Updated March 28, 2016 (Original article was October 5 – 2010)–
This is the second in our extensive series comparing various states and regions as retirement destinations. You can find links to all of the comparison articles under “Further Reading” at the end of this article.
Our approach in this series is to evaluate various factors for each state, letting our readers draw their own conclusions from the facts. As always, reader input is extremely important. We encourage you to use the Comments section below to tell your stories and express your preferences. Note that since this article was written in 2010 there has been a steady stream of comments and suggestions about various towns and communities in these states, as well as other issues.
A note about taxes as a retirement consideration. Comparing taxes between these states illustrates the perils of a simplistic approach. NJ, MD, and DE are among the top half of high tax burden states. But if you focus on taxation just for retirees, Delaware and MD become more attractive. The type of tax is what should be focused on, and how it affects you. See rest of article for more.
Population (Data from American Fact Finder-U.S. Census Bureau).
With the exception of tiny Delaware, all 4 of these states have fairly high populations. Maryland’s population is 6,006,401 with 12.3% of its population over 65. New Jersey has 8,958,000 residents; 14.7% are over 65. Virginia has a population of 8,382,993 with 13.8% over 65. Delaware’s estimated 2015 population is by far the smallest at 945,934, but that was a 5.3% increase from 2010, the highest increase in any of these states. It also has a relatively high proportion of residents over 65 (14.4%). These states attract most of their retirees from within their own borders or the northeast.
Economics and Home Prices.
All 4 states have higher home prices than the national 2010-2014 median of $175,700 (Census Bureau) or the Zillow 2016 median of $184,600. The national household income median was $53,482 in 2010-2014; all of these states were higher. Of the 4 states compared here, Delaware has the lowest home prices and household income. Home prices in all of these states had not yet recovered in 2010-2014 from what they were in the pre-recession area 4 years previously.
Delaware’s median home value in 2010-2014 was $232,800 (Census Bureau). According to the Zillow Home Value Index the value of a home was $210,900 in 2016. DE household income is $60,231.
Maryland’s 2010-14 home value was $287,500 (Census Bureau), a significant decline from 2006-10. HH income was $74,149.
New Jersey’s 2010-2104 US Census reported home value was $319,900, declining from a few years previously. Median HH income was $72,062.
Virginia homes had a median value of $243,500 in 2010-2014, according to the Census Bureau. HH income was $64,792.
There are no significant differences between these 4 states are far as climate goes. New Jersey has the coldest winters, but only by a few degrees. Source: http://www.usclimatedata.com/
State (City) Avg. July High Avg Jan Low
Delaware (Dover) 87 27
Maryland (Baltimore) 89 29
New Jersey (Trenton) 86 24
Virginia (Richmond) 90 28
Delaware generally has a reputation as a tax-friendly state for retirees among this group, although it has a fairly high overall tax burden. Delaware was ranked in 2012 (Taxfoundation.org) as having the 16th highest tax burden in the nation. The highest individual income tax rate there is 6.6%. It does have several pieces of good news for retirees: It has no sales tax.; it is the 48th highest for per capita property taxes; social security income is not taxed; and $12,500 of pension income is not taxed. DE does not have an estate tax.
Maryland is a high tax state with the 7th highest 2012 tax burden in the nation, according to the Tax Foundation. It has a top income tax rate of 5.75%; sales tax is 6%. On the plus side for retirees, it is the 25th highest for property taxes, and does not tax social security. Some residents over 65 can deduct up to $27,100 of their pension income (out of state income not included). Military personnel can deduct up to $5,000 of their military pensions. MD and NJ are among the few states that have both an estate and an inheritance tax.
New Jersey has the dubious distinction of being the #3 highest state for its tax burden, according to the Tax Foundation. Its top income tax rate is 8.97%; sales tax is 7%. Particularly hurtful for retirees, NJ has the highest per-capita property taxes in the nation. Fortunately, social security is not taxed. Some taxpayers may get exemptions from certain pension income. It has both an estate tax and an inheritance tax.
Virginia could be considered tax-friendly, at least compared to NJ and MD. It has the 27th highest state/local tax burden. The top income tax rate is a relatively modest 5.75%; sales tax is 5.3% (plus localities must collect an additional 1%). Residents who are age 65 may be entitled to $12,000 deductions, up to some income restrictions. Social Security income is exempt. It is ranked 18th highest in per capita property taxes. There are no inheritance or estate taxes.
For more facts about each state see our various State and Country Retirement Guides.
Physical Environment and Diversity
All 4 of these states are approximately the same from a geographic basis. All have a long coast line and/or waterfront on large bays. All are close to major cities in the Northeast. Virginia is the most distinctive and diverse of the 4, thanks to the mountains in its western half,
Places to Live
All 4 states have at least one important city, and all offer wide choices of college towns, beach communities, or livable small towns. Delaware and Virginia had towns that made our 2016 list of 100 Best Retirement Towns. Virginia had 3: Charlottesville (the highest ranked of these at #19), Williamsburg, and Winchester. Delaware had 2 towns on the top 100 list: Rehoboth Beach and Lewes.
Choice of Active Communities
Virginia and New Jersey seem to have the widest variety of active adult communities. At Topretirements we count 55 communities in our Delaware Directory of Active Communities, 54 in our Maryland Directory, 80 in the New Jersey Directory, and 91 in the Virginia Directory of Active Communities.
Based only on the number of towns making the Topretirements’ list of 100 Best Retirement Towns, one could conclude that Delaware and Virginia are the most popular states for retirement among these 4. Delaware’s low tax property taxes and no sales tax are among the important reasons for its popularity; its beach towns like Rehoboth are another. New Jersey, as expensive as it is, does have many, many retirees living there and some attractive retirement towns like Princeton and those on the South Jersey shore (such as Toms River and Brick). In our opinion Maryland is an under-rated retirement destination. It might have high taxes, but it does have many charming and historic towns like Annapolis, Chestertown, and Leonardtown that make great retirement spots.
Aesthetics and Intangibles
All of these states have their admirers and each has its detractors. But all of them 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 these states and see if you can’t find the place of your dreams. The region is not that big – in a few trips you should be able to get a good idea of the places that could offer you a happy retirement experience.
For your 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
Dueling States Mid-South: TN, GA, KY, AL
The Pacific Northwest: Oregon vs. Washington
What state do you prefer? Let us know in the comments section below.