Retirement Planning in New York

Retiring in New York: the starting facts

About 17.9 percent of New Yorkers are 65 or older. According to the U.S. Census Bureau, 2020 to 2024 American Community Survey, the median home is valued near $423,800, but only about 54.3 percent of homes are owner occupied, a reminder that a large share of older New Yorkers rent, many of them in regulated apartments. The cost of retiring varies enormously by region. A retiree in Manhattan, one on Long Island, one in the Hudson Valley and one in Rochester face very different budgets.

How New York taxes retirement income

Social Security benefits are exempt from New York income tax. Pensions from federal, state and local government are exempt as well. Other retirement income, such as private pensions, annuities and IRA and 401(k) withdrawals, is taxed as ordinary income, with an exclusion up to a limit for people who are 59 and a half or older. New York City residents also pay city income tax, with similar exemptions for Social Security and government pensions.

What that means in practice is that the mix of income sources matters. A retiree who relies on a government pension and Social Security may owe little state tax, while one who draws mostly from an IRA will owe more. Roth conversions create state taxable income at the time of conversion, so converting in low-income years helps. Our tax planning guide explains the trade between traditional and Roth accounts.

Stay, move within the state or leave

Tax is only part of the decision about where to retire. A New Yorker who moves to a no-income-tax state can lower income tax, though the state tax on a retiree who draws from government pensions and Social Security is often modest. The bigger savings may come from lower property taxes, lower housing costs or a warmer climate, balanced against the loss of family nearby, familiar doctors and long-established ties.

Residency rules determine whether a move changes your tax. New York treats you as a resident if it is your domicile, or if you keep a permanent place to live here and spend more than 183 days in the state. Retirees who keep a New York home and spend winters in Florida should count days carefully and keep records. The state audits residency, especially when someone moves just before taking a large distribution or selling a business. Moving to another part of New York is a third path, for example from the city to an upstate community with lower costs.

An advisor builds a month-by-month budget for each choice and tests how long the money lasts.

Property tax relief for homeowners

Several tools can lower the burden for older homeowners.

• Enhanced STAR. Homeowners 65 and older who meet an income limit can receive a larger school property tax exemption or credit than the basic STAR program. The state periodically changes how it is paid, so check the current method.
• Senior citizens homeowners’ exemption. Many counties, cities, towns and school districts offer an exemption for older owners below an income limit, which varies by locality.
• Assessment challenges. Any owner can contest an assessment, and a successful challenge lowers the bill in future years.

Income limits and benefit levels change, and each locality sets its own rules, so confirm current terms with your assessor and the state Department of Taxation and Finance.

Help for older renters

New York City’s Senior Citizen Rent Increase Exemption freezes the rent for eligible tenants 62 and older who live in rent-regulated housing and meet an income limit, and the city credits the landlord with the difference in property tax. The Disability Rent Increase Exemption does the same for eligible tenants with disabilities. For someone in a regulated apartment, keeping the apartment and the freeze can be worth more than a move that saves tax. A retirement plan should treat a rent-regulated lease as an asset and think carefully before giving it up.

Pensions and public service

Many New Yorkers retire from state, city or school service. The New York State and Local Retirement System covers many state and local government workers, and the state teachers’ system covers educators outside New York City. New York City has its own systems for city employees, teachers, police and firefighters. Benefits depend on tier, which is set by your date of hire. Tier 6 members, hired in recent years, have a later retirement age and a longer period used to calculate their pensions than those in earlier tiers.

Many public workers have also paid little or no Social Security tax. The Social Security Fairness Act, signed in January 2025, repealed the Windfall Elimination Provision and the Government Pension Offset, which had reduced benefits for people with pensions from work outside Social Security and for some spouses and survivors. If you or your spouse have such a pension, request an updated estimate before you claim. Pension elections usually include a survivor choice that is hard to change, so compare it with life insurance. Our retirement planning guide covers the broader sequence.

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Medicare, prescriptions and long-term care

Medicare begins at 65. New York’s Health Insurance Information, Counseling and Assistance Program, known as HIICAP, offers free, unbiased counseling on Medicare choices, a useful check before you pick between traditional Medicare with a supplement and a Medicare Advantage plan. The state’s EPIC program helps eligible older residents with prescription costs.

Long-term care is expensive in New York, especially in the New York City area. Medicaid pays for care for people who meet income and asset limits and has a five-year look-back for gifts, so giving property to children is not a quick fix. Elder law attorneys help families plan, and some use trusts. Families can compare long-term care insurance, a life policy with a care benefit and self-funding.

Estate planning with the cliff in mind

Because New York’s estate tax threshold is low and the cliff applies just above it, retirees with a paid-off home, a co-op, retirement accounts and savings can be closer to the line than they think. Married couples may use trusts so each spouse uses an exemption, and lifetime gifts and charitable bequests can bring an estate under the line. Keep wills, health care proxies, powers of attorney and beneficiary forms current. Our estate planning guide explains the documents.

Turning savings into a paycheck

Most advisors divide a portfolio by when the money is needed. Cash and short-term bonds cover the next few years of withdrawals, bonds and balanced funds cover the middle years and stocks cover the later decades and inflation. A retiree with a large pension can usually hold more stocks than one living on savings. The plan should test a bad market in the first years of retirement.

Regional budgets across the state

Retirement costs in New York depend heavily on where you live. A couple in a Manhattan co-op faces maintenance charges, building assessments and city taxes that a couple in Buffalo, Syracuse or the North Country never sees. Long Island and Westchester households often carry some of the highest property tax bills in the country, while many upstate homes cost far less to own but come with heating bills, snow removal and longer drives to specialists. A plan built on a statewide average will miss all of this, so a good advisor builds the budget from your actual address, your actual bills and the place you might move to.

It also helps to sort spending into three buckets. Fixed needs include housing, insurance, food and utilities, and they should be covered by income that does not move with the market, such as Social Security and pensions. Flexible spending includes travel, dining and gifts, which can shrink in a poor year. Later-life costs cover home care and assisted living, which are expensive in most parts of the state. Seeing the three buckets side by side shows how much income is fixed, how much depends on the portfolio and how large a market decline the plan can absorb before you change your spending.

A short list of questions can start the conversation with an advisor. Where do you want to live at 75? How much of your housing cost is fixed? Which pension choices are still open? Which accounts are taxable, tax-deferred or Roth? Our investing basics guide explains diversification.

What retirement advice costs

Choosing a retirement advisor in New York

1. Ask how the advisor turns savings and pensions into a monthly income.
2. Ask about experience with state, city and teacher pension systems.
3. Check the advisor with the SEC, FINRA and the state Attorney General’s office.
4. Get the total yearly cost in writing.
5. Ask whether they compare Social Security claiming ages for both spouses.
6. Meet two or three, and be careful with anyone who leads with a product.

Frequently asked questions