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.