Should You Retire in Michigan?

Michigan is home to the beautiful Great Lakes, the largest U.S. automaker ( Ford Motor Company ), national parks, and flourishing small towns. Its natural beauty and local culture give it a unique feel. It might not have 80-degree weather in the winter like parts of California and Florida, but Michigan has a lot to offer retirees.

First, Michigan offers a lower cost of living than many other states. According to RentCafe, Michigan's housing is 13% lower than the national average. Utilities (2%) and goods & services (3%) are also lower, and healthcare costs are right on par with the national average.

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Now, let's get to the taxes. Michigan is one of 41 states that does not tax Social Security benefits. You could still face federal taxes on your benefits, but retirees are good to go on the state level.

Michigan also began a four-year plan to phase out its tax on retirement income from accounts like 401(k)s and IRAs (minus Roth IRAs, which you don't pay taxes on anywhere). It's not quite as straightforward as you might like, however.

Retirees from professions like police, firefighters, and corrections can fully deduct retirement benefits received from their Michigan service from their taxable income. Other retirees can choose to use Michigan's new "phase-in method" or "tier structure" (based on your birth year) to determine how much they can deduct.

Overall, Michigan is a good place for retirees who can stand the cold and snowy winters. It has affordable housing, favorable Social Security and retirement income tax policies, and natural landscapes that make exploring the state a must.

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Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .