How is Michigan for retirement?

When considering where to spend your golden years, you want a place that offers comfort, convenience and a sense of community. One state that matches these attributes is Michigan, which is known for Midwestern hospitality and plenty of recreation opportunities. Learn how Michigan fares as a retirement destination.

Michigan is ranked as one of the best states for retirement due to its beautiful scenery, low cost of living, affordable housing, good healthcare systems, and tax benefits. The state does not tax Social Security retirement income, and it provides large deductions on other types of retirement incomes like 401(k) distributions, private pensions, and public pensions. Michigan homeowners also pay an average effective property tax rate of 1.32%.

Is Michigan a tax-friendly state for retirement?

Michigan is a relatively tax-friendly state for retirement. The state does not tax Social Security retirement income, but other forms of retirement income are subject to state income taxes. When filing state income taxes in Michigan, you can deduct your Social Security retirement income from your Adjusted Gross Income.

If you receive pension income and distributions from retirement savings plans, you will be eligible for a deduction. Individuals born before 1946 can claim a deduction on private pension income of up to $54,404 for single filers, or up to $108,808 for joint filers. You can also claim a deduction on interest income, dividends, and capital gains up to $12,127 for single filers and $24, 254 for joint filers. Public pensions are exempt from state income taxes.

If you were born between 1946 and 1952, you can claim a deduction on private pensions and distributions from retirement savings plans up to $20,000 for single filers or $40,000 for joint filers. If you receive a government pension, you can claim a deduction of $35,000 for single filers and $55,000 for joint filers; if both couples receive a pension, they can claim up to $70,000. The income that remains after deductions is taxed at the state income tax rate of 4.25%.

How much are sales taxes in Michigan?

Michigan has a sales tax rate of 6% on tangible goods, which is above the national average. However, counties and cities do not collect an additional sales tax. Therefore, the highest sales tax you can expect to pay in the state is 6%. Electricity, gas, and home heating fuels for residential use are taxed at 4%.

How much are property taxes in Michigan?

Michigan has a relatively high property tax rate, with an average effective property tax rate of 1.32%. Michigan homeowners can expect to pay property taxes equivalent to $1,320 for every $100,000 in property value. Generally, you can expect to pay higher property taxes in some areas like Wayne County than in other areas.

Homeowners may qualify for the Michigan homestead exemption. To be eligible to claim the homestead exemption, your household income must be $63,000 or less, while the assessed property value must not exceed $143,000. You must have owned or rented the property for at least 6 months during the year when property taxes are levied.

Pros of retiring in Michigan

Low cost of living

Michigan has a reasonable cost of living, and you get to enjoy more with a small budget. You will generally pay less for everyday expenses like groceries, utilities, gas, healthcare, meals, and entertainment.

Affordable housing

Michigan offers affordable housing options to residents, with median home values of $235,361 compared to the national average of $348,853. Apartment rental prices average around $1,000, but it can be pricier as you move to the downtown area. You can find housing options that fit your budget, and this presents an opportunity for homeownership at relatively affordable prices.

Four seasons

You will experience all four seasons during the year, and this brings a variety of outdoor lifestyles. Spring temperatures thaw the winter cold, and breathe life into the countryside, while summers are generally warm and inviting, and it is a good time to explore the sand beaches. Autumn temperatures are crisp, and they turn the leaves in vibrant red, yellow, and orange. When winter arrives, it brings a lot of snow for winter sports.

Beautiful scenery

Once you step into Michigan, you will enjoy breathtaking and gorgeous sceneries. In the Upper Peninsula, you can tour the Porcupine Mountains, numerous waterfalls, and sandy dunes. Other beautiful sceneries include the Black Rocks of Presque Isle Park, Fisherman’s Island State Park, and the Tahquamenon Falls.

Outdoor recreation

If you are an outdoor enthusiast, a thrilling experience awaits you in Michigan. The state has stunning landscapes, scenic views, acres of forests, long coastline, lakes, rivers, waterfalls, etc. You can pursue various outdoor pursuits like kayaking, boating, fishing, golfing, hiking, camping, hunting, ice skating, skiing, and snowmobiling.

Small-town living

After working in the city for a long time, you may desire a calmer and slower-paced retirement. Michigan has many small towns that offer peaceful living both in the Upper Peninsula and in southern Michigan. These towns offer easy access to protected forests, small cottages, lakes, and quiet rural life.

Thriving sports

If you are a fan of sports, you will be pleased to know that Michigan, especially Detroit, has a sports team in each of the major leagues. The city is home to the Detroit Lions NFL, Detroit Red Wings NHL, Detroit Tigers MLB, and Detroit Pistons NBA. There are also a variety of college sports teams to support, including the Michigan Wolverines vs. Michigan State Spartans.

Good food and beer

Michigan is a foodie’s paradise, you can experience a variety of food options from different cultures and counties. You get a taste of burgers, pizzas, burritos, and pastries to work out your taste buds. Additionally, Michigan has a thriving craft beer scene, with more than 350 local breweries to make sure you will never go thirsty.

The state hosts several festivals like the National Cherry Festival and Grand Rapids International Wine, Beer, and Food Festival, and you get an opportunity to explore the local food and beer scene.

Cons of retiring in Michigan

Harsh winters

Michigan has some of the coldest winters in the US, and temperatures often drop below freezing. The winters tend to be long and with lots of snow, and you should stock up warm clothing, and snow removal tools, and prepare your home for the below-freezing temperatures.

Poor roads

Michigan roads are far from perfect, and you can expect to find potholes and falling concrete. According to the state's transport department, 40% of the state's roads are in poor condition, 35% are in fair condition, and only 25% are in good condition. The road conditions are exacerbated by the unpredictable weather, which causes cracking and potholes. Unfortunately, budgeting issues mean that the roads are not fixed on time.

Crowded beaches

Michigan is a popular vacation destination, and people from all over the country storm into the state beaches during the summer. You will find people lining up along the shores for the perfect sun, and you will struggle to get a good spot if you get there late.

High crime rate

Michigan has a higher crime rate than the national average, with 4.73 violent crimes per 1,000 residents. The crime is more prevalent in the larger cities like Detroit, Jackson, and Muskegon Heights. In 2022, Detroit was ranked among the most dangerous city in America to live in, and it experiences all types of crime from petty crimes to homicides.

Unpredictable weather

When you retire in the Great Lakes state, you should be prepared for pretty unpredictable weather. During the summer, temperatures can drop to freezing in a day, or experience a massive hail storm. Also, during winter, it can get exceptionally warm, which lets you forget about the below-freezing temperatures for a while.

Best places to retire in Michigan

Ann Arbor

Ann Arbor is an intellectual hub, and it hosts the University of Michigan. The city has a youthful feel, and you can enjoy the thriving cultural scene and entertainment options. Residents get access to excellent healthcare, affordable housing, and plenty of outdoor recreation. There are parks, gardens, walking trails, and green spaces throughout the city.

Traverse City

Traverse City lies on the shores of Lake Michigan's Grand Traverse Bay, and it is a haven for retirees seeking a tranquil retirement. The city hosts the annual National Cherry Festival, where visitors sample the bountiful cherry orchards with different flavors and colors. You can also visit the Sleeping Bear Dunes National Lakeshore, which is dotted with sand dunes, forests, and beaches. The city has a charming downtown with art galleries and theatres.

Grand Rapids

Grand Rapid serves as a gateway to outdoor adventures, and you can explore the nearby nature center, museums, Frederick Meijer Gardens, Meyer May House, and the Downtown Market. The city’s location along the Grand River offers plenty of outdoor adventures, including hiking, biking, and picnics. Also, as the childhood home of the 38^th US President, Gerald Ford, you can find his preserved memories at the Gerard R. Ford Presidential Museum.

Petoskey

Petoskey offers a small-town charm, and it is nested along the shores of Lake Michigan’s Little Traverse Bay. This coastal retreat town offers a quiet but active retirement, away from the hustles and bustles of the big cities. It offers plenty of water adventures, including hiking, boating, and fishing. The city’s downtown is dotted with art galleries, cafes, restaurants, and boutiques.