Retirement Planning in New Jersey

Stay, move or split the year

The biggest retirement decision for many New Jerseyans is geographic. A retiree with a paid-off house in Bergen County might face a property tax bill of $15,000 or more a year. The same couple might spend a fraction of that in Pennsylvania, Delaware or the Carolinas, and many do move. Others stay for family, doctors and familiar surroundings. According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, about 17.2 percent of New Jersey residents are 65 or older, the median home is valued near $454,400 and about 63.8 percent of homes are owner occupied. The equity in a New Jersey house is often the largest asset a retiree has, and what to do with it frames the whole plan.

How New Jersey taxes retirement income

Social Security benefits are not taxed by the state. Other retirement income is partly shielded by an exclusion for residents who are 62 or older, available to people whose total income is below a cap. Qualifying income can include pensions, annuities and IRA withdrawals, and the amount excluded depends on filing status and age. Above the cap, the exclusion disappears, which means a few extra dollars of income can raise the tax by much more than the extra dollars would suggest. Planning withdrawals so that income stays below the line, for example by spreading Roth conversions over several years, can save real money. Confirm current limits with the New Jersey Division of Taxation. Our tax planning guide explains how state and federal tax work together.

The 401(k) rule matters in retirement too. Because the state taxed your contributions as wages when you earned them, New Jersey generally does not tax the portion of a withdrawal that represents money already taxed. Keeping track of that basis, usually from your retirement plan statements, avoids paying twice.

Property tax: the largest line item

Property tax can be the largest expense for a retiree who owns a home, and the relief programs change often.

• Senior Freeze, formally the Property Tax Reimbursement program, repays the increase in property tax for homeowners 65 and older or disabled, if they meet income limits and have lived in the state long enough.
• Stay NJ, which offers a credit for seniors 65 and older with property tax bills, with its own income limits.
• ANCHOR, which gives a payment to eligible homeowners and renters based on income.
• Appeals, which allow any owner to contest an assessment with the county board of taxation, usually by April 1 after a notice.

Each program has filing deadlines. Missing one can cost thousands of dollars, so mark your calendar and file even if you are unsure of eligibility.

Pensions and public service

New Jersey has many public employees. Teachers belong to the Teachers’ Pension and Annuity Fund, and most state and local workers belong to the Public Employees’ Retirement System, with separate plans for police and firefighters. The state’s pension funding has been strained for years, and benefit rules such as cost-of-living adjustments have changed. If you are in a public plan, request a current benefit estimate, understand your payment options and the survivor benefit, and think about how the pension interacts with Social Security.

The Social Security Fairness Act, signed in January 2025, repealed the Windfall Elimination Provision and Government Pension Offset. Many New Jersey public workers have pensions from jobs not covered by Social Security, so ask the Social Security Administration for an updated estimate. Our retirement planning guide covers the broader steps.

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If you leave New Jersey

Leaving can lower taxes, but the details matter. To change your state of residence, you generally need to establish a new home, spend most of the year there and sever ties with the old one: update your driver’s license, voter registration and address on accounts, move belongings and keep records of days spent in each state. New Jersey can audit residency, especially when a large sale or distribution occurs near the time of a move.

Two New Jersey rules can follow you. The state taxes income from New Jersey real estate you sell even if you live elsewhere. And the inheritance tax can apply to New Jersey real estate and tangible property owned by a nonresident, which matters if you keep a house in the state and plan to leave it to a sibling or a friend. An attorney who knows both states should review those plans.

Medicare and long-term care

Medicare begins at 65. The State Health Insurance Assistance Program, known as SHIP, offers free, impartial counseling on Medicare choices, and a call before you choose between traditional Medicare with a supplement and a Medicare Advantage plan is worthwhile. Confirm that the hospitals and doctors you use are in the network, especially if you may spend time in another state.

Long-term care is expensive in New Jersey, where nursing home costs are among the highest in the country. Medicare covers only limited stays after a hospital visit. Medicaid, called NJ FamilyCare in its health plan form, covers long-term care for those who meet income and asset limits and looks back five years at gifts. Families compare long-term care insurance, hybrid life policies and self-funding, and an elder law attorney can explain how the rules treat a spouse and a home.

Making the money last

One common approach divides savings into time buckets: cash and short bonds for the next few years of spending, balanced holdings for the middle years and stocks for the long run. Retirees with a strong pension can usually hold more stocks than those living on savings. The first years of retirement are the riskiest, because withdrawing during a market drop does more lasting damage than the same drop later. Our investing basics guide explains diversification. Because of the exclusion cap, a New Jersey withdrawal plan also looks at how much taxable income to show each year and whether to use Roth money to stay under the line.

Retiring before 65: the health coverage bridge

Many New Jerseyans leave a corporate or public job in their late fifties or early sixties, which leaves a gap before Medicare. Options include COBRA continuation coverage from the former employer, which can last up to eighteen months but at full cost; a retiree plan, if the employer offers one; a plan through Get Covered New Jersey, the state marketplace, where subsidies depend on income; or a spouse’s plan. Premiums can be thousands of dollars a year, and subsidy levels depend on the income you report, which gives you a reason to manage taxable income in the bridge years. A planner can estimate the cost of each path and show how a partial Roth conversion or a year of capital gains would change your subsidy.

A spending plan that changes with age

Retirees rarely spend the same amount every year. The early years are often the most active, with travel, hobbies and projects. Spending usually settles in the middle years and then rises again late in life, driven by healthcare and help at home. A flat budget misses that pattern. A better plan sets a baseline of necessities covered by reliable income such as Social Security and pensions, a flexible layer for activities that can shrink in a bad year and a reserve for long-term care. In New Jersey, add the property tax and homeowners insurance calendar, since large bills often come in lumps. Seeing the three layers lets you spend with confidence while you are healthy, and it shows how large a market decline the plan can absorb.

What retirement advice costs

Choosing a retirement advisor in New Jersey

1. Ask the advisor to show on paper how savings and pensions become a monthly paycheck.
2. Ask about experience with New Jersey public pensions and the exclusion rules.
3. Check the advisor with the SEC, FINRA and the New Jersey Bureau of Securities.
4. Get the all-in annual cost in dollars.
5. Confirm that Social Security claiming ages are modeled for both spouses.
6. Interview a few firms and step away from any that open with a product.

Social Security and survivors

The date you start Social Security shapes your income for life. Checks can begin at 62, grow every year you wait to full retirement age and keep rising until 70. In a married couple, the larger benefit continues for the survivor, so waiting on the bigger benefit protects whoever lives longer. Running several claiming ages for each spouse shows break-even points and how a widow or widower would fare.

Estate papers and the inheritance tax

New Jersey has no estate tax, but papers still matter. A will names who inherits. A durable power of attorney and a health care proxy name people to act for you if you cannot. Beneficiary forms on retirement accounts and life insurance override the will. The inheritance tax makes the identity of each heir important: children and grandchildren are exempt, while siblings, nieces, nephews and friends may owe tax. Naming beneficiaries on life insurance can provide for them without triggering that tax. Our estate planning guide explains each document. Review everything after a marriage, divorce, birth or death, and before any move out of state.

Frequently asked questions