Retirement Planning in Texas

Retiring in Texas: the starting facts

About 13.4 percent of Texans are 65 or older, a smaller share than in many states because the population is young and still growing. According to the U.S. Census Bureau, 2020-2024 American Community Survey, the median home value is about $283,800 and about 62.6 percent of homes are owner occupied. Retirees are spread across big cities, Hill Country towns such as Kerrville and Fredericksburg, active-adult communities like Sun City in Georgetown, and small farm and ranch communities.

What a retirement planner works on

A retirement planner focuses on the years around the day you stop earning a paycheck. The central task is turning a pile of savings and a handful of benefit rules into a monthly income that holds up for decades.

That starts with an honest spending estimate for housing, health care, travel and family. Then the planner lines up your income sources, such as Social Security, any pension, annuities and portfolio withdrawals, and tests how long the money lasts under good and bad markets. The order in which you tap taxable, tax-deferred and Roth accounts comes next. Our retirement planning guide lays out the full sequence, and our tax planning guide explains why withdrawal order matters.

Costs of getting retirement advice

Get every cost in writing, including fund expenses and any surrender charges on annuities.

How Texas taxes retirement income

Texas has no personal income tax. Social Security, private and public pensions, annuity payments, IRA and 401(k) withdrawals and investment income all escape state tax. That settles one question and sharpens others.

Roth conversions become a purely federal calculation. The years between retirement and the day Social Security or required withdrawals begin often leave room in a low bracket for partial conversions. People who move to Texas from an income tax state sometimes time large withdrawals or conversions for after they establish residency, and federal law generally stops a former state from taxing retirement plan distributions once you have left.

What Texas collects instead is sales tax, which reaches 8.25 percent in many cities, and property tax.

Property tax relief for older homeowners

The state offers several protections on a primary home.

• Extra exemptions apply to the school district portion of the bill for owners at 65, or with a disability, and many cities and counties layer on their own.
• The school tax stops growing with your home’s value, because the amount owed is generally held at what you paid in the first year you qualified.
• You may also put off paying the tax on your homestead for as long as you live in it, though interest builds and the balance is due when the home is sold or you move out.
• If you think the appraisal is too high, you can protest it with your county appraisal district, at any age.

Rules and dollar amounts change with legislative sessions, so check current details with your county appraisal district or the Texas Comptroller.

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Pensions and Social Security for Texans

Public pensions come from several systems. The Teacher Retirement System of Texas covers educators in most districts, and many of them never paid Social Security tax on their school pay. State agencies feed the Employees Retirement System of Texas. City and county staff often sit in the Texas Municipal Retirement System or the Texas County and District Retirement System, while some big cities keep separate funds for police and firefighters.

A federal law signed in January 2025, the Social Security Fairness Act, did away with two formulas that had trimmed Social Security checks for people holding pensions from jobs outside the system. In a state with this many public employees, that touches a large number of households. Anyone with such a pension, or married to someone who has one, should ask the Social Security Administration to rerun the numbers.

When a pension asks whether payments should carry on for a surviving spouse, the answer usually cannot be changed later. Weigh it against life insurance before you commit.

Health coverage and living costs

Medicare begins at 65. Stopping work earlier means buying private insurance or joining a retiree plan from a former employer, and those premiums can take a big bite. Retired Texas teachers may be eligible for TRS-Care. Once you reach 65 you choose between traditional Medicare with a supplement and a Medicare Advantage plan, and the better fit depends on your county and the doctors you want to keep.

Long Texas summers push electric bills up, and storms push insurance costs up with them. A cash reserve that covers a wind or hail deductible protects your plan, and flood coverage is worth pricing even outside a mapped flood zone. The reserve also keeps you from selling investments into a market drop to pay for a repair. Pair the budget with current wills, powers of attorney and beneficiary forms, which our estate planning guide walks through. Many retirees also decide early whether they want to stay in a large home, move to a smaller one closer to family, or relocate within the state.

Picking a retirement planner

1. Ask how they build a monthly paycheck from savings and pensions.
2. Find out whether they have worked with TRS, ERS, municipal systems or corporate lump-sum offers.
3. Look them up on FINRA BrokerCheck and the SEC adviser database.
4. Get the full yearly cost in writing, including any annuity fees.
5. Ask whether they compare Social Security claiming ages for both spouses.
6. Meet two or three advisors and choose the one who explains options without pushing a product.

Big-city or small-town retirement in Texas

Texas covers an enormous range of retirement lifestyles. A couple in Austin or Dallas has world-class hospitals nearby but pays higher housing costs and property tax. A couple in the Hill Country, the Panhandle or East Texas may live on far less, though they often drive a long way to a specialist and have fewer choices for home care. When you build a budget, name the place and price the services you will actually use: the nearest cardiologist, a pharmacy, a hospital with the right specialties and a plan for getting there if you stop driving.

Many retirees try a part-year approach, spending winters on the coast or summers in a cooler state. That can work, but it affects residency, insurance and healthcare networks. Texas has no income tax to lose, which makes the move less complicated than it is for people leaving high-tax states, yet a second home still adds costs that belong in the plan.

A checklist for the year before you retire

The twelve months before your last day are the moment to tighten the plan. Request your Social Security statement and an estimate from your pension. Compare health coverage for the gap before Medicare. Decide how to handle an old workplace plan. Update beneficiaries on every account. Build a first-year budget and a cash bucket for the first few years of withdrawals. Meet with a tax professional about your income in the first year, including whether a partial Roth conversion makes sense. Finally, practice living on the planned budget for a few months before you leave your job, which reveals gaps while you can still fix them.

Long-term care planning in Texas

Many retirees spend years caring for a spouse or being cared for, and the cost can overwhelm savings. Care at home, in assisted living and in a nursing facility each cost thousands of dollars a month in most Texas cities. Medicare covers only short stays after a hospital visit, so families rely on savings, long-term care insurance or Medicaid. Texas Medicaid has strict income and asset tests and a look-back period for gifts, so giving away property to qualify can backfire. An elder law attorney can explain which transfers are allowed, such as those between spouses.

Planning options include long-term care insurance, hybrid life policies with a care benefit and a dedicated savings bucket. The right choice depends on your health, family history and assets. Buying coverage in your fifties or early sixties usually costs less than waiting, but premiums can rise, so read the contract carefully.

Frequently asked questions