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Is Retirement in a Lower-Tax State Actually More Affordable for Verizon Employees?

Verizon employees weighing a move to a no-income-tax state should consider the full financial picture beyond tax headlines, as higher housing, insurance, and property expenses can quickly offset perceived savings. – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

For Verizon employees considering retirement relocation, the key takeaway is that lower income taxes don't always translate into lower living costs—comprehensive financial planning is vital to avoid unexpected burdens. – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

The financial considerations of relocating to a no-income-tax state during retirement.
How property taxes, housing costs, and insurance can offset tax savings.
The importance of strategic tax and estate planning before making a move.

The Financial Considerations of Relocating to a No-Income-Tax State

Retiring in a state without income tax is often viewed as financially advantageous. However, for Verizon employees planning their next chapter, it's essential to consider the overall cost of living. While the absence of state income tax is appealing, other expenses such as housing, insurance, and maintenance can significantly impact your budget.

In 2024, a couple in their mid-sixties moved from Indianapolis to St. Petersburg, Florida, to be closer to their adult children. Florida's lack of state income tax was a major draw. However, after relocating, they encountered high insurance premiums, elevated home prices, and unexpected repair costs following Hurricane Helene. Brad Clark, founder of Solomon Financial in Carmel, Indiana, noted that the husband had to return to work, altering their retirement plans considerably.

They were in a pretty good position up here, and now it's just not a pretty picture, said Clark. This example serves as a reminder that working longer may become necessary if key relocation costs are not thoroughly evaluated.

Beyond Just Income Taxes

The significance of income taxes in retirement largely depends on the size and type of income streams. Verizon retirees with substantial investment income might find benefits in no-income-tax states, but middle-income households often discover that income taxes play a smaller role than anticipated. Jared Walczak from the Tax Foundation emphasizes that sales and property taxes often take center stage in these states.

For instance, Tennessee has no income tax but has a combined state and local sales tax rate of 9.55%, the second-highest in the nation.

Property taxes are another critical factor. Texas, a popular retirement destination, has an average property tax rate of 1.60%, more than double Florida's 0.80%. This can be an unexpected expense for retirees transitioning into a fixed income.

Financial planner Caitlin Frederick of Ullman Wealth Partners in Florida advises that new homeowners may face higher tax bills than expected. Long-term residents benefit from property tax caps, but these reset when homes are sold, and the reassessment may not occur until the second tax cycle. Relying solely on online listings for tax estimates can be misleading; consulting with agents and planners can provide clarity on potential increases.

Hidden Costs of Housing and Insurance

Housing affordability is just one aspect of the retirement equation. According to Bankrate, shelter costs can easily offset any income tax savings.

This is especially true in states prone to severe weather. Florida has experienced rising insurance costs due to hurricanes and climate-related threats. For example, a Michigan couple who relocated to Sarasota found themselves paying $35,000 annually in homeowners insurance, HOA dues, and property taxes.

Nationally, Bankrate reports the average annual premium for a $300,000 policy is $2,267. In Florida, it's more than double at $5,527, second only to Nebraska. These increased costs can greatly impact retirement budgets, particularly for Verizon employees accustomed to more stable expenses.

Planning for Taxes and Estates

Many of these challenges can be addressed through careful financial planning before relocating. Strategies such as converting traditional retirement accounts into Roth IRAs can help manage taxable income and control state tax exposure in retirement. For Verizon employees, timing and proactive tax planning can be instrumental in maintaining income levels.

Each state taxes retirement income differently. Some, like Illinois, exempt income from 401(k)s, IRAs, and pensions. Others, such as Colorado and New Mexico, impose taxes on Social Security for higher earners. Understanding how your benefits are treated at the state level is crucial before choosing a destination.

Tools from the Tax Foundation and Bankrate can assist in comparing taxes, housing, health care, and other costs across states. These calculators provide Verizon employees with side-by-side insights into how far their income may extend in different regions.

Estate and inheritance taxes are additional considerations. Tony Owens from AlphaCore notes that while federal inheritance tax applies only to estates above approximately $14 million, many states have much lower thresholds. In Oregon, for example, any estate above $1 million can be taxed. Verizon retirees intending to leave assets to family should account for these potential state-level obligations.

Owens also points out that even California's 13.3% top income tax rate doesn't always make other states a financial advantage. Verizon retirees might not experience significant relief unless they are in the highest tax bracket. Understanding how each state handles marginal tax rates is essential to making an informed decision.

Bottom Line for Verizon Employees

Assuming that moving to a state with no income tax will result in savings can be misleading. While taxes may be lower, costs such as housing, insurance, and property taxes often increase simultaneously—and may even surpass the savings.

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Sources:

1. Carlson, Debbie. “Retirees Who Move to Lower-Tax States May Not Save as Much as They Think.” The Wall Street Journal , 9 Apr. 2025, www.wsj.com .

2. Costa, Moriah. “6 Important Costs to Consider When Planning for Retirement.” Synchrony Bank , 20 Feb. 2024, www.synchrony.com .

3. “Financial Fact vs Fiction: This Roth Conversion Myth Could Cost You.” Kiplinger , 6 Apr. 2025, www.kiplinger.com .

4. “Skyrocketing Housing Costs Pose Major Threat to Retirees.” TheStreet , Jan. 2025, www.thestreet.com .

5. Parkshore Wealth Management. “Tax Considerations When Downsizing or Relocating in Retirement.” Parkshore Wealth , Sept. 2024, www.parkshorewealth.com

How does the Verizon Pension Plan facilitate retirement income for long-term employees, and what specific benefits can employees expect when enrolling in the retirement program provided by Verizon? What unique features does the Verizon Pension Plan offer compared to other retirement plans an employee might have encountered, and how can employees maximize the benefits of these features throughout their career at Verizon?

Verizon Pension Plan Benefits: Verizon's Pension Plan offers substantial benefits aimed at facilitating a secure retirement for long-term employees. Upon enrolling in the retirement program, employees can expect defined benefits that are based on their salary and years of service, ensuring a predictable and stable income after retirement. Unique to Verizon, compared to some other plans, may include options for early retirement under certain conditions and a choice between annuity payments or a lump-sum distribution upon retirement. Employees can maximize these features by planning for long-term service and considering their retirement income needs early in their careers.

In what ways can employees at Verizon strategize their rollover decisions when transitioning from the Verizon Pension Plan to other retirement savings plans upon leaving the company? What factors should be considered by Verizon employees to ensure they are making informed choices regarding rolling over funds to a traditional IRA or another qualified employer plan?

Rollover Strategies: When transitioning from the Verizon Pension Plan to other retirement savings options upon leaving the company, employees should strategize their rollover decisions carefully. Factors to consider include the tax implications, the investment options available in the rollover destination, and the timing of the transfer to avoid penalties. Verizon employees should evaluate the benefits of rolling over to a traditional IRA or another employer's plan, considering their future financial needs and retirement goals.

What are the implications of the recent IRS limits for 2024 concerning contributions to retirement plans for Verizon employees, and how does Verizon align its offerings with these federal regulations? Additionally, how can Verizon employees best take advantage of these limits to enhance their retirement savings while adhering to tax regulations?

IRS Contribution Limits: The implications of IRS limits for 2024 are critical for Verizon employees as these limits dictate how much can be contributed tax-deferred into retirement plans. Verizon aligns its offerings with these federal regulations by adjusting contribution limits in their plans accordingly. Employees are encouraged to maximize their contributions to take full advantage of tax-deferred growth, especially when IRS limits increase, thereby enhancing their retirement savings while adhering to tax regulations.

How does the special tax treatment for lump sum distributions from the Verizon Pension Plan affect employees who receive their benefits early or have specific circumstances, such as being born before 1936? What options do these employees have to manage their tax burden effectively, and how can they best navigate these complicated rules while planning for their retirement?

Tax Treatment of Lump Sum Distributions: The special tax treatment for lump sum distributions from the Verizon Pension Plan can significantly affect employees who opt to receive their benefits early or under specific circumstances like being born before 1936. These employees have options to manage their tax burden effectively by opting for ten-year averaging or capital gain treatment on eligible distributions, allowing for a potentially lower tax rate on their pension benefits.

For surviving spouses and alternate payees of Verizon employees, what are the specific benefits available under the Verizon Pension Plan? How do these benefits compare to those available to employees, and what steps must surviving spouses or alternate payees take to ensure they receive their entitled benefits without delays or complications?

Benefits for Surviving Spouses and Alternate Payees: For surviving spouses and alternate payees, the Verizon Pension Plan offers benefits similar to those available to employees, such as annuity payments or lump-sum options. These beneficiaries must take certain steps to ensure they receive their benefits without delays, such as providing necessary documentation and adhering to plan rules. The plan details and processes for claiming benefits should be clearly understood to avoid complications.

How can Verizon employees utilize the resources available through the Verizon Benefits Center to better understand and manage their retirement benefits? What specific tools and services does the Benefits Center provide, and how can these resources assist employees in making informed decisions regarding their pension plan options?

Utilizing Resources at the Verizon Benefits Center: Verizon employees can utilize various tools and services provided by the Verizon Benefits Center to manage and understand their retirement benefits. The Benefits Center offers personalized consultations, detailed plan documentation, and tools for estimating pension benefits and planning retirement income, assisting employees in making informed decisions about their pension plan options.

What challenges might Verizon employees face regarding eligibility and tax withholding when receiving their pension payments, and how can they mitigate these issues? It's crucial for employees to understand the mechanics of eligibility regarding rollovers and payment processing; what key pieces of information should they be aware of to avoid unexpected taxes?

Challenges in Eligibility and Tax Withholding: Verizon employees might face challenges regarding eligibility and tax withholding when receiving pension payments. Understanding the plan's criteria for eligibility, the implications of rollovers, and the impact of mandatory withholding on distributions is crucial. Employees can mitigate these issues by consulting with the Verizon Benefits Center or a tax advisor to ensure compliance and avoid unexpected taxes.

What is the process for Verizon employees wishing to initiate a direct rollover from the Verizon Pension Plan, and what documentation will they need to prepare? Can employees receive assistance from the Verizon Benefits Center during this process, and how does using a direct rollover benefit them compared to other forms of payment?

Direct Rollover Process: The process for initiating a direct rollover involves deciding the destination of the rollover (traditional IRA or another employer plan), completing necessary documentation, and potentially seeking assistance from the Verizon Benefits Center. A direct rollover helps in avoiding immediate taxes and maintaining the tax-deferred status of retirement savings.

In terms of retirement preparedness, how does the pension plan at Verizon accommodate employeesâ€™ needs for financial security in their senior years? What additional education or resources does Verizon provide to assure that employees fully understand their retirement options and the importance of planning ahead?

Retirement Preparedness: Verizon's pension plan is designed to accommodate the financial security needs of employees in their senior years. In addition to the pension benefits, Verizon provides educational resources and planning tools to ensure employees understand their retirement options and the importance of early and consistent retirement planning.

How can employees reach out to the Verizon Benefits Center for further information about the pension plan and other retirement benefits? What specific contact methods are available to employees, and how can these interactions enhance their understanding and management of retirement benefits provided by Verizon?

Contacting the Verizon Benefits Center: Verizon employees seeking more information about their pension plan and other retirement benefits can reach out to the Verizon Benefits Center through various contact methods such as phone, email, or online portals. These interactions are crucial for enhancing understanding and effective management of retirement benefits, ensuring employees make the most of the benefits available to them.