How is Texas for retirement?

Texas is the largest state in the contiguous United States and the second-most populous state. The expansive geography provides retirees with diverse weather, culture, and outdoor opportunities. Regardless of where you decide to live in Texas, you will be impressed by the Lone Star state. But, how is Texas for retirement?

Texas is a good state for retirement due to its low cost of living, low taxes, and exciting outdoor adventures. Since there are no state income taxes in Texas, retirees won't pay state income taxes on Social Security benefits, pension, and retirement account distributions, which means thousands of dollars in tax savings. The low crime rate, plenty of sunshine, and diversity make Texas an attractive state for retirees.

Is Texas a tax-friendly state for retirement?

There are no income taxes in Texas, and this means you won’t owe state income taxes on retirement income such as social security income, pension income, and 401(k) distributions. If you want to retire on a budget, Texas is a good state for retirement since the absence of income taxes saves you thousands of dollars each year.  

Likewise, if you decide to find a part-time job in retirement, you won't pay income taxes on the wages you earn. The relatively low unemployment rates in Texas mean that you can find a job that is convenient for you while still creating time to explore the outdoors.

Additionally, Texas has a sales tax on certain commodities. The state sales tax rate is 6.25%, and local governments charge up to 2% in local sales tax. On average, you can expect to pay 8.25% in cumulative state taxes. Additionally, Texas imposes a sin tax of 8.25% on alcoholic beverages and $1.41 per pack of cigarettes.

How much are property taxes in Texas?

Texas has an average effective property tax rate of 1.69%, which is above the national average. This means you will pay about $1,690 in property taxes each year for every $100,000 in property value. This puts Texas above Florida (0.83%) and New Mexico (0.78%).

Texas homeowners may qualify for a homestead exemption if they meet certain requirements. If you qualify for this exemption, you will be exempted at least $25,000 of the property value from property taxes, while seniors above 65 can claim an additional $10,000 in property value.

Pros of retiring in Texas

Good weather

While you won't have the benefit of all four seasons in Texas, you will enjoy warm weather almost all year round. Winters in Texas are mild, and snowfall is rare. During the winters, temperatures can range between 50 degrees to 70 degrees. Summers are generally sunny and hot, and it is usually a good time to explore the outdoors.

Low cost of living

The cost of living in Texas is generally lower than in most states. You should expect to pay a low cost for groceries, entertainment, and healthcare. Also, housing is affordable, and the land is cheap.

Urban and rural areas

Texas is home to some of America’s fastest-growing cities, and you can live your dream retirement in Houston, Dallas, San Antonio, and Austin. If you are not a fan of the cities, Texas has less populated rural areas that you can consider moving into. There are active retirement communities where you can enjoy retirement amongst your age mates.

Better healthcare

When you retire in Texas, you will be close to some of the best medical facilities and medical professionals in the United States. There are more than 600 medical facilities spread across Texas, and you can find specialist hospitals for different health needs.

Cons of Retiring in Texas

High crime rate

Areas like Odessa, Houston metropolitan area, and Beaumont have higher crime rates than other towns in Texas. However, some areas in Texas are relatively safe, and you should do due diligence when choosing your preferred locations and neighborhoods. If you have your eyes on a low-crime state, check how New Hampshire performs as a retirement destination.

Severe weather

Even with the (almost) year-round sunshine, Texas is prone is severe weather. The state is susceptible to hurricanes each year, and there are periods of severe thunderstorms. Also, Texas has recorded the highest number of tornadoes than any other state, and the Red River Valley of North Texas is more vulnerable to tornadoes.

Summer heat

Texas has more sunny days than most states, but the summer heat may become too much to deal with. The summer falls between May and September, and August is usually the hottest month, with plenty of humidity. Temperatures may reach the highs of 90 degrees, and lows of 70 degrees.

Best places to retire in Texas

Granbury

Granbury is only an hour from Dallas, you can find most amenities in this city. There are shopping malls, restaurants, nightlife, golf courses, and hospitals. You can visit the beach at Granbury Lake, go fishing, kayaking, hiking, or go for a morning run in the public parks. Also, the city hosts a historic town square where you can find breweries, restaurants, and boutiques.

Brownsville

Located in South Texas, Brownsville is a good city for retirement if you want to have access to the coastline, explore outdoor adventures, visit historical buildings, and visit the beach to watch dolphins. You can also go walking and biking at the public parks and nature centers.

McAllen

McAllen is one of the cheapest towns in Texas. This city is located in southern Texas, and it sits along the Rio Grande. Residents have access to all amenities that you would expect in a big town. If you need big-city amenities, San Antonio is about four hours drive from McAllen.

Houston

Houston is the biggest city in Texas and the fourth-largest city in the United States. It is located in eastern Texas, and it has a museum district and theatre district that provide recreation opportunities to retirees. The city has one of the largest retirement communities in Texas. Seniors have access to good healthcare, and the city hosts some of the best hospitals such as Houston Methodist Hospital.