In terms of taxation, New Jersey may be an unfriendly state when it comes to planning for retirement. The state currently ranks in the bottom 10 states when compared to the tax system in other states. Planning for retirement requires careful calculation of taxes and other costs that could occur later in life.
New Jersey does exempt a lot of retiree income, but there are other areas that could cost older residents more money. With the state and local taxes some of the highest in the nation, many retirees from the state look to other states for residence after retirement. However, there are benefits to the state’s tax laws. Social Security Income and military pensions can be taxed.
Perhaps in response to the amount of retired residents moving to other states, New Jersey has enacted a program called the Senior Freeze program. This program is designed to give tax relief to seniors that may suffer from higher state and local taxes. This law may keep retirees in the state after they stop working instead of moving, or it could attract new residents to the area.
With careful financial planning and legal counsel, planning for retirement does not have to be complicated. By knowing in advance what taxes may be required, senior adults in New Jersey do not have to be surprised by the higher amounts he or she may have to pay. Making a financial plan post-retirement is one way to be secure in later years, just the same as drafting a will.
Source: nj.com, New Jersey isn’t ‘tax friendly’ for retirees, study shows, Tom De Poto, Aug. 25, 2013