The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Holyoak on August 16, 2018, 01:15:47 PM
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Anybody doing their ER/retirement in Maine? It seems taxes can be a bit much on typical ER type income (no tax on SS, but pretty much everything else), as well as pretty steep RE taxes, but I wonder if the offset in a high quality of life, can make it worth it. Twenty five years ago I would have been very interested in a very remote location, but now I think it wise to think small town, and being kinda remote/lots of privacy and especially quiet. I'm just south of Erie PA, so I know well lots-o-snow, and very cold winters.
Thinking lower half of the state, inland might be a nice idea, and would appreciate your insights and experience living in ME, especially as an ER Mustacian. Thank you.
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I just moved to Maine early this year. Doing a very rough estimate, the biggest, by far, difference is that Real Estate in Maine is very pricey. Even moving inland doesn't help that much. I'd imagine you'd be looking at a 50-100% increase for cost of housing.
Cost of living estimators put inland southern Maine to be about 25% pricier than Erie.
Comparing taxes will be difficult since Pennsylvania has a strange way of handling taxation. But I think you can expect your biggest expense to be property tax.
Income tax in Maine will be lower if you're below the starting bracket, but more if you're above it (~20k single, ~40k married). Break even is probably around 35k single; 60k married.
Sales tax is more or less a wash.
I enjoy living here, but you're right. It's above average in cost to live here. It's probably not a place that I'll end up living for the long-term, but it is lovely.
If you want, long-term rentals during the winter are very affordable. Honestly, renting out a house for the winter months can be cheaper than the rent on a comparable apartment for a year-long lease. Come see how you might survive enjoy a winter in Maine!
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I agree FIP; real estate and rent prices seem rather high, but I'd pay it if I can find what I want, in an area I want to live in. As for RE taxes, I guess like other places it varies a lot. Here are two kinda similar houses/price. One says taxes are $689:
https://www.realestatebook.com/homes/usa/me/limington/00-norton-road-id105462545?partner=fp14a&utm_source=land+watch&utm_campaign=book+10202&utm_content=property+98870363&utm_medium=feed
This one is $4600!
http://lh.mainelistings.com/details/1356893#leaf
Says it's on a "pond", but still...
Here is a link, showing tax impact of Maine and it looks pretty crappy:
https://smartasset.com/retirement/maine-retirement-taxes#maine/retirement-tax-friendliness
from it:
Are other forms of retirement income taxable in Maine?
Yes. Income from retirement savings accounts like an IRA or 401(k) is taxable. Pension income, whether from a public employee pension fund or from a private employer, is also taxable.
Maine does allow for a deduction of up to $10,000 per year on this income. However, that deduction is reduced in an amount equal to your annual Social Security benefit. So, for example, if you receive $12,000 in Social Security benefits this year, you cannot claim the deduction on your other forms of retirement income. In that case, all your other retirement income will be taxed as part of your gross income at the rates shown in the bracket table below.
Income Tax Brackets
(https://s19.postimg.cc/9t7u8y7ab/MEtax.jpg)
YOWCH!
As much as certain places in PA can be crazy with regard to RE taxes, Maine seems to really hit you hard in other ways too. Hmm...
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Those houses are cheap but property taxes are high.
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Well based on some of your other posts, it sounds like you'll be paying 0 on income tax. Like a lot of other states, property taxes can change a lot from county to county. The more rural the bigger the share you have to cover for public utilities and infrastructure. But property taxes are just one fogure out of several. Evaluate based on all of them together!