For some retirees, the idea of heading to Maine is the dream. The Pine Tree State has a lot to offer, including a chance to enjoy the changing of the seasons, oceanside excursions, and much more. Plus, Maine has a lot of amenities, including many that can help seniors live their best life. However, Maine does cost more than some other options. That means that being financially prepared is essential, ensuring you have what you need to retire well in Maine. If you’re considering The Pine Tree State for your retirement, here’s what you need to know.
Cost of Living
When it comes to retirement planning, understanding an area’s cost of living is essential. It allows you to anticipate how expensive a state is in comparison to the national average, which can be vital if you want to ensure you have enough cash set aside to handle your needs.
For cost of living scores, the national average is permanently set at 100. If a state comes in with a score above 100, it means it’s more expensive than the average. Scores below 100 are a mark of increasing affordability, something that may be particularly critical for retirees with tighter budgets.
Maine’s cost of living score is significantly above the national average, coming in at 115.2. However, what may be surprising is that Maine’s housing score is closing to the average, sitting at 101.5.
Maine’s transportation score also comes in near average, sitting at 100.6. However, the state comes in much higher in other areas, including groceries (135.0), utilities (111.9), and healthcare (114.4).
If you’re relocating to a new state for your retirement, it’s essential to understand the nuances of taxes in that area. Paying taxes can take a significant chunk out of your retirement income, making it relevant to both retirees with tight budgets that those whose retirement savings is substantial.
Maine does have a state income tax. It’s a bracket-based system, with rates coming in from 5.8 to 7.15 percent, depending on your income level.
Social Security is exempt from taxation in Maine, so that provides retirees with a bit of a reprieve. However, other forms of retirement income are taxable, including IRA, 401(k), and other pension plan payments.
Technically, there is also a $10,000 deduction each year on retirement income, but the amount is reduced based on the size of your Social Security benefit. For example, if your Social Security income is $8,000 per year, you would have a $2,000 deduction remaining. If your Social Security payments equal $10,000 or more a year, you can’t claim a deduction at all on your other retirement income.
Homeowners in Maine will also have to deal with property taxes. However, there are some programs available that can lessen this burden. If you own a homestead property for a minimum of 12 months and make it your permanent residence, you may qualify for a $25,000 exemption, reducing the taxable value of your home.
Retirees who are also veterans may qualify for the Veteran Exemption, which can be worth up to $6,000. Additionally, municipalities can have their own property tax deferral programs to assist senior citizens. Since these can vary from one municipality to the next, you would need to explore program options in the area you intend to live to determine what may be available.
Maine also has sales tax. The general rate is 5.5 percent, though some segments have higher rates, like prepared food (8 percent) and rentals of lodging (9 percent). However, there are no additional local taxes, so the rate is flat across the entire state, making it a bit easier to plan for and predict.
Part-Time Job Opportunities
Overall, part-time job opportunities tend to be available in any decently sized city or town. Initially, the coronavirus harmed the economy, leading Maine’s unemployment rate to climb as high as 10.4 percent for April 2020. However, that was far less than the national average at that time, which was 14.7 percent, a full 4.3 percentage points higher than Maine’s rate.
The Maine economy is recovering well from the COVID-19 pandemic. As of August 2020, the unemployment rate came in at 6.9 percent. That’s 1.5 percentage points lower than the national average for that same period, which was 8.4 percent.
While it appears that Maine is trending in the right direction, it is important to remember that the situation remains highly fluid. A resurgence could hinder the economy once again, and that could make it harder to find part-time jobs.
Best Cities for Retirees in Maine[embedded content]
The city you choose can have a major impact on your retirement. If you want to retire well in Maine, it’s wise to select a town that has the right kind of amenities, entertainment options, and more, based on your preferred lifestyle.
However, some options are popular with retirees. Kennebunk is considered by many to be a great choice thanks to its seaside location and wealth of recreation centers. Plus, a lot of medical services are available locally.
Belfast is another destination worth considering, particularly since its home to numerous retirement communities. Rockland has a substantial senior population and is home to a range of attractions, including the annual Maine Lobster Festival.
How Much Money You Need to Retire Well in Maine
Since the cost of living in Maine is higher than average, you’ll need access to more money if you want to be reasonably comfortable. Exactly how much it takes can vary depending on the city you choose, as some are more expensive than others. However, generally speaking, you will need access to about $73,025 a year to retire well in Maine. That amount can cover all of your basic living expenses while also leaving room for some wants or creature comforts.
Do you have any other tips that can help someone retire well in Maine? Share your thoughts in the comments below.
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