Retirement Planning in New Hampshire

Retirement planning, step by step

Retirement has two parts. The first is building savings. The second, which is harder, is turning those savings into a paycheck that lasts perhaps thirty years. A good plan starts with your likely spending, lists the income that arrives no matter what, and then sizes the draw from savings that covers the gap.

New Hampshire is an older state. According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, about 20.1 percent of residents are 65 or older, the median age is 43.3 and about 72.8 percent of homes are owner occupied. The median home value is about $402,500. Many retirees here own a house worth a lot and have to decide what to do with it.

Why people retire here

The state attracts retirees from Massachusetts, Connecticut, New York and beyond. The lack of a wage tax, the repealed interest and dividends tax and the absence of a sales tax make the monthly math easier. Add mountains, lakes, the coast, no big-city traffic and quick access to Boston hospitals, and the appeal is clear. Confirm current state tax rules with the Department of Revenue Administration.

But a low tax on income can hide a high tax on housing. A retired couple in Bedford with a $550,000 house can easily face a property tax bill in the high four figures or more every year, and it will not fall when their income does. Run that number first before concluding that the move saves money.

Taxes on retirement income

New Hampshire does not tax Social Security benefits or most pension income. It does not tax withdrawals from IRAs and 401(k) plans in the way a state income tax would. Federal tax still applies, and up to 85 percent of Social Security benefits can be taxable at the federal level, depending on total income. Because the state adds nothing, the work is in the federal bracket: filling lower brackets with traditional account withdrawals or Roth conversions in some years, then letting taxable and Roth accounts cover spending in others.

Required minimum distributions begin in your seventies under current federal rules, and a large balance can push taxable income up. Many people convert part of their traditional accounts to Roth in the early retirement years, when income is lower, to reduce that effect later.

Property tax in retirement

Property tax is the cost that surprises new retirees. Bills fund the local school district, town services and the county, and they vary from town to town. Many towns offer exemptions or credits for older, disabled or veteran homeowners, with income and asset limits and deadlines set locally. Contact the assessor or the select board office to learn what your town offers. Some towns allow low-income elderly owners to defer taxes through a lien, which then comes due when the home is sold or inherited, so understand the effect on heirs.

When you plan, grow the property tax line each year in your budget. Over twenty years it can double. If the cost threatens your plan, consider downsizing, moving to a town with lower rates or looking at a condominium where the unit pays tax on a smaller value.

Social Security timing

Benefits can start at 62, but the check grows for every month you hold off, up to age 70. Someone who files at 62 locks in a smaller amount for life, while a person who waits collects a larger one, and the gap is meaningful. Neither answer is right for everyone. A man in Laconia with a bad knee and a physical job may reasonably file early, while his wife, a healthy bookkeeper, may do better waiting. For couples the larger earner’s filing age sets what the survivor eventually receives, so the two decisions are linked. Your ssa.gov account shows your own figures. Our retirement planning guide explains the basics.

The New Hampshire Retirement System

Teachers, state employees, police, firefighters and many municipal workers belong to the New Hampshire Retirement System. The pension depends on years of service, age and average pay, and rules have changed over time, so a member hired in the 1990s may have different terms from one hired in the 2010s. Ask for a benefit estimate before you pick a date, compare survivor options and learn how a higher monthly payment now can reduce what a spouse receives later. Confirm whether your job also paid into Social Security, which changes the planning for you and your spouse.

Police and firefighters often retire earlier than other public workers, so they need a bridge for health coverage until Medicare begins. A part-time job or a second career after retirement may affect the pension, so ask the system about its rules on returning to work.

Healthcare and long-term care

Coverage through Medicare begins at 65, and you choose between Original Medicare with a supplement and drug plan or an Advantage plan that bundles everything with a network. Doctors and hospitals that take one plan may not take another, and provider choices in Nashua look nothing like those in Colebrook, so confirm your own doctors before you enroll. Premiums rise for higher incomes, using your tax return from two years back, which is one reason a big Roth conversion needs advance thought.

Long-term care is the expense Medicare mostly skips. Help bathing, dressing or moving around, at home or in a facility, is billed by the month and can reach several thousand dollars. The state Medicaid program steps in once savings are nearly gone and looks back at gifts made in the years before you apply. Families handle this with savings set aside for care, a long-term care policy, a life policy with a care rider or an early visit to an elder law attorney. Our estate planning guide covers powers of attorney and health directives.

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Winter, heat and the house

Retirees spend more time at home, so heating costs weigh more. Oil and propane prices swing, and an older house with poor insulation can use a lot of fuel. Weatherization programs, heat pumps and bulk purchasing can reduce costs. Fuel assistance is available to qualifying households through local community action agencies.

Think about the house itself. Stairs, long driveways and snow removal become harder with age. Some retirees keep the family home, some move to a ranch or condominium and some choose an active adult community. Another option is a smaller place near the Seacoast or the Lakes Region with the grandchildren a short drive away. Selling a long-held house can create a federal capital gain above the exclusion limit, so check current rules before you list.

Second homes and snowbirds

Some Granite State retirees spend winters in Florida or Arizona and summers in a camp on a lake. That can be lovely, and it adds costs: two property tax bills, two sets of insurance and the work of closing a seasonal house. Your legal home state also matters for tax and voting. If you split time, keep records of where you spend your days and talk to a tax professional before changing your residency.

Making savings last

Think of the portfolio as a reservoir with a pipe. The pipe is your yearly withdrawal, and its size should depend on your age, your mix of stocks and bonds and how much you can cut back in a bad stretch. Keeping a year or two of spending in safe holdings means you do not have to sell stocks after a drop to pay the oil bill. If the market falls ten percent, skipping a trip and delaying a kitchen remodel can protect decades of income. Our investing guide explains how stocks and bonds behave during retirement.

Questions for a retirement advisor

1. Are you a fiduciary? Get the answer in writing.
2. How will you set my withdrawal order?
3. How are you paid? Request the cost in dollars.
4. How do you handle property tax, healthcare and long-term care in the plan?
5. How often will we update the plan?
6. Do you know my pension rules?

Beneficiaries and documents

The name on the beneficiary form controls who gets an IRA or 401(k), whatever your will says, so check those forms whenever family circumstances shift. Sign a durable power of attorney and a health care directive while you are well, and leave your children a simple list of accounts and contacts. New Hampshire has no estate or inheritance tax, but federal rules can apply to larger estates. Most non-spouse heirs must empty an inherited retirement account within ten years under current federal rules, which can create a tax burden, so talk to a tax professional about the plan.

Retiring in different parts of the state

Where you land inside New Hampshire changes the plan. The Seacoast, with Portsmouth, Exeter and Rye, offers restaurants, hospitals and train and highway links, at the highest home prices. The Monadnock region around Keene is quieter and cheaper. The Upper Valley near Hanover has a well-known medical center and a college-town culture, and the Lakes Region and White Mountains deliver recreation and long winters. The North Country offers low prices, but you may drive an hour or more to a specialist.

Matching the place to your health is as important as the price. A couple healthy at 62 may love a remote cabin and then find it hard at 82. Many people choose a town with a hospital, a grocery store and a senior center within a short drive, even if the house is smaller.

Phased retirement and part-time work

Many people do not stop all at once. A teacher may retire from the district and tutor, an engineer may consult two days a week and a tradesperson may take seasonal jobs at a ski area. Earnings in the early years reduce the draw on savings and can let investments grow longer. Be aware of the Social Security earnings test if you claim before full retirement age and keep working, since benefits can be temporarily withheld above a limit. Pension systems have their own rules about returning to work, so check before you accept a job.

Part-time work can also carry health insurance, which helps bridge the years before Medicare. Compare employer coverage with a marketplace plan and with a spouse’s plan.

Protecting a surviving spouse

When one spouse dies, household income usually falls, because one Social Security check ends and some pension payments shrink, while the house still costs the same to heat and tax. Plan for the survivor by choosing pension options carefully, keeping life insurance if the loss of one benefit would hurt, and making sure the surviving spouse knows where accounts and passwords are. Our life insurance guide explains when coverage still makes sense in retirement.

Frequently asked questions