After years of hard work and dedication to your profession, retirement seems like a vacation. And to truly make it happen, you need proper planning and preparation, as not every place can be so retirement-friendly as North Carolina. If you’re not local, you will find this informative guide useful.
North Carolina has a lot to offer: the Appalachian Mountains, sandy beaches, and, most importantly, a reasonable cost of living.
“How much do I need to retire?” This guide will provide a clear path to retiring comfortably in North Carolina, living on a guaranteed fixed income stream for the rest of a retiree’s life. You will learn how to:
- Take the guesswork out of retirement income planning.
- Solve for your fixed income amount.
- Increase your retirement income up to 24% by reducing tax liability.
- Efficiently structure your income from 3 different retirement plans.
This retirement income planning guide is ideal for
- North Carolinians who don’t want to spend less money when they retire but maintain or improve their current lifestyles.
- Retirees that know they’ll have to budget their savings and are looking for the best way to invest for income.
- Those who want to simplify their income problem by expecting a monthly paycheck as if they are still working.
- Consumers who want more income than a CD but want the guarantees that come along with them.
The key to a comfortable retirement is laying a foundation for a fixed income to pay for essential monthly expenses as if you still were employed. Any investments outside the desired monthly paycheck are secondary.
The goal is to achieve your desired fixed income with the least amount of money, leaving the remainder of your retirement savings for vacations, luxuries, investments, and emergencies.
- If you are far from retirement age, read Empower Retirement.
- If you are nearing or currently in retirement, read: How Long Will My Money Last in Retirement?
- Here’s a great guide about living in Charlotte.
To retire comfortably in North Carolina starting today, you will need to save at least $65,000.
Here’s how we came to this amount.
- The Cost To Retire In North Carolina
- North Carolina State Tax Guide for Retirees
- How Do We Generate a Guaranteed Income?
- How To Pay for Long-Term Care in North Carolina
- How to Pay for a Funeral in North Carolina
- How To Start Retiring Comfortably
- 3 Best North Carolina Cities For Retirement
- Pros of Retiring in North Carolina
- Next Steps
- Request A Quote
The Cost To Retire In North Carolina
One must understand the statistics to understand how much it costs in North Carolina.
Cost Of Living
The cost of living in North Carolina is similar to Wyoming and Wisconsin, while the state also offers lower than national average expenses than in other states.
According to the U.S. Census Bureau, the median monthly cost for rent or mortgage in 2019 is
- Mortgage: $1,314
- Rent: $907
The estimated monthly expenses for a couple in Charlotte are $1,898.46.
The inflation rate is currently at 1.6% in the Southeast region of the United States for the past year.
The above statistics make North Carolina an appealing destination for retirees. Additionally, seniors in favor of an active lifestyle won’t get bored in the state.
Is Retirement Income Taxable in North Carolina?
North Carolina isn’t as tax-friendly as other states (e.g., Florida), but it still offers a fair rate.
- Federal Taxes: Between 12% and 24% on average.
- State Taxes: 5.25%.
The Cost of Healthcare
The cost of Medicare starts at $148.50 a month and can reach up to $504.90 per month.
The Cost of Long-Term Care
In 2020, the average cost of care per year in the state of North Carolina was
- Homemaker Services: $45,760
- Home Health Aide: $48,048
- Adult Day Care: $15, 340
- Assisted Living Facility: $45,600
- Nursing Home Semi-Private Room: $87,600
- Nursing Home Private Room: $96,725
Funeral Costs
The average cost of a traditional funeral in North Carolina is $7,461.
North Carolina State Tax Guide for Retirees
If you’ve been discouraged by the state’s income tax, there is one particularly good advantage of retiring in North Carolina. And this is a tax-free Social Security benefit.
- State income tax is 5.25%.
- The statewide sales tax ranges from 4.75% to 6.98%.
- The state of North Carolina does not tax Social Security benefits (however, 401(k) and pension distributions are taxed).
- No estate or inheritance tax for North Carolina retirees.
Overall, retirees are in the win with the balanced income tax and affordable living costs. In addition to Social Security, there are a few more ways to generate income.
How Do We Generate a Guaranteed Income?
To create a fixed income, one must utilize a few retirement tools to create a guaranteed lifetime income. These tools are:
- Social Security Income: The average SSI paycheck in 2021 is $1,543 a month (per person).
- Roth IRA Annuity: Provide a monthly paycheck for life, tax-free. Retirement income increases up to 24%.
- Non-Qualified Annuity: Provides a monthly paycheck for life; only the interest earned is taxed.
By utilizing these three income sources, a retiree could collect a monthly paycheck for life and reduce their tax bill, leaving more money for savings to pay for long-term care costs in the future.
What if I don’t have a Roth Annuity or a Non-Qualified Annuity?
If you’re nearing retirement, you might not have these options for your income planning.
Don’t fret.
You can roll over a 401(k) or transfer an IRA to an annuity, just like the other two retirement plans. However, you will be taxed on the total income amount versus none or a portion of your income from the Roth or non-qualified annuity.
Solving For Fixed Income
Based on the estimated monthly expenses, housing, and Medicare, a household (2 people) would need to generate the following per month to pay for the essentials.
- Total Monthly Expenses with a Mortgage: $3,360.96 a month
- Total Monthly Expenses With Rent: $2,953.96 a month
You will need a few sources of income coming in monthly to pay for these costs:
- Social Security Income: A couple would bring in an average of $3,086 per month.
- Level Income Annuity: $65,000 in retirement savings would generate an additional $274.00 a month for life.
- Increasing Income Annuity: $75,000 in retirement savings would generate an additional $274.00 a month for life and increase overtime to help with inflation.
Note* The annuity premium amounts can be lower depending on age and the amount of time deferring in the annuity before starting the income stream. The longer you wait to begin the guaranteed lifetime income, the less money will be required to generate the desired income upfront.
You can find your North Carolina Social Security Administration office here.
How To Pay for Long-Term Care in North Carolina
Above, we mentioned the median costs of long-term care services and facilities in North Carolina are costly. A long-term care annuity will offset these costs in the future. Let’s see how much retirement savings would pay for these services and costs.
Purchasing a Long-Term Care annuity with a portion of your retirement savings could quickly offset these costs. Most LTC annuities double or triple your investment to pay for these costs, tax-free, freeing up more of your retirement savings and fixed income that generally would pay for these expenses.
- Nursing Home (Private Room): $193,450 (Preferred) and $290,175 (Standard)
- Home Healthcare: $96,096 (Preferred) and $144,144 (Standard)
- Assisted Living: $91,200 (Preferred) and $136,800 (Standard)
How to Pay for a Funeral in North Carolina
The average cost of a funeral in North Carolina is $7,353. Burial Insurance (final expense) can offset these costs. A burial insurance policy can cost as little as $48.85 monthly for a $10,000 benefit at age 62. You can reduce that cost and get a $25,000 benefit by purchasing a 20-year term life insurance policy for as little as $27.27 a month.
How To Start Retiring Comfortably
Achieving retirement goals while being financially secure is feasible in North Carolina. You get a chance to live a fulfilling life in comfort and stress-free as you’ve deserved.
Retirement in North Carolina takes only a few steps:
- Calculate your essential monthly expenses.
- Subtract those expenses from your Social Security income.
- Request a quote for the remaining amount.
- Pick out your annuity and apply.
- Start the income at your targeted retirement age.
- Live comfortably.
3 Best North Carolina Cities For Retirement
North Carolina’s small towns are ideal for retirement. The state offers mild weather and excellent scenery, therefore, attracting retirement communities to its cities. Many retirees like to spend time in nature, enjoying sightseeing and socializing with their community. This and more can be expected from the state. Apart from beautiful scenery, North Carolina offers low taxes as the state doesn’t tax Social Security retirement benefits.
The blend of the relatively low cost of living and health care accessibility makes retiring in North Carolina an appealing and realistic plan.
- Asheville
- Population over 65: 30%
- Walkability score: 37/100
- Hickory
- Population over 65: 26%
- Walkability score: 28/100
- Chapel Hill
- Population over 65: 21%
- Walkability score: 34/100
By retiring in North Carolina, Ashville or other cities, you will enjoy a peaceful day-to-day life in a mild climate and affordable cost of living. As a matter of fact, retirees can benefit from housing rates that are lower than the national average and reasonable prices for recreational activities and public transportation.
Pros of Retiring in North Carolina
North Carolina offers many retirees a handful of advantages to comfortably retire in the state.
- Low cost of living: Housing costs are lower than the national average.
- Modest tax income rate: The 5.25% tax rate is lower than in most bordering states.
- Mild climate: North Carolina has mild weather throughout the four seasons.
- Recreational opportunities: North Carolina offers activities for those with active lifestyles and those who enjoy being in nature.
- Tax-friendly state: There is no Social Security Income tax, along with low property taxes.
Next Steps
A comfortable retirement is within reach for North Carolina residents who follow this guide. We showed you how to plan for a guaranteed fixed income that will last the rest of your life and how much money you need to retire comfortably in North Carolina. Use our tips and resources to ensure you’re on track for the retirement lifestyle you want – then contact us for a quote. We’ll help make your retirement dreams a reality.
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