Retiring in Hawaii: Pros & Cons (Part 2)

As military retirees we can access Trippler Army Medical Center on Oahu at no cost. However, we have to pay our own way over there (and back) and pay for lodging if we’re there for more than a day which can get expensive.

Continuing on with some positives and negatives of retiring in Hawai’i, there are both good and bad economic reasons for retiring in Hawai’i. Usually the big negative that’s mentioned about Hawaii retirement is that it’s the most expensive place to live in the U.S. but there are factors that mitigate that. Negatively, there’s another, perhaps more important factor, that could affect one’s success of settling in and subsequent quality of life in the islands:

PRO: Hawai’i is one of only two states that gives a tax exemption for all pension and Social Security income. In our own case, all of our retirement income comes from pensions (including all state and federal pensions) and Social Security, and we pay no state income tax in Hawaii. Because most of our IRA savings were non-contributory, that income is also not taxed. This break on our retirement income was a major factor in our decision to retire to Kaua’i, especially since the cost of living is so high otherwise. Because of this tax break, Hawaii turns out to be more affordable than California and some other locations on the mainland would be for us, and we know we’re happier and healthier for being here. If we want to work in Hawai’i (we don’t) then we have to pay state taxes on that income – I will pay taxes on my Etsy income, for example. However, with careful budgeting and spending, our retirement income has proven to be adequate, and has actually gone further than we imagined.

CON: The risk of becoming ill on the island, far away from family, especially before you’ve had time to settle in and make good and reliable friends is something many desiring to retire here don’t think about. This negative appears, to me anyway, to possibly be more of a worry for those coming to on their own to retire, or those in poor health to begin with. Still, some treatments are not available here, and travel to Oahu for care if might be necessary (and expensive) if living on another island. Finding a doctor can also be difficult in some places. For now, Brett and I have each other to rely on, and Kaua’i has almost all medical specialities represented and quality care.

There are many other economic factors to take into consideration when determining whether the economics of retiring in Hawaii will work for or against you (lifestyle, home ownership, travel, etc.) and all of those need to be examined carefully before making a decision to move here. As with any retirement location, there is no one size fits all in retirement here, but it isn’t all bad news either.


12 thoughts on “Retiring in Hawaii: Pros & Cons (Part 2)

  1. I know your son is so far away so thank goodness your plan for seeing them yearly. In retirement planning are your girls still all in the north east area? I for one hate the cold but here I am in Minnesota! I find travel (not so much recently with Covid) in the winter for a few short trips makes it more palatable. As family has trumped all. I have 4 children and 12 grandchildren within three hours. I can’t imagine missing out on being a part of their lives. Hopefully your daughters would stay within such close proximity.


    1. Yes, our daughters all live in the NE and plan to stay there. For now, they are just starting out on their lives and careers, with no plans for marriage or children for several (many?) years. So, this is a good time for us to be in Hawaii or travel. If there were grandkids, we’d be thinking very differently.

      We have seriously explored moving to the NE, but know for now we’d be miserable. Our girls don’t think it’s a good idea for us, and agree we’d be miserable, and our son has told us it’s an area they would not visit regularly, and the journey from there to Japan and back would be long and expensive.


  2. Hmm, yes, but there are 8 states that have no state income tax. Perhaps you would not be interested in living in those states, but I am pretty happy with Washington state. The states with no income tax are Washington, Alaska, Nevada, Wyoming, South Dakota, Tennessee, Texas, and Florida. New Hampshire is set to eliminate its states tax on interest and dividends soon, which will bring the number of states with no income tax to 9.


    1. We have lived in no-income tax states and a no-sales tax state and know that sounds appealing up front but that there are loads of other ways the state will use to raise income, such as high sales taxes, property taxes, and on and on. All of those need to be weighed when it comes to figuring out the cost of living. In Hawaii we pay no state income tax and a low GET (general excise tax) rate of 4%. As retirees here, we keep most of our income, a good things as goods and services cost more (the “paradise tax”).

      Also, not one of those states listed above, with the exception of Washington, is an area where we would consider living. But, Washington has other costs that would make it a very expensive place for us to live.


  3. I think finding a place to live in retirement is difficult. I want to live near all my children but with one 2000 miles away from the others that is not going to happen. So I just picked the place where they all viewed as “home” and plopped down there. The other three live in this state and one is a couple of miles from my retirement/weekend home. The other two are supposed to move back. We shall see. This was a compromise because I really wanted to live either north a couple of hours (my childhood home) or south three hours near beach. I did neither obviously… lol. I am happy with it being near a very large University, the hospital, Aldi, walking park, being a small house etc. Still, I paid triple what I paid for my “work” house and work house is a little bit larger. The price bites. Most folks buy a cheaper house in retirement, not one that is three times as much as previous house. Oh well. I am paying for location. That still does not make me happy about the price.


  4. Decisions, decisions…you are right: if a state doesn’t have an income tax, will have other higher taxes. Plus, if a state has low revenues, there is also a thinner safety net for people at a disadvantage. Services for seniors ( such as free transportation services for people too old to drive, for instance) will be scarce. Like in so many other instances, one gets pretty much what it pays for. Today I saw an elderly woman shopping for food at Trader Joe’s and the van driver who brought her there also helped her to get in the van, carry her shopping cart and probably make sure she will get back home safely. That was a pretty good service I thought.
    Having access to good health care is critical for retirees, so from this point of view, you are very fortunate. Maybe a move to Oahu would not be a bad idea.


    1. Income taxes are only one piece of the puzzle and have to be figured along with lots of other costs. We paid no sales tax when we lived in Oregon, but the state found plenty of other ways to collect revenue, some of it out in the open (higher state income taxes), but hidden in other costs. Family lives in no income tax states but pay very high property taxes, very high amounts for insurance, and lack services in some areas.

      Our son would be happier if we lived on Oahu because of medical care, but so far we have received great care here on Kaua’i. Almost every medical speciality is represented and care is too-notch.


  5. Have you looked into the VA paying transportation costs? My hubby gets paid for travel to and from Salt Lake for full VA care. The VA system works with regular military hospitals these days.
    I had no idea about the no state tax. That is a great benefit.
    I agree, trying to establish a community is key. We are going to have to work hard to do that in our new home.


    1. Haven’t looked into using the VA, but I think, if necessary, we could hitch a ride from Barking Sands over to Honolulu and back. The cost of a RT ticket over there isn’t too bad though, at least not for us.

      Establishing a community here is difficult and takes time. We make sure we at least know our neighbors and they know us, but have established other points of contact on the island.


  6. Healthcare is crucial, as you know. It’s one thing that weighed strongly into our decision to stay where we are.

    Agree completely that no income tax on SS or pensions isn’t always as rosy as it seems. Someone has to pay for the goods and services provided by the state – or you don’t have them. That’s even worse. And, like you, except for Washington, we wouldn’t even consider the other no tax states. Especially Florida and Texas.


    1. Healthcare was a big factor in our decision to choose Kaua’i over other places, especially the Big Island. We have been very pleased with the care we have received here, and frankly think it’s gotten better over the years (well, except for the ER at the hospital).

      State taxes are sort of like playing at a casino – the house always wins. In other words, they’re going to get their money somehow, whether that’s through other forms of taxation, or less services provided to citizens.

      We’ve lived in Florida. Once was enough.

      Liked by 1 person

  7. I doubt I’ll ever live in Hawaii and the distance from family and services is the main reason. Whenever I’ve thought about it, I wonder what I would do if I needed medical attention and had no one to rely on. It’s tough to make friends that are more than acquaintances so that type of move I would only do if I had a friend or relative to do it with me. I don’t have a pension, so that’s not a factor and I was never in the military, so living there would just be too expensive/inconvenient, but I’m sure it’s amazing to be able to live there. I’ll just have to settle for visits, if COVID ever ends. I was thinking of coming there in early December, but the way things are going, it’s looking less likely. I just heard Hawaii is considering reinstituting pre-travel testing and other restrictions.

    Speaking of moving far, I may be moving to California! I had a couple of interviews for a federal government job there, which would be my dream job. My nephew recently moved there and I’d be about an hour from him and it would be nice to be near him, so we’ll see what happens. I should hear something in the next couple of weeks. At least I’d be a lot closer to Hawaii, LOL!


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