Should you retire in Maryland?

When I think of Maryland, I think of some of the best crab in the world, the Chesapeake Bay, and Baltimore Ravens football. I’m sure I’m not alone in this. What you might not think of when you hear Maryland is that it’s a popular retirement destination.

Conveniently located within relatively short distances from some of the country’s major cities, Maryland has a location and natural beauty that attracts many people. It doesn’t have a tropical or year-round warm climate like Florida or Southern California, but it does have all four seasons, allowing retirees to experience the full weather spectrum.

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The cost of living in Maryland is higher than most states. According to RentCafe, its housing and utilities are 44% and 10% higher than the national average, respectively. However, healthcare is 4% lower, which is beneficial since this is typically one of retirees’ biggest expenses.

On the tax front, let’s start with the good news: Maryland is one of 41 states that does not tax Social Security benefits, and pension income up to $39,500 is tax-exempt in 2024. To be eligible for the exclusion pension, must be 65 years or older, disabled or have a disabled spouse. The exclusion amount can also change annually, so it’s important to be aware of it.

The bad news, but it could be worse, is that Maryland taxes money received from 401(k)s and traditional IRAs. This money is taxed as ordinary income.

Overall, Maryland is a good place for retirees looking for travel convenience, natural beauty, and favorable Social Security and retirement tax treatment. The latter, in particular, can keep thousands in the pockets of retirees.