Benefits of Retiring In Kentucky (Pros & Cons)

Good bourbon and mild weather make Kentucky a great place to retire. However, those aren't all the benefits of retiring in Kentucky.

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Good bourbon and mild weather make Kentucky a great place to retire. However, those aren't all the benefits of retiring in Kentucky.

When you retire, you want to be in a place that brings you happiness and makes you realize how much life has to offer. There are many benefits of retiring in the horse racing capital of the world. Some of them might even surprise you.

The pros of retiring in Kentucky include a tax system that is very friendly for retirees. It also has a low cost of living, and you can enjoy a lot of adventures here with access to numerous opportunities. The cons include the insane traffic, natural disasters, and the state's accent. 

Moreover, you will get a chance to meet a lot of new and friendly people in Kentucky. Despite so many advantages, there are some un-inviting factors to consider as well. For example, if you go to Kentucky, you'll face a heavy traffic issue. Some people also find it difficult to adjust to the southern accent. But more on this later.

After having lived in Kentucky for well over a decade, we've written this article to tell you all about life in Kentucky after retirement. It covers both sides of the picture so that you can decide whether this place is worth spending the rest of your life in.

Table of Contents

Benefits of Retiring in Kentucky 

Tax System is very much in favor of the Retiree

When it comes to discussing the tax system, you can enjoy your Social Security income fully, as it is totally exempt from being taxed. The benefits for senior citizens are a sizable deduction per individual of $31,110, which they can enjoy for pension income or other types of retirement incomes like IRA, 401(k). This is fully theirs. Any retirement income above this deducted amount will be charged at a 5% tax rate on income.

Moreover, taxes are lower in Kentucky than in other countries. When figuring out where to retire, you will find that several states, such as South Dakota, Alaska, Nevada, Texas, Florida, Washington, and Wyoming, do not impose any taxes on income for retirees. However, the tax rate imposed in Kentucky on retirees' income is still much lower than the rates imposed in the rest of the states. For example, Vermont imposes an 8.75% income tax rate, California 13.3%, and Minnesota charges a 9.85% income tax rate.

Sales and Property Taxes are Low 

Selecting states where there is no charge on income is tempting. These states collect revenue from other ways to make up for not charging the income tax; for example, they have set the sales or property tax high, whereas the property taxes, as well as the sales tax in Kentucky, is much lower than the average rate in the entire nation being 0.083% as the property rate.

Homestead Exemption 

Another benefit associated with Kentucky is that senior citizens above the age of 65 (65 included) will enjoy the homestead exemption if they live on the property. This amount changes per year, but as an example, the exemption amount for 2019 – 2020 was $39,300. The deduction of this amount is based on the homestead's assessed value to the value at which one arrived at the taxable property.

The sales tax is as modest as 6%, and it is not applicable on many commonly utilized items by senior citizens in order to keep prices affordable for them. That sounds cool, doesn't it? To explain, consider the example that prosthetic devices, most common groceries, and prescription drugs are not taxed.

Tax Rates for inheritance 

As per Kentucky's tax system, the rate of capital gains and rates for an inheritance might be an unattractive factor for senior citizens. The inheritance tax is not applicable to be paid by the beneficiaries who are in direct relation to you, for example, brother or sister, spouse, child, grandchild, parent, or half-brother/half-sister, sons/daughters-in-law, nieces, aunts, nephews, great-grandchildren, uncles- all these direct relatives qualify for a tax exemption of $1000. The tax rate which applies to the indirect relatives lies between 4% and 16% on anything to be inherited above this value.

For non-relatives, $500 is the tax amount that gets deducted for inheritance above the mentioned value, and this ranges from 6% to 16% with applicable tax.

Hospitable People of Kentucky 

On a general note, the people of Kentucky are friendly, especially if you compare them with people in other states of America. Their driving pace is also slow, causing Kentucky to be a safe place for those who enjoy driving.

When a senior is walking across the street, the people of Kentucky are known to help them. If they ever see a stranger on the road, they will make sure to wave. They are always smiling – a welcoming gesture that is attractive to new citizens. Moreover, they will never give you a hard time in the parking lot, even if you take your time to parallel park.

Living Expenses 

The money you require to keep a certain standard of living maintained is referred to as the cost of living. For example, generally, one needs money for healthcare, food, shelter, clothing, utilities, and taxes- all of which are essential.

The good news is that the living cost in Kentucky is lower than if you compare it with the national average. Already discussed the tax comparison across the country, we have an idea of how Kentucky's living cost is lower than other states, especially for senior citizens. Other determinants to critically analyze the cost of living are:

Utilities of an apartment relatively smaller in size are as less as $140, along with being able to enjoy a decent meal in a regular restaurant for $8. The house maintenance costs are low. Housing costs for ones looking for their own home are also low. Not to forget, the renting costs are low as well. You can buy a decent home for around $150,000. This information is as per the housing data of 2018. This is the reason that a majority of the homes in Kentucky are occupied by the owners themselves rather than being given on rent.

If you want to rent a house, on the other hand, you can get a decent home on rent for $850. This, again, is much lower than the national average.

Lots of Fun Activities 

There are a lot of activities that you can enjoy as a senior citizen and after your retirement in Kentucky. The good news is that these activities are outdoor in nature.

For example, touring the Mammoth Cave in National Park, visiting Lake Cumberland, hiking, cross-country skiing in winter, climbing the Red River Gorge, and much more. Visiting the Daniel Boone National Forest, Lost River Cave in Bowling Green, as well as the river town of Paducah (home to the quilt museum), is also a great option for adventure lovers.

Talking about the best part of the year in terms of fun is the Derby season in Kentucky. It happens in the month of May every year and is hosted at Churchill Downs. Known as the "fifth season" of the year, this is considered another season in line with the usual four seasons that Kentucky experiences.

This is mainly because of multiple festivals, celebrations, parties, and fun activities available throughout many weeks of this festival. Not to forget, it also has a big day for racing. Sounds fun, right?

Drawbacks Involved with Retiring in Kentucky 

We can't deny that every place has its fair share of pros and cons. We have discussed so many positive things about living in Kentucky, so it is only fair that we consider some of the drawbacks associated with this place.

Language adjustment 

First and foremost, when you move to a new place, the first thing you encounter is a language barrier because, as someone who does not reside in the area, you will not have a strong grasp of it. Let's admit it – nobody wants a translator to stick around them every time.

The southern effect of Kentucky might irritate you a bit in terms of understanding the accent of the locals. If you come from the American coasts, this southern drawl might push you to take some time to get used to the accent.

There are a few words that might be difficult for you to understand during social interactions, especially when you retire, when your capacity and potential of learning new things is restricted. Words like "holler" might seem from a new dictionary altogether. Before you jump to conclusions, this is a substitute word for a normal American word known as "dirt road."

Natural disasters in Kentucky 

Some people believe that the rate of natural disasters in Kentucky is "extreme." While this is not entirely true, we cannot deny that Kentucky encounters more natural disasters than any other state. There is a history of storms and tornadoes, fatal in nature since Kentucky is a part of the Hoosier Alley.

Additionally, the eastern part of the state has a history of getting hit by storms and floods approximately ten times starting from the year 2002, especially Grayson County. Louisville is another hotspot with more than an average rate of getting affected by natural disasters. It often gets hit and affected by heavy floods.

During the months of April and May, known as the Derby period, most of the natural disasters are expected to occur in Kentucky. Mother Nature can surprise you with storms, mudslides, floods, tornadoes, and rockslides during this period of the year. At least, this is what history tells us.

However, having discussed all of this, the state keeps itself prepared with necessary resources. If you want to make an investment here or purchase a property, you can get all the help you need from a disaster risk map. This will allow you to analyze any part of the state before you move there.

Intense traffic 

Other than the part on natural disasters, people in Kentucky have a habit of driving slowly. Therefore, traffic can be a problem here, especially for impatient drivers who want to get home as soon as possible.

Moreover, people in Kentucky prefer to ride alone. They also own two or three cars of their own. This makes the roads congested in major parts of the states, especially in large cities. You will find that the bigger the city, the more traffic jams you'll encounter.

Regardless of where you choose to live, every place will have its pros and cons. Similarly, the pros of living in Kentucky after retirement are way more than the cons. The cost of living is much lower than in other states of the country. The sales and property taxes are low. There are a lot of facilities and benefits given to the senior and retiring citizens. Being a retiree, you may enjoy a few exemptions too. The taxes are retiree-friendly, a huge pro when one just wants to enjoy life.

Moreover, you can have fun and take part in a lot of adventures in one state. People in this part of the state are very welcoming and friendly. They will be of help to you in every possible way. Moreover, they also have more patience than those in other states and are strong with their moral ethics. There are a lot of places worth visiting and seeing, an aspect that will be of interest to those retiring in Kentucky.

One might want to be prepared mentally and resourcefully for the natural disasters that happen quite often in this part of the country due to its geographical location. Also, the traffic can be a headache because people tend to drive slow, leading to traffic jams.

Notwithstanding, with everything discussed, the ultimate decision of whether or not to retire in Kentucky lies with one's own self. It is a decision that one must start planning before the actual retirement period.

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