Massachusetts Ranks Near Bottom for Tax Competitiveness, Impacting Retirees on Social Security
Massachusetts ranks poorly in tax competitiveness and property taxes, making it especially challenging for retirees living solely on fixed incomes like Social Security. While the state does not tax Social Security benefits at the state level, federal law can still subject up to 85% of these benefits to taxation if combined income exceeds $34,000 annually. The high cost of living and property taxes in Massachusetts place a significant financial burden on retirees who are no longer earning regular wages. Retirees are advised to take advantage of the Senior Circuit Breaker Credit and manage IRA withdrawals carefully to avoid crossing federal tax thresholds that could reduce their Social Security benefits. The state's economic data, while favorable for working residents, does not benefit those without a paycheck. Financial planning strategies such as building an income floor with dividends, interest, and guaranteed sources like Social Security are recommended over the traditional 4% rule to avoid selling assets during market downturns.
Topics: cost of living retirement Social Security taxes