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Retirement

What You Need to Know on How to Retire Well in Montana 

how to retire well in Montana

Once you get close to retirement, it’s time for some exciting decisions. For many seniors, settling down in a new state is part of the plan, allowing them to achieve their ideal lifestyle during their golden years. If you have your sights set on Montana or are at least considering it as a contender, here’s what you need to know to retire well in Montana.

Cost of Living

Before you settle on a retirement destination, taking a close look at a state’s cost of living scores is a smart move. It gives you a quick way to gain insights about how expensive or affordable a state is, both in comparison to the national average and to other states.

For simplicity, the national average cost of living score is 100. Scores above that mean a state is more expensive, while scores below 100 means an area costs less than average.

Overall, Montana has a moderate cost of living, with a cumulative score of 99.3. That means, from an expense perspective, heading to Montana has pricing near the national average.

When it comes to category scores, some are a bit below the national average while others are above. Utilities, transportation, and healthcare are all under, with scores of 87.6, 94.4, and 98.5, respectively. Groceries come out a little higher than average, sitting with a score of 100.6.

When it comes to housing, the Treasure State has a score of 104.4, putting the state just a little higher than the national average. As for average home values, Montana comes in at $324,813, which is noticeably above the national home values average of $269,039.

Tax Considerations

Looking at the tax implications of choosing a particular state for retirement is another crucial step before finalizing your destination. The amount you need to hand over in taxes impacts your overall budget and may determine how long your retirement savings will last.

Montana does have a state income tax. Like the federal system, the Treasure State has brackets, ranging from 1 to 6.9 percent.

While some states don’t tax certain kinds of retirement income, Montana taxes nearly all of it. Many pensions, annuities, 401(k) distributions, IRA withdrawals, and any other retirement income that is taxable on the federal level are taxable in the Treasure State. Even Social Security isn’t guaranteed to be tax-free.

However, there are certain income tax exemptions that may reduce your tax burden. Lower-income retirees may be able to exempt all or part of their retirement income, making the state a bit more affordable.

Now, one benefit of heading to Montana is that the state doesn’t have any sales tax. That means, when you shop, you won’t pay anything beyond the product or service sticker price at checkout.

When it comes to property taxes, the Treasure State is a bit on the lower end. Additionally, the Montana Elderly Homeowner Credit can reduce the impact of that burden. If you’re at least 62 years old, have a household income below $45,000, have lived in the state for nine months minimum, and have owned a home for at least six months, you may be eligible for a $1,000 refundable tax credit to offset the effect of your property taxes a bit.

Part-Time Job Opportunities

If you’re hoping to have a part-time job to help your retirement savings last longer, exploring a state’s unemployment rate is a good idea. It can help you estimate whether jobs are generally available before you move.

Traditionally, Montana has a low unemployment rate. While it did reach 11.9 percent during April 2020 at the height of the pandemic’s onset, the state recovered fairly quickly. Plus, that rate was well below the national average during that month, which came in at 14.8 percent.

As of December 2020, Montana was back down to 4.2 percent. In comparison, the national average for that month was 6.7 percent, a full percentage 2.5 points higher.

Overall, there’s a good chance that part-time jobs are reasonably available in Montana. However, the kind of work you’re after does play a role, as some industries will have more opportunities than others. If you want to make sure you can find something, do a little research in advance. Often, by looking at existing vacancies, you can get some insights into demand in various fields, allowing you to plan more effectively.

Best Cities for Retirees in Montana

If you’re looking for an active retirement, you may want to head to Missoula. It is near plenty of opportunities for outdoor recreation, has golf courses, and it’s reasonably walkable. Plus, you have solid access to medical facilities and other larger city amenities, which can be a boon.

For retirees looking for a slower pace, Whitefish is a great choice. The city itself maintains a small-town feel, making it relaxing. However, you still have access to everything you need, including outdoor recreation, medical facilities, and more.

When it comes to tax-friendliness, Livingston is the winner in Montana. That could make it the best option for budget-conscious retirees. However, Livingston also has plenty to offer, including access to critical amenities, outdoor recreational opportunities, and more.

How Much Money You Need to Retire Well in Montana

Since the Treasure State has a middle-of-the-road cost of living, you can retire well in Montana with a moderate amount of savings. If you have access to approximately $68,588 a year – either purely through retirement accounts or by supplementing your savings with a part-time job – you should be in decent shape. Along with covering your needs, handling some wants should be in the cards, ensuring your golden years are both comfortable and fulfilling.

Retirement Apps You Can Use

App Fees and Minimum Best for:
Betterment 0.25% per year
no account minimum
Saving for retirement
Ellevest $1-$9 per month
no account minimum
Retirement especially for women
Personal Capital Free Planning retirement

Did you retire well in Montana? Do you have any tips or insights that could help others achieve their goal of having a great retirement in Montana? Share your thoughts in the comments below.

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