cost of living – Memphis Flyer

When planning for retirement, people often focus on how much money they need to save, when they’ll retire, and how to spend their free time. An often-overlooked retirement planning consideration is where to retire — and the decision can have a significant impact on your finances. Here are some factors to consider when deciding where to retire:

• Income tax implications

Let’s go ahead and start with the elephant in the room. Sadly, even after you finish working, you’ll still owe taxes. Taxes can have a significant impact on your retirement, and different states have different tax rates for retirement income. Some states have more favorable tax policies than others, which can allow retirees to keep more of their retirement income. In addition, some states don’t tax Social Security benefits or other types of retirement income, which can help you further maximize your retirement savings.

• Retirement income

Social Security benefits — While most states don’t tax Social Security benefits, there are a few states that impose some form of taxes on them. Regardless of where in the U.S. you live, up to 85 percent of your Social Security income may be subject to federal income tax.

Retirement plan distributions — Many people hold most of their retirement savings in tax-deferred accounts, such as IRAs and 401(k)s. While these vehicles provide a great way to save in a tax-deferred manner, retirement distributions from these types of accounts are subject to ordinary income tax at the federal level. However, some states don’t tax retirement plan distributions, which can help you maximize your funds available for retirement.

Pension income — Some states differentiate between public and private pensions and may tax only public pensions. Other states tax both, while some states tax neither. Again, the amount of state tax you pay on this retirement income source can have a big impact on your lifestyle.

• Estate taxes

In 2025, the federal government allows individuals to pass on up to $13,990,000 without any federal estate tax ($27,980,000 for married couples filing jointly). However, depending on where you live, you may need to pay state estate taxes. It’s important to understand the estate tax requirements of your current state as you’re planning your legacy, especially since some states’ estate tax limits may be lower than you would expect.

• Capital gains

Long-term capital gains are taxed by the federal government at more favorable rates than ordinary income. However, this is often not the case for states that charge state income tax. Many states don’t differentiate between earned income and capital gains, which means depending on the state in which you live, you may have significant tax liabilities on investment income.

• Cost of living

Cost of living can differ widely between various cities and states, making it essential to choose a retirement location you can afford. Some cities have a much lower cost of living than others, which allows you to do more with your retirement savings. By choosing a location with a lower cost of living, you may be able to afford a larger home, travel more often, or pursue hobbies and interests that may be out of reach if you were paying more for daily living expenses.

• Healthcare costs

When choosing where to retire, it’s important to find a location that offers access to high-quality healthcare facilities. Having convenient access to healthcare can help keep your costs down.

• Housing costs

Housing costs can vary widely between different cities and states, which is why it’s important to choose a retirement location that aligns with your housing budget. It’s also important to consider what property taxes you’ll be responsible for paying, as these too can vary widely.

As you begin planning for your retirement, keep in mind it’s important to understand how where you live can impact your retirement finances. This knowledge allows you to choose a location that fits within your retirement budget and can help you live the lifestyle you want.

Katie Stephenson, JD, CFP, is a Private Wealth Manager and Partner with Creative Planning. Creative Planning is one of the nation’s largest registered investment advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

This is the week that individuals have to finish their income taxes and city government presents its budget for next year.

So how are we doing, individually and collectively?

According to the Memphis Flyer’s first-ever Memphis Index of food, finance, fuel, and fun, not too bad, not too good.

An index should be simple, local, and useful. The ones produced by economists and academics tend to be national, overly complicated, or focused on a single industry such as housing. The Flyer‘s Memphis Index has a little something for everyone.

The Gallon Index. A gallon of milk ($4.40) plus a gallon of gas ($3.22) costs $7.62 today compared to $6.15 a year ago, when gas was $2.82 and milk was $3.33. Needless to say, it costs more just to get by every week. Net indicator: negative.

The Memphis Skyline Index. The combined stock price of two big downtown financial firms, First Horizon ($12) and Regions Morgan Keegan ($19), is $31 compared to $74 a year ago, when First Horizon was $40 and Regions was $34. Two good corporate citizens in the dumps is bad news for sponsorships, employment, retailers, and the housing market. Net indicator: negative.

The Government Index. The city of Memphis budget surplus, according to Division of Finance Director Roland McElrath, should be $79 million at the end of the fiscal year in June, up $2.5 million in the last year and up $47 million in the last two years. Still, Mayor Willie Herenton asked for a property-tax increase this week and wants to cut libraries and community centers. Net indicator: neutral.

The Memphis Fortune 500 Index. The combined stock price of the three Fortune 500 companies with headquarters in Memphis, namely FedEx ($93), International Paper ($27), and AutoZone ($118), is $238 this week compared to $277 a year ago. All three stocks are down at least 10 percent. Corporate stock-market wealth impacts executive bonuses, housing, philanthropy, business expansion, and civic involvement. Net indicator: negative.

The Mortgage/Savings Index. The average interest rate on a 30-year fixed mortgage from loan brokers and financial institutions in Memphis is 6 percent this week (you can do better or worse if you shop around), compared to 6.4 percent a year ago. Lower interest rates mean lower monthly payments. But they also mean lower returns on savings accounts and certificates of deposit, now mostly under 4 percent, whereas they were above 4 percent a year ago. Net indicator: neutral.

The Small Business Index. The number of pages in this newspaper last week was 64, compared to 72 pages a year ago. Like most newspapers, the Flyer sets the number of news pages in each issue based on the amount of display and classified advertising. Local businesses are the backbone of our business. Net indicator: negative.

The Music Index. The 2008 Beale Street Music Festival offers a three-day pass for $63.50, the same price as last year. Net indicator: positive.

The Fan Index. The Memphis Grizzlies average attendance for 41 home games this season was 12,770, compared to 14,654 a year ago. The Grizzlies were second-to-last in attendance this year and last in 2006-2007, indicating that overall NBA attendance is down. A disgruntled owner, a bad team, another Calipari powerhouse, and a bad economy could mean even lower attendance next year. Net indicator: negative.

The Cheap Thrills Index. The cheapest ticket to a Memphis Redbirds game inside AutoZone Park is $7, or $5 on the bluff — same as last year. A movie ticket for an adult at Malco’s Paradiso is $9, compared to $8.50 a year ago. Net indicator: negative.

The Civic Wellness Index. Memphis gets a point for the University of Memphis Tigers’ run to the NCAA Final Four, another point for the upcoming Memphis in May celebration, including the Beale Street Music Festival, and another point for the end of Operation Tennessee Waltz. Memphis loses a point for the tornado that severely damaged Hickory Ridge Mall and left its future in doubt. The mergers this year of Atlanta-based Delta Air Lines with Northwest Airlines (based in Minnesota but with a hub in Memphis) and International Paper with Weyerhaeuser’s packaging business cancel each other out. Net indicator: positive.

Grand tally of 10 indicators: six negative, two positive, two neutral.