How is Delaware for retirement?

If you are considering retiring in the Northeast, Delaware can be a good place to retire. The state offers a laidback beachfront lifestyle, and retirees get access to many amenities including beautiful beaches, good healthcare facilities, and affordable housing. But, how does Delaware compare to other states as a retirement destination?

Delaware is a popular state for retirement due to its favorable tax system, low cost of living, coastal lifestyle, and rich history. It does not levy sales tax at the state or local level, and Social Security income is exempted from state income taxes. If you are age 60 or older, and you have other retirement incomes such as pensions and 401(k) withdrawals, you won't be taxed on the first $12,000 per year.

Is Delaware tax-friendly for retirement?

Delaware is a fairly tax-friendly state for retirement, and it is one of the states that fully exempt Social Security income from state income taxes. However, other retirement income such as pensions and 401(k) withdrawals are taxable in Delaware, but they are eligible for a deduction.

Delaware provides a tax deduction of $2,000 per person if you are younger than age 60, or $12,500 if you are age 60 or older. This tax deduction applies to the combined retirement income from other sources like pension and retirement plan distributions.

For example, if you are age 63 and your total retirement income is below $12,500, you won't owe any state income tax on the money. However, if your total retirement income is more than $12,500, the extra income will be combined with other incomes and taxed at the state’s income tax rate.

Additionally, Delaware is one of the states that does not have a sales tax at the state or local level. Also, the state does not have an estate or inheritance tax.

How much are property taxes in Delaware?

Property taxes in Delaware are relatively low, with an average effective property tax rate of 0.56%. The average homeowner in Delaware can expect to pay $560 in property taxes for every $100,000 in home value. The low property taxes match the relatively low home values compared to other Mid-Atlantic States like Virginia and Maryland.

Senior homeowners in Delaware may be eligible for the Senior School Property tax credit. To be eligible for the property tax credit, you must be at least age 65 or older as well as own and occupy your home as your primary residence. Eligible homeowners get a tax credit of 50% of their school property taxes, with a maximum limit of $400 per year.

Pros of retiring in Delaware

Proximity to big cities

Many retirees desire a laidback retirement away from the hustle-bustle of the city, but still close enough to the big cities. Delaware is located in a central location close to major cities like Washington DC, Baltimore, and Philadelphia. You can take day trips to these cities to access a wide range of outdoor and entertainment options, without living in the middle of a major metropolitan area.

Quality healthcare

The Diamond State is home to some of the best healthcare facilities, nursing homes, and specialists, and you are assured of access to quality healthcare services. Some of the best hospitals in Delaware include Christiana Care Health System, Wilmington Hospital, and Fort Delaware Hospital.

Coastal living

Delaware boasts a vast 28-mile coastline along the Atlantic Ocean, and you can find plenty of scenic beaches on the shoreline. There are multiple public beaches along the coastline, including Lewes Beach, Beach Plum Island Nature Preserve, and Cape Henlopen State Park Public Beach. The long coastline provides plenty of opportunities to explore the picturesque beaches, stroll along the white sandy beaches, play golf on the scenic courses, or exercise in the multiple trails.

Rich history

If you are a history buff, you will be fascinated by the state's rich historical background dating back to 400 years ago. You can find traces of the past everywhere, from battle sites, architecture, historical landmarks, and botanical gardens. You can tour the Du Pont mansion, the Air Mobility Command Museum, and the Delaware Art Museum. Additionally, there are various small theatres, galleries, and festivals to keep you engaged.

Good weather

With warm summers and mild winters, seniors retiring in Delaware are assured of an action-packed retirement. The favorable year-round weather means you can spend your days exploring the outdoors, playing golf on the scenic courses, hiking miles of trails, fishing, or exploring the 10,000+ acres of state parks.

Cons of retiring in Delaware

Population concerns

Delaware is the second smallest state in the United States, but it is denser than 75% of all other states in the United States. Hence, you should expect to see crowds of people nearly in every town. If you prefer to maintain your personal space and enjoy some calm, you might not find that in Delaware. The high population growth comes with negative impacts of urbanization, including pollution, congestion, environmental degradation, etc.

Lack of public transportation

If you decide to retire in the Diamond State, you will need a car to get around the state since there are few public transportation systems. Since you can't consistently rely on buses and trains, you may need to buy a car for your needs.  

Heavy traffic

Large towns in Delaware can have bad traffic, and you should expect to sit in traffic for longer hours. The high population paired with the absence of public transportation means that you will find terrible jams on the highways. Additionally, Delaware has some of the most careless drivers, and you should stay alert on the road.

High crime rate

Delaware often tops rankings of states with the highest crime rates, and you should research the neighborhoods with the highest public safety. Popular crimes include property crimes and home invasions. However, there are many safe neighborhoods in the state that you can move into.

Best places to retire in Delaware

Lewes

Lewes is a beach town that lies on the Atlantic coastline, near where the Delaware Bay meets the Atlantic Ocean. This small town has a rural feel, and it is surrounded by ponds, beaches, and state parks. It is home to the Cape May-Lewes Ferry, which runs year-round between Delaware and the Southern tip of New Jersey.

Retirees can enjoy the beautiful sunsets, art galleries, and vibrant downturn area. You can find some of the best restaurants in Lewes, shop at a boutique, try craft beer, and explore the many antique stores. Lewes has a rich history, you can explore the 1938 Lightship, local museums, and a 17^th Century house. Retirees also enjoy quality healthcare, with the nearly Beebe Healthcare Hospital being one of the best nationally-ranked hospitals in the city.

Dover

Dover is the capital of Delaware, and it is an affordable place to retire. It is a charming city with a rich history, and retirees get to enjoy the big city amenities including quality hospitals, good public transport, restaurants, and cultural attractions.

The city is a short drive to the shoreline, and you get quick access to coastal living- from fishing, beachcombing, surfing, and public beaches. Additionally, Dover has a rich history, and you can delve into the colonial architecture, museums, and monuments dotting the city.

Milton

Milton is a charming small town, and it offers retirees a laid-back lifestyle, affordable housing, and plenty of outdoor recreation opportunities. It is only 15 minutes off the coast, and you can enjoy the beaches of Delaware without being in the middle of activity.

While Milton was originally a ship-building hub, it has a vibrant downtown filled with shops, restaurants, antique stores, boutiques, etc. The city is home to the Dogfish Head Craft Brewery, which produces 250,000 barrels of beer annually; you can tour the Milton testing room and kitchen to sample some of the locally-produced beer.

If you are keen on exploring the outdoors, you can visit Prime Hook National Wildlife Refuge, which has 10,000+ acres of natural wetlands; you can hike, fish, and canoe all year round. You can also visit the 5-acre Lavender Fields at Warrington Manor.

Rehoboth

Rehoboth is known for its beautiful beaches and boardwalk, and it is a popular retirement destination for retirees seeking a coastal lifestyle. While it gets busier during the summer tourist season, retirees enjoy a laid-back lifestyle during the off-season. There are cozy residential neighborhoods and quiet areas to engage your creative side. It has a mile-long boardwalk, where residents can walk or ride a bike to stay active.

Though small-sized, Rehoboth has a bustling urban feel, and you will find shops, outlet stores, art galleries, and restaurants. You can also attend many events in the town, including the Autumn Rehoboth Jazz Festival, Gumbo Crawl, Kite Festival, Sandcastle Contents, and sidewalk sales.