Is PA a Good State to Retire In?
Yes, Pennsylvania offers many advantages to retirees. At almost 45 thousand square miles, Pennsylvania is one of the largest states in the country. It is also home to the city of Lancaster, which U.S. News and World Report recently ranked as the second best area to retire in the U.S. Several other cities in Pennsylvania also made the list.
|PA Retirement Taxes||Retirement Age||Property Taxes in Pennsylvania|
|Pros and Cons of Retiring in PA||Inheritance and Estate Taxes||Attractions in Pennsylvania|
|Who Should Retire to Pennsylvania||Contact Cornwall Manor||Request a Tour|
Approximately 15.4 percent of Pennsylvania’s population is 65 years old or older and it is home to more than 870,000 veterans. The VA Medical Center in Lebanon County, PA, located near Cornwall Manor Retirement Community, is consistently ranked as one of the best veterans’ health care facilities in the country. Pennsylvania is also home to 249 retirement communities.
When looking for the right state to begin your retirement, you want to consider taxes, so you can stretch your retirement income as far as it will go. Pennsylvania provides a tax-friendly climate for retirees.
Pennsylvania does not tax its residents’ retirement income. It is one of only two states, and the only state on the East Coast, that considers pension income completely tax exempt.
The Keystone State also has the lowest flat tax rate in the country at just 3.07 percent. It is impossible to escape federal income taxes, but when you retire, you might lower your tax obligation by moving to a state like Pennsylvania where the income tax rate is low.
Retirees often count on pooling income from several different sources:
- Social Security: Retirees derive a portion of their income from Social Security depending on the amount of money they paid into the system while they were working. Widows may be entitled to their spouse’s social security check. The state of Pennsylvania does not tax social security income like some states, including West Virginia, Connecticut and Rhode Island.
- Pension: Many retirees today receive pension benefits, either from a public entity or private corporation. The amount is based on their terms of employment, the number of years they paid in and how well the pension fund was managed. Neither public nor private pension income is taxed in Pennsylvania, which offers an advantage over nearby states such as New Jersey, New York and Maryland, which tax pensions.
- Individual Retirement Account (IRA): If your employer did not offer a pension plan, you might have invested money in an IRA to use in retirement. IRA’s offer different types of tax advantages. Pennsylvania adds one more by not taxing the funds you take out of your IRA as income.
- 401(k): Another retirement investment account, a 401(k), usually includes money you saved and matching funds from your employer. No type of employer contribution retirement plan is eligible for taxation in Pennsylvania as income.
When you are a resident of Pennsylvania, your retirement income is tax exempt. Pennsylvania is one of the most generous states in the country for retirees’ income. They are also helpful when it comes to other taxes.
The state sales tax in PA is just six percent, which is one of the lowest in the country. Food and clothing are also exempt from state sales tax. Only Philadelphia and Pittsburgh, PA add a local tax on top of the state rate. There is another special exemption to sales tax in Pennsylvania that can have a great impact on seniors. All prescription and non-prescription drugs are tax exempt. Since the cost of medication tends to increase as you age, the state of Pennsylvania is doing what it can to keep those costs low.
Is Military Retirement Pay Taxed in PA?
Pennsylvania proudly provides tax benefits for military service members and Veterans. Military retirement pay is not taxed as long as you fulfilled your years of service or reach retirement age. Military pay is also exempt from personal income tax for those serving in the PA Army National Guard or United States Army Reserve, even if their active duty service was performed outside of Pennsylvania.
If you receive Military Disability Retirement Pay as an annuity, pension or similar allowance due to sickness or injury resulting from your time in active service, it should not be included in taxable income as long as you meet the criteria.
If you’re a survivor of a military service member who died while performing their duties, your Dependency and Indemnity Compensation (DIC) is a benefit that is not taxed as long as you live in Pennsylvania.
The retirement age is the same in every state. For those born in 1960, the full retirement age according to the Social Security Administration is 67. This means you can receive 100 percent of your social security benefits without any reductions. Beneficiaries receive 50 percent of their spouse’s retirement benefits when they reach 67 years of age.
If needed, the earliest someone can begin receiving social security retirement benefits is at 62. However, the rate is reduced, and they will only get 70 percent of their own monthly benefits and 32.5 percent of their spouse’s retirement benefits. As each month passes, the percentage of their retirement benefits grows until it reaches the full amount at age 67.
What Is the Retirement Age in PA for State Employees?
Pennsylvania’s statewide State Employees’ Retirement System, or SERS, is one of the oldest and largest retirement plans for state employees in the country. When the state first hires an employee or when they get close to retirement age, they have lots of decisions to make about their retirement benefits, including at what age they wish to retire.
The SERS normal retirement age is 65, 60, 55 or 50 years of age, depending on what class of service you were in. A SERS employee’s class of service is determined by when they became a member and the type of work that they did. The annual pension for SERS members is calculated with a formula that includes a few variables about your service as a state employee, including:
- Class of service
- Years of credited service
- Final average salary
When you reach retirement age, your house may be paid off. Your living expenses would be reduced to property maintenance and taxes. In some states, retirees are quick to downsize to lower their tax burden. In other states with high taxes, property taxes on a single-family home can represent a large part of the retirement budget.
Many homeowners hold their property taxes in escrow, which means they pay toward them each month with their mortgage payment. When the mortgage is paid off, and the taxes are collected twice a year, the amount can be shocking. Many communities across the country are struggling with budget shortfalls and are raising taxes to try to close the gap.
In Pennsylvania, if you are over 65, you may be eligible for a rebate on your housing costs, whether you own or rent your home. For seniors who own their home and do not exceed $35,000 in annual household income, the average property tax rebate is $650. With supplemental rebates, that amount can increase. Income calculations to determine eligibility exclude 50 percent of income that comes from social security and Railroad Retirement benefits.
Property taxes for seniors in Pennsylvania are calculated in their favor. Even renters are eligible for a housing rebate if their income is under $15,000. The same exemptions apply in determining the total amount of income.
At a retirement community such as Cornwall Manor, residents do not pay property taxes.
The amount of taxes charged on your estate can significantly impact the legacy you leave for your children and other heirs. Estate taxes may make it difficult for you to transfer family wealth or property to succeeding members of the family. The most substantial portion of the inheritance and estate taxes is that imposed by the state.
The state of Pennsylvania does not charge an estate tax for spouses or direct heirs aged 21 or younger. The inheritance tax is based on the relationship to the deceased. A direct heir, a child or grandchild, will see their inheritance taxed at a rate of 4.5 percent. Siblings of the departed will pay 12 percent in inheritance taxes.
All non-relatives or family members of indirect lineage have an inheritance tax of 15 percent. Many of the surroundings states have an estate tax, and some have both an estate and an inheritance tax. Maryland and New Jersey have both. New Jersey has the second highest inheritance tax rate at 16 percent and the lowest exemption threshold for an estate tax.
If you choose to leave part of your estate to a charity, Pennsylvania does not charitable organizations an inheritance tax. Nonprofits, government entities and some institutions are exempt from inheritance tax in Pennsylvania. Also, any part of the estate left to a spouse is tax-exempt, and property owned jointly by spouses passes to the surviving spouse without a tax by the state. At the death of a minor child, the parent will not pay taxes on any inheritance.
The tax climate of the state in which you are a resident can impact your children and grandchildren and the legacy you leave them. Pennsylvania is one of the most lenient taxing authorities in the country, making it financially advantageous to move there for retirement.
Deciding where to retire requires careful planning and some research. You want to go where you will be comfortable, where you can enjoy your life and where your retirement funds will buy you the most. To do that, you need to look at the housing market, the tax structure, the climate and the proximity of healthcare services.
Pennsylvania can be a great place to retire. Just ask the retirees who are already living there. A few of the positive features Pennsylvania offers retirees include:
- No Income Tax on Retirement Income: While the state does tax income from active employment — even if you are retired from your primary job — Pennsylvania does not tax any of the traditional retirement income funds.
- Low Sales Tax: Your retirement budget will stretch further in Pennsylvania with a sales tax rate of six percent. With food, clothing and heating fuel exempt from sales tax, you have a significant financial advantage in the Keystone State
- Access to Restorative Care & Healthcare: Pennsylvania has an assortment of VA hospitals and other medical facilities that offer state-of-the-art healthcare services, including world-renowned health systems such as Penn State/Hershey Medical Center; Penn Medicine and UPMC.
- Change of Seasons: The geography of Pennsylvania is varied, and there are four distinct seasons that provide a variety of weather and beauty. Pennsylvania is renowned for having the most beautiful and long-lasting fall foliage in the country that provides a spectacular display of color in autumn.
The Keystone State attracts tourists from around the world. Pennsylvania is full of American history and cultural opportunities. Here are some attractions to consider in PA:
- World Series: The Little League World Series is played in Williamsport, PA every summer. This long-standing little league contest attracts sports fans from around the world. The city of Williamsport, PA holds a week-long celebration to mark the occasion.
- Historic architecture: As the first capital of the United States, Philadelphia, PA includes some historic buildings and monuments, like the Liberty Bell. The Capitol Rotunda in Harrisburg, PA is considered one of the most beautiful capitol buildings in the country as well. Cities and towns across Pennsylvania – including Lancaster and Lebanon near Cornwall Manor Retirement Community – are dotted with grand historic architecture.
- Art scene: Pennsylvania is full of world-class museums, historic theaters and spectacular music venues. Philadelphia and Pittsburgh, PA both offer a mix of styles and flavors to attract any art aficionado. The smaller cities include unique art venues all their own too.
- Craft beer and wineries: Pennsylvania is home to the most craft breweries in the country, and people may be surprised to know that the state is also home to many vineyards and wineries.
- Big cities: Pennsylvania is home to several major cities including Philadelphia, PA which ranked as the 19th best retirement city and Pittsburgh, PA which earned the eighth spot. Cornwall, PA is located just five miles from the PA Turnpike and is just a two-hour drive from Philadelphia, 30 minutes from Lancaster, and 20 minutes to Hershey, PA.
- Historic sites: One of the defining battles of the Civil War was fought in Gettysburg, PA. The area is now home to many war-related remembrances and historic You can take a battlefield tour, visit the Gettysburg National Military Park Museum and brush up on your Civil War history.
- Amish village: Lancaster County is home to one of the largest Amish communities in the country. In addition to seeing Amish men driving their horse-drawn wagons down the streets, you can also learn about the Amish way of life at The Amish Village. The city of Lancaster was also ranked as the second best city in the country to retire by S. News and World Report.
- Beautiful mountains: The Poconos in Northeastern PA is a traditional resort region that draws visitors from all over. The area combines opportunities for hiking, camping and outdoor adventures with resort hotels and attractions for the whole family. The Poconos also features several amusement parks, ski resorts and romantic retreats.
- Amusement parks: Another well-known amusement park is Hersheypark. The whole town of Hershey was built around the chocolate industry and still smells like chocolate. The street lights are shaped like Hershey Kisses, and the city plays host to visitors year-round. The amusement park itself offers a historical look at the iconic chocolate company, along with rides and food.
- Life Long Learning: Pennsylvania has an abundance of colleges and universities that offer a wide array of learning and cultural opportunities for older adults.
Pennsylvania has a wide variety of attractions, cultural opportunities and amusements. Whether you enjoy outdoor sporting activities or educational tours, there is always plenty to do in PA.
Retiring in Pennsylvania
Retiring in Pennsylvania offers many advantages, from taxes to attractions. The economic climate in PA for seniors is conducive to a comfortable retirement where you can enjoy rightsizing your life and making the most of the money you’ve saved. The geography in PA includes mountains, rivers and great opportunities to enjoy your retirement by doing what you love. Pennsylvania is also one of the oldest states and is full of historic sites and architecture.
- If you are ready to retire but are still active, PA is the right place for you. Here, there is so much to do and see that you’ll never get bored.
- If you have a pension, 401(k) or social security income that you want to make the most of, PA is the state where you should retire. Living in Pennsylvania makes your retirement income go further.
- If you have children and grandchildren who will want to visit you, Pennsylvania is a convenient place to travel. Philadelphia and Pittsburgh, PA are both major cities with transportation hubs. PA is also close to New York City and New Jersey, making it easy to travel in and out.
- If you enjoy moderate weather, you will be comfortable in PA, where the summers are warm, and the winters are tolerable. With cool summer nights in the mountains and sunny winter days on the ski slopes, Pennsylvania seldom sees extreme weather.
- If you have an interest in American history, you can immerse yourself in historical sites in PA. Every city and town in Pennsylvania contains timeless architecture and stories from the Civil War or before. PA was an essential part of the founding of this country, and evidence of that fact is scattered around the state.
- If you want to leave the busy, crowded city after you retire, PA is the place to enjoy your retirement in rural splendor. There is plenty of farmland, green trees and winding country roads to let you spread out away from the crowd.
- If you want to stay connected to a major city for work after retirement or just to enjoy the cultural offerings, Pennsylvania is the right location for you. You can enjoy the tax benefits and elbow-room of the rural atmosphere and still travel into the city with ease.
- If you need access to high-quality medical care after retirement, you will find everything you need in PA. Central PA is home to first-class medical facilities such as Penn State Hershey Medical Center; Penn Medicine/Lancaster General Health; the VA Medical Center; UPMC; Pinnacle and WellSpan health systems.
When you are planning your retirement, look for a retirement community such as Cornwall Manor in the state of Pennsylvania. Cornwall Manor offers a variety of housing options with healthcare and other related services. Cornwall Manor was voted “Best Retirement Community”, “Best Personal Care” and “Best Nursing Home” by the Lebanon Daily News. Residents of the Continuing Care Retirement Community include people who have moved from down the road and across the country.
Cornwall Manor is one of many reasons to consider Pennsylvania for your retirement.
Contact Cornwall Manor today to learn more about our community and to request a tour – or stay the night as our guest to explore the area and see why PA is such a wonderful place to call home.
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