— This article continues our Dueling Retirement States series. See Further Reading at end for links to the other regions compared in the series —
February 16, 2015 — The Pacific Northwest has continued to experience amazing population growth since the end of World War II. Oregon’s population, for example, grew by 400,000 between 2000 and 2010, and almost 2/3 of that was net in-migration. Many of the area’s new residents are 20 and 30 somethings who have come for jobs and the great out of doors. But another demographic segment flocking to the region for its beauty, outdoor recreation, and in many cases, to be near their adult children, is the huge baby boomer group. In this article we will compare and contrast these 2 vital states, Oregon and Washington. Population and income data is from American Fact Finder-U.S. Census Bureau.
A Few Facts
Washington is the more populous of the 2 states. It had a 1990 population of just under 4.9 million, went to 5.9 million in 2000, and climbed to 7.1 million in 2014 – a 45% increase in 25 years. Oregon’s population was 2.8 million in 1990, 3.4 million in 2000, and just under 4 million in 2015 – a 43% increase over that span. Washington has a younger makeup than Oregon – 13.6% of its population is 65+, compared to 15.5% of Oregon’s (the total U.S. % is in between those 2 at 14.1%).
Economics and Home Prices.
Oregon and Washington were not hit as hard by the 2006-7 housing meltdown as many other states were. Zillow’s Home Value Index for Oregon homes was $242,300 in early 2015, up 6.3% over the previous year. The highest priced Oregon Metro is Portland at $297,400 and the lowest was Salem at $168,800. The 10 year low for Oregon home values was about $200,000 in 2012. By comparison, the Home Value Index for the entire USA is $179,200, a 6.6% increase yr. to yr.
Meanwhile over in Washington the Home Value Index was a bit higher at $266,200, up 8% vs. the previous year. The lowest price real estate metro is Tacaoma at $178,800, Seattle was valued at $452,600, and Bellevue the highest at $570,300.
Cost of Living
The Numbeo.com Cost of Living + Rent Index is 59.4 for Portland (OR) and 78.21 for Seattle. Since the Index for New York City is 100, that means both cities are less expensive than the Big Apple, with it being cheaper to live in Portland.
Being close to the same latitude, Washington and Oregon tend to have similar climates. The actual biggest differences are the very wet coastal sections of these states with their desert-like eastern reaches. In Washington the western side of the Olympic Peninsula receives as much as 160 inches of precipitation annually, making it the wettest area of the 48 lower states and a temperate rainforest. However in the rain shadow created east of the Cascades that area receives as little as 6″ of rain annually. Mountain ranges include the Olympics in the west and then the Cascades, with the Selkirks in the northeast. The northeast part of the state tends to have temperature extremes; hot in summer and cold in winter. In Seattle the temperature is quite moderate – the average high is 46 in January and 76 in August.
Over in Oregon the situation is much the same. The western portion is very wet in winter and spring, dry in summer. The eastern two thirds of Oregon have cold, snowy winters and very dry summers; much of it is semiarid to arid. Most of the population lives in the Willamette Valley, which is considered a mild climate for its latitude.
Tax Environment Comparison
Both states have reason to be considered tax friendly. Washington is one of the few states not to have an income tax. The sales tax is 6.5% statewide and 9.5% in Seattle and some other cities. In Oregon the reverse is true: no sales tax but a stiff income tax in its place. The top marginal rate is a very high 11%, which kicks in over $250,000. Although the tax rate starts at 5%, a couple earning just over $16,000 would pay 9%. Oregon exempts social security and some pension income from state income tax. Oregon seems to treat capital gains as regular income.
Both states offer senior property tax exemptions to those with lower incomes. The data below is from the Tax Foundation and Tax-Rates.org. For more detail about taxation and other information about each state see our mini State Retirement Guides.
Tax Burden Ranking
State Inc Tax
5% – 11%
State Sales Tax*
Med Prop Tax Rate**
*Localities may add additional sales taxes
** On appraised market value
Taxation of Social Security
Taxation of Pensions
Yes, in-state & milit. exempt
Yes – Estate tax on over $1 million
Yes – Estate tax on over $2 million
Where to Live by State
Oregon State Guide
Both states are renowned for their outdoor recreational possibilities, with outstanding hiking, biking, skiing, fishing, and kayaking – among other activities. They also each have a vibrant big city and some appealing smaller towns as well.
Topretirements has reviews of 22 Oregon towns and 70 active communities. The Portland and the north central area has just under half of the state population, and many of these people are retirees. Some live in prosperous suburbs like Beaverton. But there are plenty of other towns spread around the state where baby boomers can enjoy retirement. Some retirees like the idea of living in a college town like Eugene, a bit to the south of Portland.
To the east
Folks looking for a smaller town with a tremendous reputation among outdoor oriented people might look into Bend, which is more to the east.
Some of the nicest towns in the state are located to the south, sometimes close to the California border. Ashland, which hosts one of the largest Shakespeare Festivals on earth, is one of them. Famous for fruit growing, Medford, in the south central region in the Rogue Valley is especially nice for retirees. Tiny Jacksonville is a former gold mining town near Medford that is quite charming. Nearby towns like Klamath Falls and Grants Pass are retirement spots with pluses that will attract some people (lower cost of living and the outdoors) and minuses (not as prosperous).
Washington State Guide
Eastern Washington, courtesy of Wikipedia and JGkatz
Washington has a number of different areas to consider for retirement, all with different climates and types of towns. At Topretirements we have reviews of 25 WA towns and 94 active adult/55 communities.Here we will consider some of the state’s best retirement areas.
Much of this area is rainforest, characteristic by tremendous precipitation from the wet air of the Pacific hitting the coastal mountains. There are a few terrific towns on the edges of this area include Olympia (the state capitol) to the south, Port Angeles, the especially charming Port Townsend, and the “Blue Hole”, Sequim.
In addition to the major city of Seattle and all of its interesting neighborhoods, there are appealing suburbs that you might live in like affluent Redmond. Going north there are the beautiful San Juan Islands (which might be a good, but expensive second home site) and highly rated Bellingham, which has unbelievable natural scenery from Puget Sound on the west and Mount Baker to the east. Anacortes is another beautiful and low key city on the water.
Located more in the center of the state is the fruit growing area around Yakima, which is less expensive. Further to the east is the college town and wine region of Walla Walla, and then tucked in the corner is Spokane.
Going south along the coast towards Oregon you run into the delightful community of Ocean Shores. See the extensive report on that town by one of our Members, Rich: It is Rocket Science, How a Space Engineer Found His Best Place to Retire.
Comparisons and Observations
– Both Oregon and Washington have many wonderful places to retire. In each you can choose from a youthful big city (Portland or Seattle), college towns, or small towns. You can be near mountains or water – sometimes both.
– Oregon is slightly cheaper in terms of real estate, but the median home price is higher than the national median in both.
– From a tax standpoint if you don’t want an income tax Washington would be the choice, but if your tax Achilles heel is sales tax, pick Oregon.
For further reference:
State Retirement Guides
Gulf Coast Retirement: Sun, Tax-friendly, and a Lower Coast of Living
Retirement 101 Mid-Atlantic States: MD, DE, VA, NJ
Florida Retirement 101
Dueling Carolinas: NC vs. SC
Dueling States: Arizona vs. Florida
California Retirement 101
Retirement in the Southwest: AZ, NM, and Utah
The Mountain States: CO, ID, MT, NV, UT, WY
Comments? We and all your fellow members love to know what you are thinking. Please share your thoughts about retirement in these 2 states in the Comments section below.