But one thing they didn't check out before making their move was their potential tax bill. The county they moved to was growing, and soon the bite from rising property taxes cut into the budget they lived on from Bill's government pension. The money they save is spent on taking courses or attending events at the University of Southern Mississippi and travel. All too often people don't consider any options for reducing their taxes at all. And if you want to spend your retirement in your current house, you should make sure that you could still afford the property taxes.
Some states are especially generous to retirees.
In the meantime, here's a brief rundown of some of the tax burdens and breaks for retirees that you may want to check into. Tax rates, brackets, and preferences vary in the other 41 states. The Urban Institute, a nonprofit research organization in Washington, D.C., surveyed state-tax benefits for the elderly as of 1998. The study found 18 states with some type of tax break for people with pensions and 13 states that offer an exemption for Social Security income. As the Litwillers found out, you could even end up paying more.