Retirement planning involves crucial tax considerations, from choosing where to live to managing Social Security benefits. Forbes’ 2025 list highlights Lawrence, Kansas, as a top retirement destination, with a median home price 21% below the national average and no state taxes on Social Security benefits. However, Kansas applies a 5.58% income tax rate on couples earning over $46,000, which could affect retirees with significant non-Social Security income.
Claiming Social Security before full retirement age reduces monthly payments by up to 30%, while delaying boosts benefits by 8% annually until age 70. At the federal level, up to 85% of Social Security benefits become taxable if combined income exceeds $34,000 (individuals) or $44,000 (couples). States like Kansas avoid taxing these benefits, making them fiscally advantageous for retirees.
The IRS now uses artificial intelligence to improve audit accuracy and taxpayer assistance. While this could streamline processes, retirees should ensure meticulous record-keeping to avoid automated scrutiny, particularly on retirement income sources like pensions or withdrawals.
Strategic location choices and informed Social Security decisions are key to minimizing tax burdens and maximizing retirement stability.
