Many retirees obtain health care coverage through Medicare. While Medicare is a federal program, costs for some Medicare programs, such as Medicare Part D (which covers prescription drugs), can vary from one part of the country to another.
For instance, a 65-year old Michigan resident who retired in 2015 would spend more than $150,000 over a 20-year period for Medicare Parts B (covers medically necessary and preventative services) and D and supplemental coverage, according to calculations from Healthview Services, a producer of health care cost-projection software. That compares to $112,500 for a retiree in Hawaii.
You'll want to consider these Medicare programs in retirement planning, as Medicare Part A and Part B, often referred to as “traditional Medicare," don't cover many medical procedures used by seniors, such as long-term care, most dental care, eye exams and hearing aids.
Traditional Medicare also doesn't cover deductibles, coinsurance or copayments. For these, you'll likely need a Medicare Supplemental Insurance policy, or Medigap.
Not all taxes disappear in retirement. If you own a home, you'll pay property taxes. Your tax bill will depend on where you live. For instance, the average per-person property tax collected in New Mexico in 2015 was $770, according to the Tax Foundation. In Illinois, it was $2,087, also per the Tax Foundation.
Even within a state, property tax rates can vary widely. The Illinois average included both Cook county (in Chicago) where the average annual property tax was about $4,600, and Wayne County in southern Illinois, at about $800.
Sales tax can also stick around after retirement. Again, it will vary by both state and city. Five states don't impose a statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon, according to the Tax Foundation. Alaska and Montana allow municipalities to charge local sales taxes.
For those states that allow state and local sales taxes, the rates range from 5.5% in Maine to 10.02% in Louisiana, also per the Tax Foundation. These are average combined local and state sales tax rates.