When you have your sights set on retirement, choosing where to live is one of the bigger decisions you’ll need to make. Not only will it impact your lifestyle, but it also affects your budget. Some states are more affordable than others. If you choose one that doesn’t align with your budget, you may not be as comfortable as you’d hope. If you want to make sure you can retire well in Virginia, here’s what you need to know about living in the Old Dominion.
Cost of Living
The quickest way to assess the overall affordability of a state is by checking out its cost of living scores. Since the national average is permanently 100, you can make fast comparisons. Scores higher than that mean a state costs more, while ones below that mean the state costs less.
It also lets you compare states to each other. Whichever has the lower scores is more affordable.
The cumulative cost of living score in Virginia is 101.5, putting it slightly above average. For its individual category scores, there is a bit of a mix. Groceries, utilities, and transportation are below average, coming in at 96.1, 96.5, and 88.7, respectively. Healthcare is near the average, sitting at 99.9.
On the higher cost side is housing. In that category, Virginia has a cost of living score of 111.7. That’s also supported by home values in the state. While the national average home value is $287,148, Virginia has an average of $323,717. That’s a difference of more than $36,500.
While some may assume that means homes are simply nicer in Virginia, that isn’t necessarily the case. Instead, if there were two comparable properties – one in Old Dominion and one in an area representing the national average – the former would simply be more expensive.
Tax Considerations
One crucial point that many relocating retirees overlook when choosing a retirement destination is tax rates. Since how much you’ll need to pay to handle your taxes can have a substantial impact on your budget, it’s important to fact them into the equation.
Virginia does have a state income tax. Like federal taxes, there is a bracketed system, with rates ranging from 2 to 5.75 percent.
However, certain kinds of retirement income are exempt. For example, Virginia does not tax Social Security or Tier 1 Railroad Pensions. There is also an age deduction for taxpayers that are 65 or older that is worth up to $12,000. However, your income level plays a role. If you want to see if you’d qualify for a deduction, you can use the age deduction calculator to get an estimate.
Income that isn’t exempt or covered by the deduction is taxable. You can use the income tax calculator to approximate what you’d owe.
When it comes to sales tax, Virginia does have one. However, it’s relatively low. The base rate for most items is 5.3 percent. However, there are some municipalities with rates as high as 7 percent.
Virginia’s property taxes are also lower than average. Additionally, residents who are at least 65 years old may qualify for tax relief. Your household income level determines how much you’re eligible for, as well as the value of certain assets, features of the property, and more.
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Part-Time Job Opportunities
For many retirees, leaving the workforce entirely isn’t part of their immediate plan. Instead, they intend on finding part-time job opportunities, allowing them to supplement their income while staying social and active. By looking at a state’s unemployment rates, you can estimate the availability of part-time jobs.
As of May 2021, the Virginia unemployment rate was 4.5 percent. That’s more than a full percentage point below the national average for that time, which was 5.8 percent. All in all, that’s good news, as it means part-time jobs should be reasonably available, especially if you’re open-minded about the kind of work you’ll do.
Best Cities for Retirees in Virginia
When you are planning your retirement, you can’t just choose a state; you also have to select a city. Luckily, there are plenty of great options in Virginia.
If you’re active, Falls Church could be right up your alley. There are vibrant retirement communities, golf courses, and a fun urban feel.
For art lovers, Abingdon can be a stellar choice. There are numerous festivals during the year, bringing in creative types from all around the area. Plus, you can still enjoy the outdoors thanks to nearby hiking opportunities.
If you want high-quality healthcare and some historic charm, head to Williamsburg. The city rates well for medical services, is historically significant, and is home to William & Mary College, giving you learning opportunities, too.
Finally, if you’re looking for a small town, try Winchester. It’s affordable, relaxed, and near many attractions. Whether you want to spend your time outdoors or cruising through museums, there is something nearby.
How Much Money You Need to Retire Well in Virginia
Since Old Dominion has a moderate cost of living, you’ll need access to a decent amount of income. In general, to retire well in Virginia, around $64,277 a year in retirement income will do the trick. You’ll be able to handle your needs comfortably, as well as some wants, ensuring your post-workforce years are as enjoyable as possible.
Retiring well in Virginia can take work and planning. Do you have any other tips that could help someone pull it off? Share your thoughts in the comments below.
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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
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