therefore, is that you shouldn’t necessarily avoid retiring in a state that taxes Social Security. Rather, be prepared to pay those taxes should that situation apply to you.

Steer clear of financial surprises

Although retirement is an exciting milestone to look forward to, it can change your financial picture in many ways. So it’s important to know what to expect with regard to taxes, in particular.

Even if Social Security only ends up being one of several income sources you have at your disposal in retirement, it’s important to understand the factors that could potentially shrink your benefits, like state taxes. But as long as you go in equipped with that knowledge, you should feel free to retire in the state you feel will lend to the best overall quality of life.

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