How is Illinois for retirement?

Illinois is one of the wealthiest states, and it has the fifth-largest GDP in the United States. It has a thriving economy, developed infrastructure, rich history, and plenty of employment opportunities. Illinois is also a good state for retirement due to its relatively friendly tax system and outdoor recreation.

Most retirees find Illinois an attractive state for retirement due to its tax exemptions, outdoor recreation opportunities, and easy access to big city amenities. For starters, Illinois exempts retirement incomes from state income taxes; you won’t pay state income taxes on Social Security income, pensions, and income from retirement savings plans. However, the high property taxes and sales taxes make Illinois less desirable for some retirees.

Is Illinois tax-friendly for retirement?

Most retirees consider Illinois a tax-friendly state for retirees. Illinois is one of the states that don't tax retirement income, and retirees enjoy full tax deductions for Social Security, pensions, and retirement plan withdrawals. This means that your retirement income will be exempted from the state's 4.95% income tax rate.

When filling out your state income taxes, you will be allowed to claim a tax deduction on Social Security, pensions from private and public schemes, and incomes from retirement savings plans such as IRA and 401k. You will still pay state income taxes on other incomes such as salaries and wages.

You will also pay sales taxes on goods and services. The statewide sales tax rate is 6.25%, while local governments levy their own sales taxes, averaging 2.48%. The combined state and local sales taxes average 8.73%, which is above the national average. While most states exempt prescription drugs and groceries from sales taxes, Illinois levies sales taxes on drugs and groceries, but at lower rates than the standard sales taxes. You can expect to pay a 1% state sales tax, and 1.25% at the local level, totaling to 2.25%.

How much are property taxes in Illinois?

Illinois has the second-highest property tax rate in the United States, with an effective property tax rate of 2.07%. Homeowners pay about $2,070 annually for every $100,000 in home value. However, the property taxes can vary across the counties and cities.

If you use your home as the primary residence, you may be eligible for the Illinois homestead exemption. The exemption is determined by calculating the difference between the current property value and the Equalized Assessed Value (EAV) in 1977, with a limit of up to $6,000. If you qualify for the homestead exemption, you can reduce your property taxes by up to $1,000.

If you are at least 65 or older and your total household income is less than $65,000, you may be eligible for the senior citizen homestead exemption. You can get an exemption of up to $5,000 off your equalized assessed value and up to $8,000 if you are in Cook County.  

Pros of retiring in Illinois

You can live in Chicago

When you retire in Illinois, one of the cities you can settle in is Chicago, the third-largest city in the United States by population. Chicago offers a variety of cultural and entertainment options, including theatres, museums, restaurants, and festivals. You will always find something to explore and enjoy the benefits of a highly developed city.

Plenty of outdoor recreation opportunities

Illinois is dotted with lush forests, rolling hills, parks, nature preserves, and the magnificent Lake Michigan. If you want to enjoy the best of freshwater fishing, kayaking, boating, and watersports, Lake Michigan is an obvious spot. Still, there is an extensive network of other small lakes and rivers. You can also explore the state parks and forests for hiking, camping, and biking.

Four season

Illinois is one of the states that experiences all four seasons. Summer temperatures can go up 95 degrees Fahrenheit, while the winter temperatures can go as low as -20 degrees Fahrenheit. The climate is fairly consistent and temperate, and you will find something to do during each season.

Good healthcare

Illinois is ranked among the best states with statewide access to top healthcare. There are more than a dozen hospitals spread across the state, and you can access quality medical care across the state. Some of the top-ranked hospitals include Northwestern Memorial Hospital, Loyola University Medical Center, and Advocate Good Samaritan Hospital.

Cons of retiring in Illinois

Traffic congestion

Larger cities like Chicago can have heavy traffic, and more people come into the megacity for business, entertainment, or work. The noise and air pollution from the traffic can be overwhelming to retirees seeking a more relaxed retirement environment. If you want to avoid the messy traffic, you may want to settle outside the big cities.

High crime rate

Illinois has reported a year-on-year increase in crime rate, with about 4.3 incidents per 1,000 residents. The most common crimes are property-related crimes and violent crimes. Nevertheless, there are relatively safe neighborhoods in Illinois, including Chester, Campton Hills, and Orland Hills. If you plan to retire in Illinois, you should research cities and retirement communities with good security.

Unpredictable climate

While some retirees desire states with all four seasons, others may find the weather to be too erratic. You must be prepared to handle all types of weather including hot summers and extremely cold winters. The state is also known for extreme weather conditions, including hail storms, strong winds, flash floods, heat waves, and thunderstorms.  

Cost of living

If you opt to live in Chicago or other big cities, the cost of living will be higher than the national average. You can expect to pay more for groceries, fuel, housing costs, and healthcare expenses.

Best places to retire in Illinois

Galena

Galena is a popular retirement and vacation destination in Illinois, and it is the perfect place to retire for an outdoorsy person. It lies in the northwest of the state along the Mississippi River, making it an ideal place for retirees looking for a picturesque setting. Galena is also a historic town with well-preserved 19^th-century architecture. It has a lively downturn with art galleries, restaurants, boutique stores, and bars.

Chicago

If you like the hustle and bustle of a large city, you are sure to like it in Chicago. As the third largest city in America, Chicago is home to over 2.7 million people. You will have access to all the big city amenities like good food, sporting events, festivals, financial institutions, public transport, etc. There are many public parks, biking trails, beaches, hospitals, and universities within the city.

Palos Hills

If you want to retire in a small community while remaining close to big city amenities, Palos Hills is a good place to retire. Palos Hills is a suburb of Chicago, and you will have access to all amenities and attractions that Chicago has to offer. The city has good housing, healthcare facilities, and public transport. It also has one of the lowest crime rates in Chicago; property-related crimes and violent crimes are rare, and they are below the national average.

Champaign-Urbana

If you desire an active retirement in a college-town environment with opportunities to pursue further education, Champaign-Urbana is a good place to retire. It is a bustling college town, and it offers retirees a variety of cultural attractions, outdoor recreation, and easy access to healthcare facilities. Residents get to enjoy sports events, arts, and culture from the University of Illinois. You can also find cultural museums, cafes, restaurants, and bars in the town.