Is Pennsylvania the Best Place To Retire in the United States? Experts Weigh In
The best place to retire in the United States has been chosen — and it is Harrisburg, Pennsylvania.
Harrisburg was awarded first place in the 2024 Best Places to Retire in the U.S. list from U.S. News & World Report. Pennsylvania is mentioned an additional six times in the rankings. The three best places for retirement are all Pennsylvania cities, including Reading and Lancaster.
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Does this mean Pennsylvania is the best place to retire in the United States? GOBankingRates spoke to several financial experts to see which benefits, and downsides, come with retiring in Pennsylvania.
Pro: Overall Retirement Tax Friendliness
While taxes were not among the top criteria mentioned in U.S. News’ methodology, Pennsylvania’s tax friendliness is a major perk for retirees.
Kenneth Couser is a CFP and director of financial planning at Janney Montgomery Scott, which is headquartered in Philadelphia. In Pennsylvania, Couser said, payments from retirement accounts, 401(k) plans and IRAs are not taxable. Residents of Pennsylvania do not have to pay taxes on income derived from pensions or Social Security either.
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Con: State Income Tax Rate
While this may sound like great news for some retirees, not all retirees benefit from Pennsylvania tax laws.
Tammy Trenta is the CFP, founder and CEO of Family Financial, an asset management firm based in Los Angeles. Trenta said Pennsylvania imposes a flat state income tax rate on all residents. According to Trenta, retirees with substantial retirement savings or investment income may face higher tax burdens compared to states with no income tax or those which exempt retirement income.
Another matter worth noting is generational wealth transfers. Skylar H. Riddle, CFP and financial advisor at Fort Pitt Capital Group in Pittsburgh, said Pennsylvania does have a state inheritance tax. It is one of the few states in the nation to have this tax and can make passing assets on to loved ones more expensive.
Pro: Affordable Housing
Housing affordability was one of the top criteria that determined U.S. News’ ranking of the best places for retirement in 2024.
Let’s look at Harrisburg housing costs as outlined by U.S. News. The national average housing cost in 2022 was $383,883. In Harrisburg, however, average housing costs were at $223,842. When housing costs are compared to the median household income, housing is a better value in Harrisburg and for retirees on a budget than in other similarly sized metros.
Con: High Property Taxes
Despite affordable housing costs, Trenta said, many areas in Pennsylvania do have relatively high property taxes.
“Retirees on fixed incomes should carefully consider the impact of property taxes on their budgets,” Trenta said.
Pro: Access To Quality Healthcare
Healthcare quality ranked consistently high in each of the seven Pennsylvania cities mentioned in the 10 best places to retire in the U.S. list.
“Pennsylvania is home to world-class healthcare facilities and renowned medical institutions, particularly in cities like Philadelphia and Pittsburgh,” Trenta said. “Retirees can expect to have access to top-notch healthcare services and specialists.”
Pro: Outdoor Recreation
There’s a lot to do in Pennsylvania and substantially more activity diversity than retirees might find in a beach town.
An adventurous retiree might follow Trenta’s recommendation to hike through Pennsylvania’s rolling hills, fish in its lakes or birdwatch in one of the state’s parks and recreational areas. Retirees who love history might visit the state’s many museums and historical sites, including the Liberty Bell in Philadelphia or Amish country, to take in Pennsylvania’s rich culture.
Riddle said, “You can have an active lifestyle and spend time outdoors, engage in culture and the arts in the major cities, be entertained by several of the sports teams or just relax in your quiet little neighborhood.”
Maybe a Pro, Maybe a Con: Pennsylvania Weather
Some retirees may not like the extremes of Pennsylvania weather.
Still, not every retiree wants to retreat to the heat. Riddle points to the benefit of Pennsylvania having all four seasons, which may be exactly what retirees who don’t exactly dream of sunny, 75-degree temps every day are looking for in the next chapter of their lives.
Should You Retire in Pennsylvania?
While Riddle said many Pennsylvania residents retire in the state because they have lived there their whole lives, making the decision to retire in Pennsylvania depends on a retiree’s individual preferences and priorities.
Trenta said people should carefully weigh the pros and cons of retiring in Pennsylvania in the context of their own financial, lifestyle and healthcare needs before making a decision. Retirees who need additional insight are recommended by Trenta to meet with financial and retirement planning professionals. Ideally, the professionals should have knowledge of Pennsylvania’s tax and housing market nuances.
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