Florida is considered by many to be the best state for retirement, but experts suggest it may not be the best place to prepare for your later years.
Although its climate and coastal access are desirable, it is particularly vulnerable to natural disasters like hurricanes, meaning its home insurance premiums are more expensive than anywhere else in the country.
Homeowners paid an average annual premium of $7,788 in 2022, according to insurance Agency – almost five times the national average of $1,636.
And even though the Sunshine State imposes no income tax, citizens could find themselves taxed in other ways that are even less retiree-friendly – including on purchases and on their housing.
With good weather for much of the year and access to the coast, Florida has become the go-to state for retirees.
Florida homeowners paid an average annual premium of $7,788 in 2022, making it the most expensive state in the country for homeowners insurance. Pictured: The aftermath of Hurricane Michael in 2018
“Florida is prone to natural disasters, especially hurricanes,” said John Grace, president and founder of Investor’s Advantage Corp. GoBanking rates.
“While homeowners insurance is essential, premiums in Florida can be significantly higher due to the increased risk of hurricane damage. Retirees should carefully consider these insurance costs in their financial planning,” he added.
“Additionally, climate change could exacerbate these risks in the future, potentially leading to even higher insurance costs and property damage issues.”
In July, former President Donald Trump criticized Florida Gov. Ron DeSantis, his rival for the upcoming Republican presidential nomination, for failing to take steps to ease the cost of expensive home insurance in his state.
“We want him to go home and take care of his insurance, because you have the highest insurance in the country,” Trump said at the time.
A few days earlier, national insurer Farmers Insurance announced it would do so. no longer offers insurance plans in Florida.
Not only are homes in Florida more expensive to insure, but their values are notoriously volatile. This could cause problems for retirees who have more wealth tied up in property.
“The Florida real estate market can be volatile, with property values fluctuating widely,” financial expert Mark Smith told GoBankingRates.
“This volatility can affect your long-term financial stability, especially if you rely on real estate investments as part of your retirement strategy,” he added.
Although Florida does not have an income tax, it relies heavily on sales tax and property taxes to generate revenue. Pictured is a vacation rental home in Florida
Damaged property after Hurricane Idalia made landfall in Horseshoe Beach, Florida in August
Part of Florida’s appeal for many is its relaxed approach to taxes.
But even though there’s no income tax, Grace suggested it might not be cheaper overall.
“Some Florida counties have high property tax rates, especially in desirable retirement communities,” he said.
With an effective property tax rate of 0.91 percent, it ranks 26th in property taxes as a percentage of housing value of all states, according to Tax Foundation.
“Retirees should research property tax rates and sales tax implications in their desired Florida retirement location to ensure they fit their budget,” he added.
Florida has an average combined state and local sales tax rate of around 7 percent, which complements its large tourism industry.
Retirement experts therefore suggest that some other states might make more desirable retirement destinations.
Grace suggested retirees should consider states like Colorado, Texas or Nevada.
“Colorado offers a wide range of outdoor activities,” he said. “The country also benefits from a relatively low property tax rate, and many cities offer a mix of cultural amenities and recreational opportunities.”
Like Florida, Texas has no income tax.
“Cities like Austin, Houston and Dallas offer diverse cultural scenes and the cost of living can be relatively lower than other major metropolitan areas,” he said.
It comes like a A study this year by Bankrate found that Florida was no longer the best state in which to spend your senior years, with Iowa taking the top spot.
This marks a significant change from the 2022 rankings. This year, Florida fell from first to eighth place among the top hot spots for retirees.
Bankrate ranked all 50 states on affordability, overall well-being, health care quality and cost, weather and crime.
Iowa has been ranked as the best state to retire due to its reasonable cost of living, affordable but high-quality health care, and low crime.
The annual retirement study looked at affordability, overall well-being, health care quality and cost, weather and crime.
Although the weather in Iowa is colder than Florida, the Hawkeye State is the sixth cheapest place to live in the United States, according to the Council for Community and Economic Researchmaking it an attractive location for retirees looking to extend their fixed income in today’s economy.
Declining housing costs have also helped support the state on affordability, Bankrate said, and the price of homeowner’s insurance is lower than the national average.
According to real estate company data red finThe average home price in Iowa is $239,000, well below the national average home price of $388,800.
Although the state is in the middle of the pack in taxes, it tops the rankings for quality of health services and low health care costs.
Additionally, according to census data, nearly 20 percent of Iowa’s population is 65 and older, making it easier for retirees to meet others of the same age.