Retirement Planning in South Carolina

Why so many people retire to South Carolina

Take a couple who spent their careers in Pennsylvania and bought a house in Bluffton at 62. They wanted warm winters, golf and a lower tax bill, and the state delivered on the third point in a specific way. Social Security does not count as income on the South Carolina return. Pension and IRA withdrawals do, yet the state gives a deduction for retirement income that is larger once you reach 65. Add a homestead break on property tax for older homeowners and no estate tax, and the math tends to favor retirees who own a primary home.

According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, about 18.9 percent of South Carolina residents are 65 or older, and the median age is about 40.2. About 71.9 percent of homes are owner occupied, and the median household income is about $69,324. The retiree population is concentrated in Beaufort, Horry, Georgetown, Charleston and Pickens counties, along with pockets near Aiken and Lake Keowee.

The order of withdrawals

Most retirees hold three kinds of money: pre-tax accounts like traditional IRAs, tax-free Roth accounts and taxable brokerage accounts. The order in which you spend them changes how long the whole pile lasts. A common starting point is to spend taxable accounts first, let pre-tax accounts grow, and use Roth money last. A better approach for many is to blend the accounts each year so you stay inside a chosen tax bracket.

In South Carolina there is one extra wrinkle. Because the deduction on retirement income rises at 65, a retiree who stops work at 60 might fill the early years with Roth conversions at a modest cost, then shift to pre-tax withdrawals once the larger deduction applies. Rates and limits change, so confirm current rules with the South Carolina Department of Revenue or a tax professional.

Social Security timing

You can claim as early as 62, but each year you wait until 70 raises the monthly check. A person who claims at 62 receives a permanently smaller benefit than one who waits until full retirement age, and a larger one still if they wait to 70. For a married couple, the higher earner’s choice matters most, because the survivor keeps the larger of the two checks. A couple in good health with other income often benefits from letting the higher earner delay. Our retirement planning guide covers the claiming rules in more depth.

Pensions from state and local service

South Carolina teachers, state workers and local employees draw from the South Carolina Retirement System, and police officers and firefighters from the Police Officers Retirement System. Choosing a payout option is a once-only decision. A single-life option pays the most each month but stops at your death. A joint option pays less and continues for your spouse. Some retirees return to work after retiring, and the rules limit earnings and affect benefits, so read the current terms before you accept a job. An older deferred option called TERI closed to new participants years ago, so do not rely on advice written when it was open.

Military retirees have a separate set of choices, including the Survivor Benefit Plan and TRICARE for Life, and the state has granted a deduction for military retired pay. Check the current phase-in schedule.

Healthcare in retirement

Medicare starts at 65, but it does not pay for everything. Plan for premiums, supplement coverage or a Medicare Advantage plan, drug costs and dental, vision and hearing care. Prisma Health in the Upstate and Midlands, the Medical University of South Carolina in Charleston and regional hospitals along the coast provide major care. Rural counties have fewer specialists, so retirees who plan to live in small towns should ask how far they will drive for cardiology or cancer care. Retirement before 65 requires a bridge, and the state has not expanded Medicaid, so plan on employer retiree coverage, COBRA or marketplace plans. Confirm current options at the time you retire.

Long-term care

Some form of long-term care will be needed by many older adults. Costs for assisted living and nursing homes vary across South Carolina, higher around Charleston and Hilton Head than in smaller towns. Options include self-funding from savings, a long-term care insurance policy, a hybrid life policy with a care rider, or Medicaid after assets are spent down. Medicaid has strict look-back rules, so talk to an elder law attorney well before you need care. Many continuing care retirement communities in the state require an entrance fee and monthly charge, and the contract details matter more than the brochure.

Buying in a coastal or golf community

The sales pitch for a retirement community often leaves out the recurring costs. Owners in many neighborhoods near Myrtle Beach, Kiawah and Hilton Head pay monthly or yearly association fees, club memberships and special assessments after storms. Flood insurance can be expensive in low-lying areas, and some named storm deductibles are a percentage of the value of the home. A $500,000 house with a five percent deductible exposes the owner to $25,000 before insurance pays. Ask for the community’s financial statements, reserve study and a history of assessments.

Also check evacuation routes. Retirees without family nearby should have a plan for leaving, including medicines, documents and a place to stay.

Claiming the homestead break and other local savings

Homeowners who are 65 or older, or who meet certain disability tests, can apply for a homestead exemption that excludes part of the home’s value from property tax. It does not happen automatically, so apply at the county auditor’s office after you meet the age requirement. Legal residence classification is a separate form, and it reduces the assessment ratio on the home. Between them these two filings can make a noticeable difference to a retiree’s yearly bill. Vehicle property tax still applies, and some counties offer relief for older owners.

Staying active and earning part-time

Many retirees take on consulting, teaching or seasonal work. Earnings before full retirement age can reduce Social Security benefits temporarily, and wages count as income on the state return. Part-time work can also help you delay Social Security or avoid drawing down savings in a bad market year. A planner can model how much you can earn without hurting your tax picture.

Leaving an estate

Because the state has no estate tax, most estate planning is about control, not taxes. Name beneficiaries on retirement accounts, keep them updated, and make sure your will, powers of attorney and health care directive are signed under South Carolina law. Land held in the family needs particular care. Our estate planning guide explains each document, and it matters for anyone who owns property in more than one state.

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A simple timeline

1. Five years out: test your numbers, pay down debt and decide where to live
2. Three years out: price insurance, explore healthcare and review pension options
3. One year out: set the Social Security date, plan cash for the first two years and apply for local tax breaks
4. Retirement year: start withdrawals in the order the plan sets and adjust for taxes
5. Each year after: review spending, market results and health

What to gather for your first meeting: recent statements for every account, your Social Security estimate, pension paperwork, home insurance policies and a list of monthly expenses. Pair that with our investing guide if you want to read about how portfolios behave in retirement.

Where retirees settle, and what each place costs

The Grand Strand offers lower home prices than the Lowcountry, plenty of condos and a large seasonal workforce, but it also has the heaviest tourist traffic and busy summers. Hilton Head, Bluffton and Kiawah draw buyers who want golf and water views and are ready to pay for them. Charleston and Mount Pleasant mix history, restaurants and strong hospitals, with high housing and flood costs. The Upstate and the lake communities near Greenville and Clemson offer cooler weather and mountain views, with more traditional property tax and insurance profiles. Aiken is known for horse country and a quiet downtown, while smaller Midlands and Pee Dee towns have the lowest prices and the fewest services. Visit in more than one season before you sign anything, because August in the Lowcountry feels very different from March.

Budgeting for a long retirement

A healthy 65-year-old couple has a real chance that one spouse lives into the nineties, so a plan must last thirty years or more. Inflation quietly cuts buying power over that stretch. Spending also tends to follow a pattern: higher in the early active years, lower in the middle, then higher again as healthcare costs rise. A planner will build a spending range, not a single number, and set rules for what to cut in a bad market year. One simple rule is to skip the cost-of-living raise to yourself after a year when your portfolio falls. Our budgeting and saving guide shows how to track what you spend before you retire, which is the most useful information you can give an advisor.

Helping children and grandchildren

Retirees often want to help with a down payment, tuition or a grandchild’s first car. Gifts are easy to make and hard to undo, so decide how much your own plan can afford first. The state’s Future Scholar 529 plan lets grandparents contribute to a child’s education account, and contributions may qualify for a South Carolina income tax deduction. Check current rules and read the plan disclosure. Helping a family member does not have to mean cash today. Some retirees choose to pay tuition directly to a school, which stays outside gift tax limits, or leave money through a will instead.

Frequently asked questions