Did you know that there are about 1.5 million individuals aged 50 or older living in Oregon – accounting for more than a third of its total residents?
Oregon, with its stunning natural beauty and laid-back lifestyle, understandably attracts many retirees. However, that picturesque scenery comes with a price tag.
Related: Retiring Into the Next Phase of Your Life
In this blog, we’re exploring seven financial planning considerations you should know if you’re planning to retire in Oregon in 2024, from the average cost of living to medicare premiums and more.
2024 Retirement Planning Information Every Oregon Retiree Should Know
1. The cost of living in Oregon is higher than most other states.
The cost of living in our beautiful state comes at a slightly higher premium than other U.S. regions.
In fact, Oregon is 16% more expensive overall than the national average as of 2023 – especially in categories like housing (41% higher) and transportation (17% higher). Expenses like utilities and healthcare, however, are more on par with the rest of the nation, sitting just 3% higher than average.
Keep in mind that the cost of living will vary depending on which part of Oregon you settle in for retirement. As an obvious example, real estate in Portland is much higher than here in Corvallis.
2. Long-term care in Oregon costs between $60,000 and $144,000 per year.
Most seniors will need some type of long-term care in their retirement – and the cost of that care can quickly add up.
According to data provided by Genworth, an at-home health aide will likely cost you $6,667 per month in 2024, or about $80,000 per year. A private room at a nursing home facility runs around $12,143 per month, while an assisted living facility costs $5,513. Remember that these costs are average estimates and that your price will vary depending on your location and the type of care you require.
Long-term care insurance can be a great help in keeping your out-of-pocket costs low, while potentially offering tax deductions on the monthly premiums.
Related: 5 Ways to Prepare for the Cost of Long-term Care
3. Oregon is relatively tax-friendly when it comes to retirees.
Each state has their own tax laws that could affect your retirement – here’s what you need to know about Oregon taxes:
- There are no taxes on Social Security income
- 401(k)s and IRAs are taxed at the full income tax rate (up to 9.9%)
- There is no sales tax
- Some PERS-eligible employees can file for a tax remedy
4. Oregon has the 6th highest average Medicare premiums in the nation, but the out-of-pocket max isn’t too bad.
The average monthly Medicare premium in Oregon is $48, the sixth-highest premium in the country. That being said, the average maximum out-of-pocket expense for Medicare is $5,357, the 26th highest.
Medicare is a vital component of most retirees’ health insurance plans. Medicare Part A (hospital insurance) premiums are free to most residents, while Part B (medical insurance) coverage costs $164.90 per month on average. The monthly premium for Medicare Advantage plans sits at about $33.74. Keep in mind that these expenses can vary depending on your specific situation.
Related: Will Medicare Exist in 10 Years? And Other Common Medicare Questions
The Oregon Department of Human Services also offers several savings programs to help cover the costs associated with Medicare. You must apply to enroll in a program, and eligibility is based on your income.
5. Oregon has the lowest estate tax exemption at $1 million.
Estate planning ensures your assets are distributed according to your wishes after your passing. Each state has different estate laws and tax laws that dictate how you can create estate planning documents and how your assets are gifted upon your passing. For example, in Oregon you’ll need at least two witnesses to create a legal will.
Moreover, Oregon isn’t a community property state – which means that any assets you acquire during your marriage aren’t automatically considered joint property. And while Oregon doesn’t have an inheritance tax on those being given the assets, they do have an estate tax of 10% to 16% for estates worth more than $1 million.
Click here to learn more frequently asked questions about estate planning laws in Oregon.
6. Social Security is not taxed in Oregon but can still impact your income tax bracket.
Social Security plays a significant role in many retirees’ income. While Social Security itself isn’t taxed in Oregon, your income may impact your state income tax bracket.
Related: ‘Will Social Security End in My Lifetime?’ and 5 Other Common Questions About Social Security
However, you may still be subject to federal income taxes on your Social Security benefits. There are several free online calculators you can use, like this one from SmartAsset, that can help you estimate your state tax liability.
7. PERS pensions are a powerful retirement income tool for employees of the state of Oregon.
If you’re a current or former Oregon public employee, you likely participate in the Public Employees Retirement System (PERS).
Related: How to Read Your PERS’ Oregon Public Service Retirement Plan (OPSRP) Statements
PERS offers full benefits at the normal retirement age, which varies depending on your membership tier and years of service. When and how you collect your pension (lump-sum vs. monthly) can affect your overall finances, including taxes and Social Security benefits. If you’re wondering how to optimize your pension benefits, it’s best to consult a financial advisor with experience in PERS.
Retiring in Oregon can be a fantastic experience, but it requires careful financial planning. By considering these seven factors, you can make informed decisions, build a solid financial foundation, and embrace your golden years with confidence.
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