Retiring in Naples: What I Wish I Had Known Before Retiring in FloridaMidwesterners love to head south in winter, and for good reason. Who wouldn’t want to avoid our frigid temperatures? One of the most popular places to winter is Florida, or, for Minnesotans specifically, the gulf coast of southwestern Florida: Naples and the Fort Myers area.But before you commit to the move from good ‘ole Minnesota to tropical Naples, take a minute to ask yourself this: do you know everything you need to know about retiring in Florida?Retiring in Naples (or Anywhere in Florida) vs. Minnesota: What’s the Difference?There are many differences relating to financial and retirement planning between states, and this is especially true in regards to Midwestern states and Florida. Minnesota is one of the higher-taxed states in the United States, meaning that retirees will pay a greater portion of their profits and/or withdrawals in income tax. And while moving to Florida solves this issue, there is no such thing as blended residency from a state income tax standpoint. Before you commit to the big decision, take a look at how taxes play into retiring in Florida.No State Income Tax in FloridaBesides the weather, one of the most significant differences between retiring in Naples versus in Minnesota relates to state income tax. Florida does not have a state income tax at all, meaning that if someone is a resident of Florida, they do not need to file a state tax return—only federal. The tax that would have been due on a typical state tax return is not required when living in Florida as a resident.Yet, residency in Florida is a sticky item. You may have heard the oversimplification that all it takes for residency is living in Florida for six months plus one day per year. Unfortunately, the reality is that the rules and regulations are much more complicated than that, both during life and also at passing. We see this to be the most misunderstood aspect of Minnesota versus Florida retirement planning. But do not fear—Minnesota has a handy 26-factor checklist of factors that may or may not be considered that impact the question of residency. Being there six months and a day is but one of the considered criteria. The others can easily override the former.Non-Income Taxes Are Higher in FloridaOf course, there is no free lunch in life. Other Florida taxes tend to be higher on items like gasoline and non-resident property tax, among others. So, while state tax calculations can be estimated, the real expense of retiring in Naples versus the Midwest is much more difficult to calculate and requires a careful thought process before making this major life shift.While it’s not a simple process to make an accurate estimate, we have a tip that is a key step in reaching a working number: consider property tax. Property tax is considerably higher for non-residents and tends to surprise many retirees that buy property in Florida. Therefore, if you do not consider this tax to begin with, your actual disposable income may be quite less than you thought when living in Florida. It’s a simple step—but a useful one.Strategy: What Should You Do?Strategy is important regardless of location, but it becomes more so when considering a transition between states. It is of great value to consider the other differences before and after a move, including investment portfolio management and taxation of things like municipal bonds, government bonds federally, and stock, which can all vary between states. Sometimes, planning can make a meaningful difference in retiree income, and careful consideration is particularly worthwhile. Make sure to take stock of any and all relevant aspects to best plan for your retirement.Transition TimeDespite the fact that snowbirds are residents of the United States regardless of which state they are living in, we find that many people are surprised with the meaningful difference in retirement that thoughtful financial planning can make to their bottom line.In the case of a firm like ours, Berger Financial Group maintains both Midwestern and southwestern Florida offices, meaning clients have a brick and mortar presence in the areas they live, both before and after the start of their retirement process. Despite the extra requirements to hold offices in Naples and Minneapolis, we find that the ability to transition with our clients in their retirement process provides an even deeper way to strengthen our relationships with them. Looking for further guidance? Find your support today by filling out the quick 1-minute form below. Get Started Name Email Phone Question Thank you! Oops!