The state of Connecticut has a lot to offer retirees. If you’re considering retiring here, you’ll need a well-thought-out plan. Here’s what you need to know.
Connecticut is known for many fabulous reasons. Its four-season climate, Ivy League universities, and rich history are all things to admire. When the time to retire comes, many residents nearing retirement find themselves deciding whether to stay in their current city or move somewhere new. But one question remains, are your golden years worth relocating?
Agemy Financial Strategies is proud to have first opened our doors in the place we call home. With our headquarters in Guilford, CT, we can offer you experienced and knowledgeable advice on managing your retirement in this beautiful state. But before making such a life-changing decision, let’s look deeper at what retiring in Connecticut entails.
Step 1: Define Your Retirement Goals
Regardless of where you are in your retirement planning journey, clearly understanding your goals is important. Do you want to move closer to family? Do you want a beach life? In a quaint town, or a bustling city? Sitting down and identifying what you want to prioritize is paramount, whether it is proximity to family, cultural activities, or a peaceful natural environment.
Fortunately, Connecticut has a lot to offer its retirees. Connecticut beaches are only two hours away from the ocean at the furthest point when living here. Several popular destinations within the state include Hammonasset Beach State Park and Ocean Beach Park. The state boasts nearly 100 miles of coastline along the Long Island Sound and is crossed by four major rivers, providing residents with beautiful scenery and outdoor recreational opportunities.
It is a fantastic place for hiking, which includes a stretch of the Appalachian Trail. Most state parks have opportunities for you to enjoy, and a handful of forest preserves make for the perfect autumn trek. There is something for everyone to love when you live in Connecticut.
Step 2: Factor in the Cost of Living
How much do you need to retire comfortably? It’s a question in the mind of every American saving for retirement. Unfortunately, there’s not a one-size-fits-all answer. There are several rules of thumb to help you figure out how much to save to retire. But the exact dollar amount you need will depend on a variety of factors — especially where you plan to live in retirement.
When planning for retirement in Connecticut, it's essential to consider the cost of living, which tends to be relatively high. In 2023 there was a notable increase in the cost of living adjustment, which rose to 8.7%. This adjustment can affect your retirement budget and financial planning, underlining the significance of factoring in these figures as you map out your retirement journey.
Furthermore, Connecticut house prices can quickly eat into your retirement savings. The median home price in the state stands at $379,836, up 5.0% over the past year. Renting a two-bedroom apartment or house can also come with a significant price tag, averaging $1,950 per month.
While the cost of a comfortable Connecticut retirement is down the list of the most affordable state to be in, according to GoBankingRates, Connecticut's cost of living for retirees is still very much attainable:
- Total expenditures: $60,171
- 20% comfort buffer: $15,043
- Cost of a comfortable retirement annually: $75,213
This number was estimated based on an individual’s spending on groceries, healthcare, housing, utilities, and transportation - and the annual retirement income needed to cover these living expenses.
Step 3: Factor In Taxes
Including state-specific taxes is crucial when deciding where to spend the rest of your golden years. Taxes can erode your retirement income quickly if you are unprepared. Let's take a look at four of the most common types of taxes you need to consider:
- Income Tax: Connecticut's state income tax structure is graduated, meaning that the amount people are taxed increases as their earned income increases. This ranges anywhere from 3% to 6.99%. While Connecticut has a higher sales tax rate than the national average, no local sales taxes are charged, which produces a balancing effect for the net amount of taxes collected.
- Sales Tax: The State of Connecticut has a single, statewide sales tax. Because local jurisdictions in Connecticut impose no additional sales taxes, the rate of 6.35% applies to the retail sale, lease, or rental of most goods and taxable services.
- Property Tax: Connecticut homeowners pay relatively high property taxes. The effective property tax rate is 2.5%, while the effective property tax rate for the nation is 1.11%.
- Inheritance and Estate Tax: A huge benefit for residents of Connecticut is that it does not have an inheritance tax. However, there is an estate tax. As of 2023, the Connecticut estate tax exemption amount is $12.92 million.
Working with a financial advisor can help you navigate Connecticut tax questions and concerns.
Step 4: Healthcare Considerations
The elephant in the room? Access to quality healthcare and the price tag it comes with. Connecticut ranked 3rd healthiest state in the nation by the United Health Foundation. 93% of patients in the state have healthcare coverage. But what about the cost of long-term care?
The average length of time people need long-term care services is 3 years. In 2022, the average cost for 3 years of long-term care in Connecticut is $546,132 ($182,044 annually). That cost is projected to be $986,376 ($328,792 annually) in 2042.
It's important to factor in healthcare costs like LTC in retirement and ensure you are properly insured. Researching healthcare providers, Medicare coverage, and long-term care options helps ensure you're well-prepared for any health-related needs that may arise during retirement. The peace of mind that comes with knowing you've prepared for your healthcare needs can contribute significantly to your happiness (and financial stability) in retirement.
Step 5: Estate Planning Needs
When it comes to protecting your wealth, estate planning is one of the most important roadmaps to retirement. These legal documents help outline your healthcare proxies and establish powers of attorney if you pass away. This level of preparation can bring peace of mind to you and your family. Without a clear estate plan, the distribution of assets can lead to conflicts and disputes among family members.
It's important to review your estate plans frequently, including wills, trusts, and powers of attorney. Consult with your financial advisor (preferably a Fiduciary) to help ensure your affairs are in order and your wishes are documented. This step is essential for securing your assets and providing peace of mind for you and your loved ones.
Work With A Fiduciary Advisor
Whether you want to remain in Connecticut, move into Connecticut, or even out of our great state (stay!), working alongside a trusted Fiduciary Advisor can help your transition to retirement. At Agemy Financial Strategies, our Connecticut-based Fiduciary Advisors can provide invaluable assistance in developing a retirement income plan that encompasses crucial financial factors, such as:
- Retirement Planning
- Estate planning
- Wealth management
- Long-term care planning
- Lifestyle Management
Our Fiduciary Advisors are committed to working closely with you to make the most out of your retirement years. We understand that retirement planning looks different for each individual, and with that in mind, we carefully craft your plan to meet your specific needs. For a complete list of our service offerings, see here.
Final Thoughts
Retiring in Connecticut can be a wonderful and fulfilling experience with the right plan in place. By defining your goals and including all your possible expenses in retirement, you can be well on your way to a satisfying retirement in the Nutmeg State. Remember, retirement is a journey; with a solid roadmap, you can make it a journey of joy, exploration, and contentment.
At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions during your retirement process, wherever life takes you.
For more information on our retirement planning services, contact us today.
