Here’s What You Should Know to Retire Well in Kentucky!
When soon-to-be retirees who are open to relocating to make their most of their golden years think about places to settle down, Kentucky doesn’t commonly come to mind. However, if you are looking for an affordable place to retire that has a lot to offer, Kentucky needs to be on your list. By heading to the Bluegrass State, your retirement dollars could go further. Plus, there is a multitude of outdoor recreational activities, beautiful landscapes, and lovely cities just begging to be explored and enjoyed. Whether you are trying to choose a place to retire or have already decided that Kentucky is the place you want to be, here’s what you need to know to retire well in the Blue Grass state.
Cost of Living
A state’s cost of living lets you compare how expensive the area is in comparison to the national average, which is always set with a score of 100. In Kentucky, the overall cost of living comes in at 94.2, which is good news for retirees. That means it’s cheaper to live in the Blue Grass state, allowing your savings to go further.
One area where Kentucky really shines is housing. For that segment, the state has a score of 82.0. The average home value comes in at $149,987. That’s almost $100,000 less than the national average, which sits at $248,857.
While some may assume that lower housing values mean the homes are of lower quality, that isn’t necessarily the case. It can also mean that the going rate for properties is lower in general, meaning a nice house costs less than a comparable property in a higher cost state.
But housing isn’t the only sector where Kentucky’s prices are less than the national average. It also comes in below 100 for groceries, utilities, transportation, and healthcare, which is essentially every major category that most retirees would have on their minds when choosing a destination.
Taxes can take a big bite out of your retirement savings. As a result, it’s important to examine the tax implications of heading to a particular state.
In Kentucky, there is a state income tax. However, Social Security Income is exempt, which could be a big help to retirees on a budget. Railroad Retirement Board benefits are also exempt.
Additionally, there are partial exemptions for other forms of retirement income, such as pensions, 401(k) funds, or IRA withdrawals. If your total withdrawals fall under the annual limit set by the state – currently $31,110 – they are entirely tax-exempt. If your withdrawals go above the threshold, then a portion will be subject to the income tax rate, which is set at 5 percent.
Kentucky does have a sales tax as well. The rate is 6 percent on qualifying purchases, including most retail and digital property sales, along with certain services. There are no local sales taxes, so the rate is consistent across the entire state.
For property taxes, individuals who are 65 or older may qualify for the Homestead Exemption. With this, through 2020, up to $39,300 of a property’s value is deducted for tax calculation purposes. The exemption is reassessed every two years to adjust it for inflation, and the next adjustment will be effective starting in 2021, potentially changing the size of the exemption.
Part-Time Job Opportunities
Part-time job opportunities are often available in Kentucky. Even in the post-COVID-19 landscape, the unemployment rate in Kentucky isn’t as high as some other regions of the country. As of July 2020, the unemployment rate was 5.7 percent. While higher than the pre-COVID-19 period, that’s far below the July 2020 national average, which was sitting at 10.2 percent.
However, the workforce landscape is still a bit precarious. It isn’t clear whether there will be a resurgence that could lead to short-term business closures or hiring shifts. As a result, retirees may experience challenges essentially everywhere when it comes to landing a part-time job.
Best Cities for Retirees in Kentucky
If you want to retire well in Kentucky, there are plenty of cities and towns that could offer you a great lifestyle. If you prefer larger metro areas, both Lexington and Louisville could be great choices. Many of the Louisville suburbs – including Windy Hills, Graymoor-Devondale, Indian Hills, and Hurstbourne – are also popular, providing proximity to city amenities with a more residential, relaxed feel.
For quaint towns, Fort Thomas is a fun choice. The area offers up a lot of charm, as well as a genuine community-oriented atmosphere. Crestwood is another excellent choice, providing a small-town feel while being close to Louisville.
How Much Money You Need to Retire Well in Kentucky
Thanks to Kentucky’s lower cost of living, you can retire well in the Blue Grass state for less. While exactly how much you’ll need does vary depending on the city or town you choose and your unique needs, having about $59,713 a year available should allow you to live pretty comfortably. You should have enough to cover your needs and also quite a few wants, allowing your retirement to be enjoyable without breaking the bank.
Do you have any other tips that can help someone retire well in Kentucky? Share your thoughts in the comments below.
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