Primarily known for its rich colonial history and breathtaking shorelines, Delaware is an ideal retirement spot. While it may not be the first locale to come to mind when brainstorming perfect retirement states, Delaware has a lot to offer including proximity to some of the best big cities in the country, wonderful ocean access, and four distinct seasons to enjoy.
Additionally, The First State offers residents some pretty attractive tax benefits. Although the state's overall cost of living exceeds the national average significantly, according to MarketWatch
, it is still less expensive to live in Delaware than in most of its rival Northeastern states. This means that Delaware can offer retirees a lot of bang for their buck in terms of amenities when compared to other nearby relocation options.
Here are some of the most important cost of living considerations that should be taken into account before planning for retirement in Delaware.
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1. Delaware has No Sales Tax
This is one of the biggest draws for folks looking to relocate to Delaware. Because it is home to many of the nation's largest corporations, Delaware has an important economic role to play. The state has an 8.7 percent flat corporate income tax rate coupled with a personal state income tax, which lead Delaware to some of the highest tax collections in the nation each year, according to Daily Finance
. This enables the state to refrain from charging a sales tax on purchases. There are only five states in the nation that offer this luxury.
2. Social Security Benefits and Some Other Forms of Income are Tax Exempt
Another plus for retirees is that Delaware allows Social Security benefits and railroad retirement benefits to remain tax exempt, according to the Retirement Living Information Center
. In addition to those benefits, individuals ages 60 and older can exclude $12,500 of investment and qualified pension income and may qualify for an additional tax credit. Even out-of-state government pensions qualify for the exemption.
3. Retired Military Pay May Be Tax Exempt
For those younger than the age of 60, up to $2,000 of military retirement pay is excluded, and for individuals age 60 and older, the limit goes up to $12,500. Veteran's Administration benefits are also not taxable.
4. Delaware's Cost of Living is Significantly Higher Than The National Average
According to TopRetirements.com
, Delaware's cost of living index is 116 compared to a national average of 100. While the state's cost of living exceeds the national average, the severity of the difference varies based on which town is chosen. For instance, Rehoboth Beach is a luxurious beachside town, which is popular as both a retirement home and a vacation destination for Northeasterners. The cost of living in this particular area is much higher than both the national average and the Delaware average, with median home prices topping out at about $650,800.
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