Editors Note: This is the third in our series comparing various states as places to retire. Don’t miss the first, Florida vs. Arizona Retirement, or the second, Delaware vs. Maryland vs. Virginia vs. New Jersey. There are more “Dueling” comparisons listed at the end of this article. We welcome ideas for future ones.
Updated May 29, 2018 — The Carolinas are a red-hot retirement destination; both North and South Carolina enjoy a very favorable image among baby boomers. As great places to retire, both have become as popular as Florida. In this comparison we will evaluate various factors for both states that affect retirement, letting you draw your own conclusions from the facts. As always, reader input is extremely important, so we encourage you to use the Comments section below. (Note: The first version of this article was originally published in 2010; this edition contains numerous updates and revisions. Because it goes way back to 2010, there are a LOT of comments which are worth reading. The latest comments are at the bottom.)
Population (Data from American Fact Finder-U.S. Census Bureau).
One obvious difference between the two states is the number of people. In 2016 North Carolina’s population was about double its southern neighbor’s (10,273.419 vs. 4,834,605). The over 65 population in both states is increasing: in South Carolina it was 15.8%, North Carolina is slightly younger at 14.7% (the national percentage was 14.5%). Both states attract significant numbers of retirees from beyond their own borders, usually from the Northeast or Midwest. In fact, you will hear comments from native Carolinians who are concerned that their states are changing due to the influx of newcomers from the north.
Home Prices and the Economy
One reason why the Carolinas are popular for so many retirements is a lower cost of living. On a statewide basis both states have significantly lower home prices than the entire U.S. The Zillow 2018 Home Value Index for South Carolina has the median home value pegged at $157,600, $14,000 lower than North Carolina’s ($171,500). Note that the Zillow estimated home value of $215,600 is quite a bit lower than the same estimate from the National Association of Realtors, which showed a U.S. median home price of $245,500 at the beginning of 2018.
Home prices in some North Carolina Metros have been increasing fast over the past few years and in many cases have caught up with or exceeded the U.S. figures. In Durham the median home selling price at the start of 2018 was $267,700; in Charlotte it was $226,400, and in Raleigh it was $274,300 (per NAR). Meanwhile in South Carolina, the Greenville median was $206,200, Spartanburg was $168,200, but in pricier Charleston the median was $273,100.
The economies of both states are very similar. Manufacturing, services, and agriculture are important in both. In fact you might also add retirement to the list of growing industries. The 2016 median HH income in North Carolina was $48,256, slightly higher than South Carolina’s $46,898. By comparison the national household income median was $50,046. South Carolina’s cost of living is the 21st lowest in the U.S. while North Carolina’s is very similar at 23rd. Unemployment rates in both states have declined in recent years and are now very close the overall U.S. unemployment (4.7%) According to the Census Bureau unemployment for South Carolina was 5% and in for North Carolina it was 5.1% (rates are for people over 16 years of age).
There are no significant climate differences between these 2 states. The most northern parts of North Carolina will have slightly colder winters than the most southerly part of SC, but the difference will only be a few degrees. What differences there are mostly stem from the varying climates present within each as they go east to west – from beach to mountains. Here are a few representative temperatures for cities within these states:
Avg Jan low
Avg Jul high
Many retirees look to tax comparisons to help determine what they view as a retirement friendly state. Until a few years ago South Carolina would undoubtedly have won that comparison – it had lower taxes in almost every category. However, beginning in 2014 comparing taxes between the two states is much harder, and the bottom line difference is probably not that great. According to the Tax Foundation, SC had the 42nd highest tax burden in the nation in 2012, whereas NC’s was 20th. However due to the dramatic changes in NC’s tax structure in 2014, those rankings are actually much closer in 2018.
To make a few observations, we would start by saying that the individual characteristics of your tax situation have so many ramifications that you should have someone prepare a hypothetical tax statement for you to get the real picture. But here are some things to consider:
– SC has a much higher marginal tax rate, although it also has higher exemptions
– Neither state taxes Social Security
– The sales tax in NC is 1.25% lower than in SC, but local taxes can narrow this difference
– Neither state has an inheritance or estate tax
– NC has higher property taxes as a % of home value. But it also has a nice “circuit breaker” program for people over 65
South Carolina has a (very high) maximum tax rate of 7% that begins at a quite low income of $14,400. South Carolina accepts the adjustments, exemptions and deductions allowed on your federal tax return. North Carolina’s income tax is much lower, as it was recently lowered to a flat 5.499%.
Social Security and Income Tax Exemptions for Seniors
Neither state taxes Social Security payments.
Although South Carolina has much higher tax rates, its high exemption levels are more tax-friendly. Each resident over 65 is entitled to an exemption of $15,000 ($30,000 for couples) in calculating income for state tax purposes, of which up to $10,000 each can be retirement income. For couples filing jointly when both are 65 or older you might not need to file a SC tax return unless your gross income is greater than the federal gross income filing requirement plus $30,000.
There is a $8750 exemption per person in NC (no age limit). When North Carolina reduced its state income tax rates in 2014 some seniors’ deductions were eliminated. Social Security is still exempt, as is NC pension income under the Bailey Settlement if you had 5 years of service by 1989. Otherwise federal, state, and local pensions are exempt up to $4000 per person, $2000 for private exemptions.
An initial comparison of sales taxes would makes it look like NC is the most friendly when it comes to sales taxes. But when you add in local taxes, they are quite close. In SC the sales tax is 6%, and local governments can charge an additional 1%. In NC the rate is 4.75%, although almost every county charges at least an extra 2% on top of that.
Estate and Inheritance Taxes
There are no estate or inheritance taxes in South Carolina or North Carolina (NC repealed its estate tax in 2013).
SC residents pay one of the lowest property taxes as a % of home value (ranked 46th) in the country. NC is ranked 33rd. SC residents pay an average of .5% of their home’s assessed market value, compared to .78% in North Carolina (figures from the Tax-Rates.org). Homeowners in SC over 65 can usually deduct $50,000 of valuation on their property taxes. In NC there is a property tax homestead exemption for people over 65 who meet certain income criteria, as well as a circuit breaker program for eligible people over 65 which limits property taxes to 4 or 5% of your income.
Note: Taxes are complicated and the laws change quickly. Consult state Department of Revenue Guides and/or your tax professional before making important decisions. This brief overview is not meant to give any advice.
Physical Environment and Diversity
As with population, North Carolina also has a much bigger geographical area – 54,000 square miles as compared to SC’s 32,000 miles. Both have a long coast line with beautiful beaches and/or waterfront on large bays. The Cape Hatteras region of NC is quite remarkable, as is Myrtle Beach and Hilton Head in SC. North Carolina has a larger and more pronounced western mountain area with four seasons and the Blue Ridge, Great Smoky, and Black Mountain ranges. The highest point in NC (and the eastern U.S.) is Mt. Mitchell at 6,684 ft.; Sassafras Mountain is SC’s highest peak at 3,560 ft.
Places to Live
Both states have several important cities and numerous interesting mid-sized cities. Both states have college towns, such as Chapel Hill and Durham in NC and Clemson in South Carolina. Both Carolinas have a strong representation of towns on Topretirements’ list of 100 Best Retirement Towns: NC has 4 in the top 20 and SC has 3. ( #3 Asheville (NC) #11 Brevard #12 Murphy and #13 New Bern.
South Carolina’s most popular places to retire include #7 Beaufort, #9 Charleston, #18 Bluffton. Here is the full list of our most popular 100 best retirement towns.
Choice of Active Communities
North Carolina and South Carolina are both loaded with active adult communities. At Topretirements we count over 180 communities in our North Carolina Directory of Active Communities and over 160 in the South Carolina Directory of Active Communities. Whereas the active communities in NC are dispersed throughout the state in areas like Asheville, New Bern, Charlotte, and the Research Triangle area; South Carolina’s are clustered mostly along the coast, from Myrtle Beach to Charleston. In both states the choices are many and varied, with many of them relatively new.
Comparing living in the two Carolinas
North Carolina and South Carolina share numerous similarities in addition to a similar climate and topography. Indeed, many retirees say they are contemplating moving to the “Carolinas” for retirement, and don’t often specify one of the states.
Looking for differences, we could generalize and say North Carolina is a bit more diverse. It has more large cities to choose from, such as Charlotte or Winston-Salem. NC has taller mountains and more towns in mountainous areas, if that is what you are looking for. South Carolina might have the most interesting city, Charleston. NC’s cities and college towns, particularly those in the Research Triangle, tending to be progressive. Its rural areas are more conservative. North Carolina has made recent strides in getting to more a tax friendly par with South Carolina. South Carolina, which tends to be quite conservative, is probably less of a melting pot than its northern cousin, and remains more of a “southern” state in many areas. While North Carolina recently became much tax friendlier, many liberal leaning residents are not happy with the attendant cuts to social services, education, and other programs. Both states have had an influx of northern retirees, a fact sometimes lamented by locals.
So which state is more popular? Regardless of which state wins the retirement sweepstakes, both are doing very well. A Del Webb study a few years ago found that the Carolinas had become a more popular retirement destination than Florida. At Topretirements our South Carolina retirement guide is visited slightly more than is our NC retirement guide (in fact they are the #2 and #3 most popular state guides after Florida). The differences between the Carolinas are subtle. Both contain some wonderful places to retire, if the mid-Atlantic region is the region where you would like to retire. Rather than take sides on the issue, we recommend that you visit cities and towns in both states and see if you can’t find the place of your dreams. Fortunately, the two states are contiguous- in a few trips you should be able to get a good idea of the places that could offer you a happy retirement experience.
Sources: In most cases we used Tax-rates.org. as the source for tax information in this article, American Fact Finder for demographic information, and Zillow or the NAR for home pricing. Some additional tax burden figures are courtesy of the Tax Foundation.
For for further reading:
My Southern Retirement Adventure
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
Dueling States Mid-South: TN, GA, KY, AL
California Retirement 101
Retirement in the Southwest: AZ, NM, and Utah
The Mountain States: CO, ID, MT, NV, UT, WY
The Pacific Northwest: Oregon vs. Washington
What state do you prefer? Let us know in the Comments section below. (Note: This article has been updated numerous times and has many interesting comments. To find the most recent ones scroll down and look by date).