New Jersey is located on the east coast of the United States and is a desirable retirement destination. Various outdoor activities, engaging cultural events and a pleasant moderate climate make it a beautiful and enjoyable place to live. However, like many coastal, northeastern states, New Jersey has a relatively high cost of living compared to some of its neighbors.
If you love living near the sea and have a generous retirement budget, New Jersey may be the ideal spot to settle and enjoy retirement. Should you wish to explore a nearby affordable location with a similar climate, the state of Pennsylvania is renowned for welcoming retirement communities and a low cost of living.
Important Considerations When Choosing Your Retirement Destination
Around 17.7% of New Jersey residents are over the age of 65. Retirement in New Jersey means warmth and bustle in summer and cozy, relatively mild winters. While the area is charming, it was ranked among the top six states most likely to quickly drain retirement savings. Contrastingly, Pennsylvania is renowned for its affordability and for providing a high quality of life for retirees. The Keystone State is also one of the largest in the U.S., so it offers diversity and spaciousness. It’s known for its scenic natural beauty and provides a less expensive retirement destination.
What Is the Retirement Age in New Jersey?
The usual federal retirement regulations apply in New Jersey. You can access your Social Security benefits at 62 but will receive higher monthly payments the longer you wait. The recommended age to activate your benefits is 67.
There are some state regulations for service members retiring in New Jersey. According to the Police and Firemen’s Retirement System (PFRS), police and firemen are subject to mandatory retirement at 55. If service members have not filed for retirement, they are automatically retired on the first day of the month following their 55th birthday. Benefits only begin once the filing is complete, so it’s recommended to begin the retirement process six months in advance.
Is Social Security Taxable in New Jersey?
Railroad Retirement and Social Security benefits are not taxable in New Jersey. Military pensions or survivor’s benefits, regardless of disability status or age, are also not taxed in this state. This makes New Jersey a moderately tax-friendly state for retirees and is a good option for former military service members and veterans. Military service includes the Army, Air Force, Marine Corps, Navy and Coast Guard.
Does New Jersey Tax Retirement Income?
Retirement income is taxable in New Jersey. Both pension and annuity income are taxed, including all local and state government pensions, federal pensions and teachers’ pensions. Contributions to an individual retirement account (IRA) are taxed as per normal income tax in the year they are made, so withdrawals are not taxed a second time.
Public and private pension plans due to total and permanent disability are not subject to tax. However, if you retire before 65 years old and receive a disability pension, the disability pension is treated as an ordinary taxable pension from 65 onwards.
Reflections on the Pros and Cons of Retiring in New Jersey and Bordering Areas
While the sandy shores of New Jersey might be your dream location, the neighboring states are also contenders for top retirement destinations. While New York has high living costs, Delaware and Pennsylvania boast advantageous tax regulations for retirees and are worth exploring.
If you prioritize a tax-friendly retirement and love expansive natural landscapes, welcoming communities and cultural attractions, explore Pennsylvania. The state does not tax pensions, IRAs, social security benefits or military retirement income. It’s also home to exceptional retirement communities like Cornwall Manor. If you value your independence and want to have an active and social retirement with quality care available should you need it, this is the place for you.
Contact us online to learn more or schedule a visit to Cornwall Manor. Take a tour of our facility to experience the healing powers of nature, explore numerous walking paths and discover more about the life-enriching activities that ensure our residents thrive.
