Retirement Planning in Wyoming

The two halves of retirement planning

Retirement has a saving half and a spending half. In the saving half you build accounts and aim at a target. In the spending half you turn those accounts into a paycheck that has to last twenty-five or thirty years. The second half is harder because mistakes are difficult to undo, and no employer is sending a check every two weeks.

A sound plan estimates your yearly spending, lists the income you can count on, and tests the gap against market ups and downs. Then it picks an order for drawing money from different accounts.

What Wyoming does and does not tax

Wyoming has no personal income tax, so Social Security, pension payments, IRA withdrawals and 401(k) distributions are not taxed by the state. Many retirees from places with high taxes find that their net income rises after moving here. The state also has no inheritance tax or estate tax, which simplifies leaving money to heirs.

The federal government still taxes much of this income, and Medicare premiums rise for higher earners. Sales tax and property tax apply, and the rules on exemptions or relief for older owners can change, so confirm current rules with the Wyoming Department of Revenue or a tax professional.

Social Security timing

The age you claim Social Security shapes your income for the rest of your life. Claiming at 62 gives a smaller monthly check, waiting until full retirement age gives the full amount, and waiting until 70 gives the largest check. A married couple should think about both spouses, because the survivor keeps the larger of the two benefits.

A couple in Sheridan, both 63, might decide that one spouse claims early while the other waits, using savings to cover the gap. The right answer depends on health, family longevity, other income and whether either spouse still works. An advisor can model several paths and show the difference at ages 80 and 90.

The Wyoming Retirement System

State employees, teachers, many county and city workers and some other public employees belong to the Wyoming Retirement System. It pays a monthly benefit based on years of service and pay, and the details differ by plan and by when you were hired. Law enforcement employees have a separate plan.

Before you pick a retirement date, ask the system for a written estimate. Compare the payment options, since a choice that pays more now might leave a surviving spouse with less. Also check whether you will receive Social Security on top of the pension, and how any government pension rules might affect spousal benefits. Our retirement planning guide covers the general rules.

Healthcare in a rural state

Medicare starts at 65, but it has gaps. Many people add a Medigap policy or choose a Medicare Advantage plan, and the choices differ by county because insurers do not serve every area. Check that your doctors and the nearest hospital take the plan before you enroll. In some small communities there are few options.

Specialists are often in Casper, Cheyenne, Billings, Salt Lake City or Denver, so plan for travel costs and occasional hotel stays. Telehealth helps for many visits. Rural hospitals and critical access hospitals provide a lot of local care, but some procedures require a trip.

Long-term care and aging at home

Medicare does not pay for most long-term care. Options include saving to cover it, buying long-term care insurance or a hybrid life policy, or planning to rely on family. Costs vary across the state, and home care aides can be hard to find in small towns. That is a planning issue as much as a cost issue.

Many Wyoming retirees want to stay on their own land. That works well with a plan: a home that can be used on one floor, snow removal arranged, a neighbor or family member nearby, and money set aside for help. If you own a ranch, decide who will take over chores when you cannot.

Where Wyoming retirees live

Cheyenne offers the services of a capital city and is close to Colorado. Casper has a large medical center and an airport. Sheridan and Cody attract retirees who like the mountains, Cody with Yellowstone to the west. Laramie combines college-town activity with a lower cost of living. Jackson is far more expensive, so many people who work there plan to retire elsewhere.

According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, about 18.5 percent of Wyoming residents are 65 or older, and the median home value is about $309,700. Visit in January before you commit to a town. The winter wind and snow tell you more than a summer trip.

Housing choices after the kids leave

A couple in their late sixties in Riverton may own a large house, a shop and a few acres. Selling and downsizing could free up money and reduce upkeep. Staying put keeps community ties and a familiar yard. Renting out part of the property, or moving into a smaller place in town, falls somewhere in between.

Compare the cost of staying, including heating, repairs and taxes, with the cost of moving, including sale costs and the new place. A planner can show how each choice affects how long your money lasts.

Retirement for the self-employed and ranchers

Ranchers and small business owners often have little in retirement accounts because their wealth is in land and equipment. Turning that into income means deciding whether to sell, lease, bring in a family member or keep working part-time. Lease income from grazing or minerals can support retirement but may vary.

If you own a business, start a retirement account, even if contributions are small, and plan the exit. A buyer may take years to find. A planner can estimate how much the sale needs to bring to fund your goals.

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Retirement accounts and withdrawal order

Most retirees hold some money in pre-tax accounts, some in Roth accounts and some in regular taxable accounts. The order you draw from them changes your tax bill. Many people use taxable money first and let tax-advantaged accounts grow, but that is not right for everyone. Required minimum distributions begin at a set age under federal law, which forces withdrawals whether you need them or not.

With no state income tax, Roth conversions in low-income years are decided on federal brackets alone. A planner can show how much to convert each year to reduce later tax. Our investing guide explains how different accounts work.

Income from energy and minerals in retirement

Some retirees live partly on royalty or lease payments. Those payments can fall without notice when wells slow or prices drop. Treat them as variable and avoid committing all of the income to fixed bills. A rule many planners use is to base the budget on the lower figure and put the surplus into savings.

If you hold mineral rights, make sure your heirs know about them and have the lease documents. Lost mineral interests are common after a death when nobody knows where the paperwork is.

Leaving money to family

With no state estate tax, estate planning in Wyoming is mostly about making sure the right person gets the right asset. Review beneficiary designations on retirement accounts and life insurance, because those override a will. Name a durable power of attorney and a health care proxy, and consider a trust if you own land, have children from earlier marriages or want to control timing. See our estate planning guide for the basics.

Federal estate tax applies only to very large estates, but rules change, so confirm with a professional.

Questions to ask a retirement advisor

• How do you decide how much I can spend each year?
• What happens to my plan if markets fall early in retirement?
• Will you estimate my taxes, Medicare premiums and Social Security together?
• How are you paid, and what is my total cost?
• Can we meet by phone or video through the winter?

Winter and the practical side of retiring here

Wyoming winters are long, and the wind is a daily fact on the plains. Heating bills, snow removal, vehicle repairs and the chance of being snowed in for days all belong in a retirement budget. A couple in Rawlins might spend far more on propane or electricity in January than in July, so a budget that divides annual costs by twelve will mislead. Build a monthly line for the cold months, and keep a reserve for a furnace or roof repair.

Driving is another practical matter. Many retirees give up long highway trips in winter, and some move closer to a hospital in their seventies. Planning for that move before you need it makes the choice calmer and the finances stronger.

Retirement on tribal lands

Members of the Eastern Shoshone and Northern Arapaho tribes on the Wind River Reservation may hold land in trust or restricted status, and may receive benefits through tribal programs or the Indian Health Service. Those facts affect what can be sold, leased or passed on, and how healthcare is arranged alongside Medicare. A retirement plan for a tribal member should be built with an advisor willing to learn the rules, and with an attorney who knows federal Indian law.

Retiring before Medicare starts

Leaving a job at 60 leaves a five-year gap before Medicare. Coverage during that time can come from a spouse, retiree benefits, COBRA for a limited time, or a marketplace plan. Premiums can be a large expense, and income affects subsidies. Some people time retirement or part-time work to keep health coverage.

A planner can model what the gap costs and whether working two more years or taking a part-time job is worth it. Do this before giving notice, not after.

Protecting a surviving spouse

When one spouse dies, a household loses a Social Security check and often a pension payment, but expenses fall by much less. The survivor may also move into a higher tax bracket as a single filer. Look at what the survivor would have in income and whether life insurance or a different pension option fills the gap. Make sure the survivor knows the passwords, account locations and the names of the advisor and attorney.

It also helps to have a trusted person, perhaps a child or friend, who can step in. Our advisors guide explains how to find someone who will work with both spouses.

Frequently asked questions