Here’s How to Retire Well in Alabama Without Breaking The Bank
If you’re looking for a place to retire, Alabama should be on your list. In comparison to many other states, Alabama is incredibly affordable. Plus, it’s considered tax-friendly for retirees, and that’s an important part of the equation. Finally, the state has a lot to offer in the way of entertainment, relaxation, and amenities. If you want to know how you can retire well in Alabama, here’s what you need to know.
Cost of Living
In the United States, a cost of living score of 100 is average. States that come in below 100 have a lower cost of living, meaning it’s a more affordable place to live. Alabama’s score comes in at 82.3.
Part of why Alabama shines when it comes to affordability is the cost of housing. The median home value in Alabama comes in at $143,072 while the national median is more than $100,000 higher, coming in at $248,857.
In certain cities, including Huntsville and Mobile, the cost of housing is 25 percent lower than the national average or more. Grocery prices are also slightly below the average. Between those two points alone, it can make the higher than average utility costs no big deal by comparison.
While sales tax in Alabama can be a bit on the high side, Alabama is otherwise pretty tax-friendly for retirees. Social Security isn’t subject to income tax, for one, and that can make a substantial difference. Government and private pensions, including military retirement, also aren’t subject to taxation.
Additionally, wage income tax isn’t incredibly high, which could make working part-time more financially viable. However, it is important to note that unless you have a Roth IRA or Roth 401(k), IRA and 401(k) distributions are taxed in Alabama.
Finally, property tax rates are incredibly low in Alabama. Plus, once you reach age 65, you’re exempt from state property taxes as long as you proactively claim the deduction. Just keep in mind that you may have to pay county or city property taxes, though they are usually pretty reasonable.
Part-Time Job Opportunities
Generally speaking, retirees can find part-time job opportunities in Alabama. Before the COVID-19 pandemic, Alabama was experiencing economic growth, a situation that usually leads to an increasing number of job opportunities.
Even during the pandemic, Alabama’s unemployment rate stayed below the national average. In May 2020, Alabama came in at 9.9 percent while the United States as a whole sat at 13.3 percent.
While the coronavirus pandemic ultimately makes all employment a bit trickier, if conditions begin to return to normal, retirees may find options in Alabama. Until that time, it’s a bit difficult to gauge.
Best Cities for Retirees in Alabama
Many cities in Alabama are excellent options for retirees. Orange Beach is a favorite, with over 28 percent of the population being senior citizens. There are plenty of recreational opportunities as well as retirement centers, which can make the slightly higher taxes worthwhile.
However, if you want to retire well in Alabama, that isn’t your only option. Greenville is a popular choice, as well as Wetumpka and Attalla.
If you want easy access to medical professionals, consider Guntersville, Cullman, or Jasper. Fairhope, a former utopian community near Mobile, can also be a great option, or, if you’re looking for historic charm, consider Eufaula.
How Much Money You Need to Retire Well in Alabama
In general, retiring in Alabama costs much less. With about $898,000 stashed away, you can typically live out your retirement years in the state. Considering that the national average is $1.1 million, and that’s a pretty substantial savings.
However, if you want to live comfortably, you may need more than $55,000 a year available. Considering that’s about half of what it takes to maintain a great quality of life in Hawaii, Alabama looks like a steal.
Do you have any tips that can help someone retire well in Alabama? Share your thoughts in the comments below.
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