Can You Afford to Die?

Steve McDonald By Steve McDonald, Bond Strategist, The Oxford Club

Two-Minute Retirement Solution

If you plan to move to one of the more popular senior locations after you retire, you need to consider a lot of variables: housing, state income taxes, cost of living, etc.

These costs depend on the location and are all over the board.

But deciding where you will die is becoming just as important and should be one of the variables you consider before you choose a location for your golden years.

It’s getting really expensive to pass away in this country, and it’s all about estate taxes. Oh, and there are 20 states, plus the District of Columbia, that can add additional estate and inheritance taxes…

Needless to say, dying can be an expensive life event.

Take a look at the chart below. If the feds don’t take enough when you check out, these 20 states and the district will make sure you pay.

A 12% to 20% tax is no joke, but some of the exclusions make it a little more palatable. But, come on, Maryland, New Jersey, Iowa and Pennsylvania don’t exclude any assets for their inheritance taxes.

And Maryland and New Jersey hit you for inheritance and estate taxes!

These are taxes on nothing more than having done well in life and dying. And all the money in an estate has already been taxed, in some cases, multiple times. Whacking us a second and third time after we check out is crazy.

What’s next, a birth tax?


These can really hurt when the situation involves a family farm with lots of real estate assets or a small business where the family has to liquidate the assets to pay these taxes.

Estate planning offers some solutions, but they aren’t cheap.

Most people will never exceed the fed’s $5.49 million exclusion and won’t pay any federal estate tax. That’s a lot of money.

The $1 million exclusion in Oregon, Massachusetts and the District of Columbia is another story. By the time you add in real estate, IRAs and 401(k)s, $1 million is not hard to realize.

And a lot of folks forget about life insurance because it isn’t taxable as income. But it is included in your estate’s assets and can be taxed if you exceed the exclusions.

When you sit down to discuss where you’d like to spend your golden years, make sure you look at how much it will cost to live and check out there.

Good investing,

Steve