Is Pennsylvania a New Retirement Destination?

Aside from the thriving pro sports scene in Pennsylvania that has attracted and entertained fans for many decades, there seems to be something else going on in the Keystone State that has made it become more appealing lately to retirees. For folks who have worked and raised families in high-cost, high-tax neighboring states, the finances in Pennsylvania tend to look favorable by comparison. Additionally, for those who appreciate snow around the holiday season versus the palm trees of Florida, there may be qualitative benefits to Pennsylvania that are also worth considering.

Do the dollars make sense for retirees?

In the United States, as of 2023, only nine states had no state income tax.1 While Pennsylvania does have a state income tax, its low 3.07% rate makes it among the states with the lowest income tax in the country.2 Not only is the flat tax rate low in Pennsylvania, but it also excludes types of income that are common to retirees. For example, Social Security, IRA/401(k) distributions and qualified pension payments are not subject to Pennsylvania state income taxation.3

That said, those who are looking to remain in or relocate to Pennsylvania should know that property taxes are relatively high (but not as high as in neighboring New Jersey), and local municipalities can also implement their own income taxes. Additionally, the sales tax is 6%, and some larger cities like Philadelphia and Pittsburgh will add another 1% to 2% local sales tax on top of that.4

While Pennsylvania does not have a state estate tax, it does have an inheritance tax that may apply depending on the type of beneficiary. This tax can range anywhere from 0% to 15%, as follows from the Pennsylvania Department of Revenue:5

  • 0% on transfers to a surviving spouse or to a parent from a child aged 21 or younger
  • 4.5% on transfers to direct descendants and lineal heirs
  • 12% on transfers to siblings
  • 15% on transfers to other heirs, except charitable organizations, exempt institutions and government entities exempt from tax

From a cost-of-living perspective, Pennsylvania ranked about 27th in the nation in 2023.6 While not in the top 10 in terms of affordability, Pennsylvania is certainly better than New York (47) and New Jersey (40), according to the MERIC cost of living index for calendar year 2023.7

Other qualitative factors to consider

For 2024, U.S. News & World Report ranked the “Best Places to Retire,” where they took qualitative and quantitative data to identify the largest U.S. municipalities that would be most appealing to retirees. It may come as a surprise to most people that Pennsylvania actually captured the top five rankings and seven of the top 10. These included Harrisburg, Reading, Lancaster, Scranton and Allentown (the top five, in descending order), as well as York (7) and Pittsburgh (10).8

While affordability is an important criterion in these rankings, so should be the quality of health care and ready access to it. In a 2023 study conducted by WalletHub, Pennsylvania landed in the top half of all states, ranking number 21 in the country.9 This study focused on three criteria: cost, access and outcomes. In addition to quality health care, we believe it’s important to identify states with adequate supply and access to senior housing. For retirees seeking an all-inclusive solution, such as a Continuing Care Retirement Community (CCRC), as of 2019, Pennsylvania had more communities than any other state (189) and accounted for nearly 10% of the total CCRCs in the U.S.10

In summary

For all of the compelling reasons mentioned above, Pennsylvania could be worth considering for retirees in the Northeast or elsewhere who want relatively low taxes, quality health care, abundant senior housing and a change in the seasons. Those who feel like a one-way ticket to Florida is the only viable option may want to take a second look at Pennsylvania for their golden years.




James Ciprich, CFP®, MBA

James Ciprich, CFP®, MBA

Partner, Wealth Advisor

Jim is a Partner, Wealth Advisor and Investments Leader in our Morristown, NJ, office. Serving a broad range of clients, he has a particular focus on retirees considering care and housing options. Jim founded legacy firm RegentAtlantic’s Senior Solutions practice specialty. He is often asked to speak at retirement communities and client events and is frequently quoted in the media. Jim also serves on an advisory council to the MIT AgeLab. He holds the CERTIFIED FINANCIAL PLANNER™ certification and has an MBA and a BA in Economics from Rutgers University. He served as an adjunct professor at Fairleigh Dickinson University in the CFP® program. Jim is a past president of his local estate planning council, and he has also served as a trustee for Morristown United Methodist Church. In recent summers, he has volunteered with Appalachia Service Project. In a prior career, Jim worked in the music industry, where he was awarded multiple RIAA-certified gold and platinum albums.