How is Maine for retirement?

When retirement beckons, you may envision a retirement filled with the luxury of time, leisure strolls, and an opportunity to explore your hobbies. Maine is a popular place to retire and for a good reason. With miles of coastline and natural beauty, the state offers an opportunity for active retirement.

Maine is ranked among the best states for retirement due to quality healthcare, low crime rate, low cost of living, plenty of recreation opportunities, and tax benefits. The state does not tax Social Security benefits, but all other forms of retirement income like 401(k) withdrawals and pensions are subject to state income taxes. However, you may be eligible for a deduction of up to $10,000 on pension income per year.

Is Maine tax-friendly for retirement?

Maine is a moderately tax-friendly state for retirement. The state exempts Social Security income from state income taxes, but other retirement incomes are taxable. Retirement incomes such as distributions from 401(k) and IRA, public pensions, and company pensions are taxed at the state income tax rates.

However, retirees enjoy a deduction of up to $10,000 annually on pension income. This deduction is reduced by an amount equal to your annual Social Security benefit. For example, if you received $15,000 in Social Security benefits, you won't be eligible to claim the deduction. When this happens, all your retirement incomes except Social Security income will be included in your gross income and taxed at your tax bracket rate.

The state income tax rates range from 5.80% to 7.15%, depending on your filing status and income.

How much are sales taxes in Maine?

Sales taxes are relatively low in Maine, with a statewide sales tax rate of 5.5%. Counties and states do not collect local sales taxes. Therefore, the highest sales tax you can expect to pay on tangible goods and services in Maine is 5.5%. However, the state exempts certain items from sales taxes, including groceries and prescription drugs.

How much are property taxes in Maine?

Maine has an above average property tax rate, with an average effective property tax rate of 1.09%. Maine homeowners can expect to pay $1,090 per $100,000 in property value. The typical Maine homeowner pays an average of $2,756 in annual property taxes.

If you have owned your home for at least 12 months and you use it as your primary residence, you may be eligible for the Maine homestead exemption. Eligible Maine homeowners may be eligible for an exemption of up to $25,000, which is deducted from their assessed property value before local taxes are applied. Additionally, homeowners age 62 or older may be eligible for the veteran exemption of up to $6,000 annually.

Pros of retiring in Maine

Low cost of living

If you want to cut down your costs, Maine can help you live a decent life on a budget. You will generally pay less for groceries, housing, healthcare, and transportation than in bigger cities without compromising the quality of life.

Safe cities

Maine has a reputation as one of the safest places in the United States, and it has one of the lowest property and violent crime rates. The low population and the low population density mean that most people know each other and often look out for each other. Also, the police force is well-funded and well-trained to maintain order across the state.

No traffic jams

If you are moving from busy states like California and Maryland with the highest traffic rate, you will be pleased to know there are hardly any traffic jams in Maine. Due to the low population density, you won’t experience delays on the major highways, including in the bigger cities.

Seafood galore

Maine is popular for its delicious seafood, with lobsters being a common delicacy. Maine’s seafood is prepared in the traditional way to give it natural flavors, and you will find many restaurants serving the most delicious lobster cuisines. Other seafood you will find in Maine include crab, scallops, oysters, and mussels. 

Abundance of outdoor recreation

If you desire an outdoorsy and active retirement lifestyle, you will have plenty of outdoor recreation opportunities in Maine. Maine is home to over 7.5 million acres of forests, 3600 miles of coastline, 97 mountains, and over 3,400 lakes. Regardless of where you live in Maine, you won’t be more than an hour away from some of the best hiking, fishing, boating, and camping in the state.

Delicious food

Apart from Lobsters, Maine's traditional cuisines have attracted a lot of attention across the nation. The state is known for sustainable farming practices, and you can buy fresh farm produce at the farmers' market. You can find fine dining options at friendly prices. You can also taste specialty foods from local chefs.

Excellent healthcare

Maine ranks as one of the best states for healthcare. It has a strong network of healthcare providers and accessible health insurance. Also, some of the leading hospitals in Maine are ranked among the best healthcare facilities in the US. Some of the top-ranked hospitals include Maine Medical Center, Rumford Hospital, and Inland Hospital.

Cons of retiring in Maine

Chilly winters

While Maine experiences all four seasons, the winters can get fairly cold. The winter months last from November to January, and you should be prepared for winter coats, snow boots, hats, gloves, shovels, and snow blowers. In some harsh winters, you can see more than 100 inches of snow.

High taxes

The state income tax rates can be as high as 7.15%, which can significantly shrink your retirement paycheck. Also, the high income taxes can be a financial burden for seniors who plan to work in retirement.

Lack of diversity

If you desire to retire in a state with plenty of cultures and diversity, you will be disappointed in Maine’s lack of diversity. At least 90% of the state’s population is white, and you won’t find ethnic diversity. This means there will be limited ethnic foods and cultures.

Limited job opportunities

While Maine has a low unemployment rate, there are hardly any job opportunities. Many of the jobs are blue-collar and high-specialized, and they are limited to the major cities like Portland. Outside the major cities, the state is mainly rural, and you won’t find corporate jobs.

Rural isolation

Maine is mainly rural, and it can be a good option if you are seeking a peaceful and secluded retirement lifestyle. However, living in the rural areas can bring a feeling of isolation from the rest of the community and social activities. Also, you will have limited access to basic services like healthcare, shopping centers, public transportation, and airports.

Best places to retire in Maine

Portland

Portland is the state’s largest city, and it offers retirees a blend of urban amenities and coastal charm. Its location along Casco Bay offers stunning views and plenty of water activities, including fishing, boating, kayaking, and sailing. You can explore the historic neighborhoods in the Old Port district, which features brick buildings and cobblestone streets. Portland has a thriving arts scene, and you can find art galleries, theatres, live music venues, and annual festivals.

Bar Harbor

As the gateway to the Acadia National Park, Bar Harbor is a favorite retirement destination for nature lovers and outdoor enthusiasts. Retirees can explore the stunning ocean views, the park's hiking trails, and scenic evening drives; you will find opportunities for hiking, biking, camping, sailing, fishing, etc. Additionally, Bar Harbor has a bustling downtown, and you can find shopping malls, art galleries, theatres, restaurants, and bars.

Augusta

Augusta is the capital city of Maine, and it has the highest percentage of seniors over 65, at 25%. It offers a small-town charm but with big city amenities, including public transportation, shops, restaurants, museums, gardens, and green spaces. The state also hosts the Kennebec River Brewfest every summer. You can spend time at the Viles Arboretum, Maine State Museum, and the Old Fort Western.

Waterville

If you plan to retire in a college town with a vibrant arts scene, Waterville may be the place for you. The state is home to Colby College and Thomas College; Colby College hosts the Colby College Museum of Arts, which has numerous contemporary art pieces. You can also watch performances at the Waterville Opera House. The city’s location on the Kennebec River offers seniors plenty of recreation opportunities, including rafting, kayaking, and canoeing.

Brunswick

Brunswick is another college town with a rich academic heritage. It is home to Bowdoin College, which hosts a museum of art, art events, and lectures. Brunswick has a vibrant downtown that features historic architecture, shops, art galleries, and dining options. The town’s location on the mid-coast offers opportunities for outdoor recreation, including swimming, fishing, and sailing.