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Where retirees may not want to live

06/28/11

While much attention is paid to proper savings for retirement, it is also important for Americans to consider where they want to live in their golden years. Some states have extremely high taxes, while others do not exempt retirement income from state taxation, according to Kiplinger. Relocating to a state with unfriendly tax breaks can heavily cut into a retirement savings account or annuity-based fund.

The most unfriendly retirement states to live in are mainly in the northern half of the country, the news source reports. Vermont takes top honors of the state most retirees may want to avoid. There is no exemption for retirement income and all out-of-state pensions are fully taxed. The state's property taxes are also among the top ten highest in the nation and a 9 percent sales tax is imposed on prepared foods and lodging.

Just a few hours south of the Green Mountain State, residents of New Jersey pay the highest annual tax bill of any state, according to the Tax Foundation. Fortunately for residents, New Jersey does not tax Social Security benefits or military pensions.

The friendliest place for retirees is Wyoming, Kiplinger reports. Residents pay some of the lowest tax rates in the country and there is no state income tax. 

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