Delaware vs Florida Retirement: Taxes, Insurance, Housing & Lifestyle Costs Explained

Most people that are comparing Delaware to Florida for retirement all start with the same thing. Florida has no state income tax. That's it. Case closed. Florida wins. And that's where they stop. But that one number is not your entire retirement budget. And yes, that totally matters. I'm not going to sit here and say that state income tax doesn't matter because it absolutely does. But once you move past that number and look at how much it actually costs to live in each state, that picture actually changes very quickly. I see this on calls all the time. Clients come to me, they have done the research, they've talked to friends, they've watched the videos, they have downloaded the guides, they have built a mental picture of what retirement is going to look like and what it is going to cost. But the number that they have been anchoring everything to is that state income tax. Meanwhile, there are five to six other numbers that definitely should be in your monthly budget. And that can change the whole picture very quickly. So in today's video, I want to walk you through the full comparison of Delaware retirement to Florida retirement, not just the taxes, we're going to talk about everything. So first, let me just start off by saying that if you have been researching this and you are confused, that is totally normal. You read one article that says Florida doesn't have any state income tax, and that looks like the obvious choice. But then on the other hand, you read another article that says that Florida's insurance costs are going through the roof. And then someone brings up to you things about Delaware and no sales tax. We have an exemption for retirement income, the property taxes are low. And then you start looking at HOA fees, home prices, the cost of and it is mind boggling. And you're sitting there left confused on which state actually makes sense for me. And listen, you are not overthinking this. This is a lot to take in a lot. And a lot of times the problem is that you'll see videos that just compare one thing at a time. So then you have to sit there and watch 1000 videos to get exactly what you're actually looking for. So I have tried to make this very simple. And I have created a guide that has everything on it, everything that we're about to talk about in this video, Delaware versus Florida for retirement. So go ahead and grab that down below in the description, I tried to make it very simple and put everything in one guide so that you're not having to watch 1000 videos. Okay, so let's just get started. Here's the number one mistake that I see people make is they usually choose one number, whether that be the Florida doesn't have any state income tax, the property taxes, they think about maybe the home prices, HOA fees, and they stick with just that one number and they ride everything else off of that one number instead of looking at the full picture. Because let's be honest, income tax is just one line out of everything. And for a lot of retirees, especially ones that are living off of their social security, or a modest pension or their withdrawals from their investments, income tax might not even be the biggest thing that's affecting your whole picture. The costs that really affect people are the ones that they most likely didn't research. They're the ones that are already assumed like homeowners insurance, or your auto insurance, or your property taxes, or healthcare or your HOA fee. They just assume that because Delaware and Florida are what people consider retirement states, that everything that I just mentioned is going to be easy. Everyone else is retiring there. Why wouldn't it work for us? Because each case is individual and it's based off of your individual needs, not your neighbors. So let's go over the seven categories that we'll be talking about. Housing, taxes, insurance, HOA and maintenance, healthcare, lifestyle, and long-term suitability. And that order matters because your housing choice is going to affect your property taxes, your HOA, the healthcare, your insurance, and your maintenance. Your income sources also affect whether Florida's tax structure is going to be beneficial for you, or if Delaware may be better for closing the gap. And your healthcare situation is not something to just blow off. We really need to discuss because as people get older, they're going to need healthcare and you need to be in a place where you can get to it quickly. So let's start off with housing because it is not just about the purchase price. It's about the actual cost of owning the home. And this is where I want to be careful because statewide numbers can vary differently depending on which area of the states that you are in. And that can be very misleading. For example, if you are looking at the median home sales price, that can be different for Florida, but it also can be different if you're looking in Delaware. And so you're looking at Newcastle County, Kent County, or Sussex County, they all vary. For example, if you're comparing Delaware, Sussex County near the coastal beaches, and you're comparing that to statewide purchase price in Florida, it may look like Florida is cheaper. When in most cases, it could be that Delaware is cheaper, but it really depends on what you're comparing. Better question to ask is what type of home do I want? What type of community do I want? What area do I want? And then compare that to Florida. So for example, say you're looking in coastal Delaware, and maybe you want a 55 plus community, you want a ranch style home, you want the HOA fee to be affordable, and you want lots and lots of amenities at your community. What you're going to want to do is compare that same type of house, community, and HOA to Florida. That is going to give you the best picture instead of, oh, the median sales price in Delaware is $450, and the median sales price in Florida is $425. What type of house is that? What is the HOA? Do you get a lot of amenities? Is that a 55 plus community? Is it a condo? It's really, you have to really sit down and do apples to apples and not oranges to apples. Because a $450,000 home in Lewis may look very similar to a $450,000 condo in Florida on paper, but in reality, one is a house and one is a condo. And then once you add in property taxes, homeowners insurance, HOA fee, your hurricane deductible, special assessments, and maintenance, all of a sudden those two properties can look very different. This is why I'm always telling people, do not just stop at the home price and not compare everything else. You really need to put it down on paper and say, I want a 55 plus community. I want a ranch style home, or I want a condo. These are the condo association fees. This is what the HOA costs. This is what I get for that amount of money. This is what I get here for that amount of money. This is what my maintenance would be because it's not just about the purchase price. It's about the whole picture of owning the All right. So let's switch over to the number one thing that people normally start off with, and that is taxes. Florida does not have any state income tax. Delaware does. And listen, that is real. That matters, especially if you have a significant retirement income. If you have a large pension, a big traditional IRA withdrawals, required minimum distributions, or a high taxable income in retirement, Florida's zero state income tax may be a real advantage to you. And listen, I'm not here to pretend that it isn't because it absolutely is. But here is what a lot of the articles that read that Florida is the best state for retirement leave out about Delaware. Delaware also has tax advantages and those matter too. Delaware has no state sales tax, zero, nothing, which is so nice because when you go to buy furniture or a large screen TV or appliances or literally anything, the price that you see on the shelf is the price that you're going to pay at the register, which is so nice. Florida has a 6% sales tax and most local communities also have a surtax on top of that, which listen, I used to live in Pennsylvania. So I am used to having to pay that 6% because I've lived in Delaware for so long. When I go back to other states like Maryland or Pennsylvania, it's very uncomfortable when you walk up to the register, it's just this whole thing and you're going to round up and that adds up. If you think about it, it's very easy to overlook that because it's not one big bill. And if you are someone that is on a fixed income, those couple of 6 cents every single time that you purchase something could add up to something significant by the end of the year. Delaware also does not tax your social security income, which is really nice for retirees, especially since the majority of retirees are living off of social security. And if you do have a pension or you have an IRA or you have a 401k, if you were aged 60 and over, Delaware does allow you to exempt $12,500 off of your yearly taxes per person. So if you are a married couple, that's $25,000 of exemption from your pension or IRA or your 401k. So does Florida win with taxes? In some cases, yes. But in other cases, no. Especially if you are someone that is living off of your social security, Delaware does not tax your social security income. So really the true answer is it really depends on your income source. This is why I'm always saying, do not make your decision off of one line in your monthly budget. All right. So let's switch over to insurance because this has changed significantly in the past few years. And for a lot of retirees, this is where the Florida math gets very complicated. Delaware is consistently one of the most affordable states when it comes to homeowner's insurance. Depending on the source, the home and the coverage amount, you can roughly estimate that your homeowner's insurance is going to run around a thousand dollars per year, maybe slightly more. I know that mine is about a thousand dollars. Florida is a completely different story depending on the home, the location, the coverage, and whether you are in a high risk area. Florida's homeowner's insurance could cost you a couple thousand dollars per year, if not more. And in some cases it is much higher than people are expecting. So my advice is you want to look at the specific property that you are looking at, whether it be Delaware or Florida, and call to get some quotes before you fall in love with the property and realize that the homeowner's insurance is way more than you were expecting. Now let's talk about something that I actually just found out about, and that is a hurricane deductible. This part of the Florida homeowner's insurance could absolutely wipe out all of the money that you are saving in Florida, especially if you're looking at just the taxes. Homeowner's insurance in Florida has a hurricane deductible, and unlike the Northeast where we're used to the deductible being a number, whether that be a thousand dollars, twenty five hundred dollars, five thousand dollars, ten thousand dollars, it is actually a percentage in Florida. So it could be two percent, five percent, ten percent, and this is of your hurricane deductible, which means, this part blew my mind, that you could be paying out of pocket anywhere from nine thousand dollars, twenty two thousand dollars, up to forty five thousand dollars before the insurance company will cover anything from a hurricane. That blows my mind. That's a lot of money, especially for someone that is on a fixed income. Not to mention that if a hurricane completely wipes out your house, you also are in a situation then where you don't have a home and you could possibly have to pay forty five thousand dollars out of pocket. Crazy. Now listen, I'm not going to act as if Delaware does not have a coastal risk, because it absolutely does. And I'm not going to sit here, I'm not going to do the same thing I did where I said, oh, it doesn't snow in Delaware. And then this past year we had two major snowstorms. So I'm not going to say it doesn't snow or we don't get hurricanes. But I can tell you that we do not get hurricanes often. We get nor'easters, which is basically rain, just a lot of rain. So no, we are not dealing with the same statewide hurricane insurance like Florida is. To be honest with you, a lot of Delaware is not even considered in a flood zone. So in most cases, you actually don't even need to have flood insurance either. This is why Delaware's insurance is a fraction of what you'll be paying in Florida. Now let's talk about auto insurance. Florida is also an expensive state for auto insurance. The current estimates for full coverage in Florida is roughly in the mid twos, which means if you have two vehicles, you could be paying upwards of five hundred dollars per month in just auto insurance. So if you combine both the homeowners insurance and your auto insurance and compare that to Delaware, you could be spending thousands and thousands of dollars more than if you lived in Delaware as opposed to Florida. And for someone that is on a fixed income, that is not a footnote. That is an actual expense, a real expense in your monthly budget. Now let's talk about HOAs and maintenance. Now this one really depends on what type of home that you are purchasing. If you are someone that has decided that you don't want to deal with any kind of maintenance, you would like amenities, and you would like to be in a community, in most cases in Delaware, you will have an HOA fee. That could be anywhere from one hundred and fifty dollars per month. I've seen it lower than that to four hundred dollars per month, which also I've seen it higher than that. But it really depends on what type of community that you're looking for. And it's hard to just group all of them in together because some communities don't have a lot of amenities. Some communities don't really, they have an HOA fee, but it really only covers snow removal and maybe the front of the community with the sign just to keep it really nice. It really depends on what type of community that you're in. Now in Florida, this range could be wider. And this is because a lot of times you're dealing with condos in Florida. And we have seen this shift a lot over the past couple of years. In Florida, you really need to look at the condo association fee, but then you also really need to look at the financials. What are the reserves? Are there any special assessments? Has the building been properly maintained and is up to code for safety requirements that have changed recently? Florida has recently passed safety requirements for condo buildings since the Surfside tragedy. And while yes, this is great for the tenants in place in these condo buildings, it has also put a significant amount of financial pressure on the condo owners. So before you look at a condo in Florida, you may want to look at, like I said, financials. Have there been any special assessments? Are there any lawsuits? Are there any upcoming repairs? What do the reserves look like? What does the next year's budget look like? Are they hitting next year's budget? This is where a good buyer's agent really matters and not someone just to open the door. They can help you determine whether or not a building has good financials before you fall in love emotionally with a place and realize that it's actually not where you want to live. And listen, I do not want to make it sound like Delaware is immune from that because we are absolutely not. We do have HOAs. You want to look at the HOA. You want to know the financials. You want to know what are the reserves? Does it have any lawsuits? Has there been any special assessments? That all matters in Delaware as well. So I don't want to make it sound like Florida has it and Delaware does not because they absolutely both have it. Healthcare is another category that is very important to my retirees and rightfully so because the longer that you are in retirement, in most cases, the more you're going to need access to healthcare. And this part does not get enough attention when comparing the two states. Delaware has a strong access to healthcare. Not only are there major hospitals throughout the state, including Christiana Hospital, BayHealth Kent, BayHealth Sussex, BB, Tidal Health. They all have satellite locations located throughout the state with more and more coming what feels like almost daily. When you're driving down 113 or even Route 1, there are so many new buildings that are going in for healthcare. Florida also has excellent healthcare access to its major metropolitan areas. But there is no question, Florida is a bigger state than Delaware. So while Delaware is small, it is easier to get to our healthcare facilities and quicker than it is in Florida, depending on where you live. If you buy in a more rural or even suburban area in Florida, it may take you a couple extra minutes to get to a major hospital than it would be if you lived in Delaware. Basically just because the states are one is bigger and one is smaller. So really what you want to look at is where are you living? What type of doctors are you going to need? How far are you willing to drive? There's also a Medicare piece here. If you are on Medicare Advantage, you want to make sure that the doctor that you are wanting to see is available in network in the state that you decide you would like to live in. Also near the area that you decide you want to live in. Medicare networks can vary a lot by location. And listen, that is no reason to not move. It's more just to make sure and double check before making the move and deciding where you want to live in the different states. Okay, so let's go to the next category, which is lifestyle, which is a category that most people skip, which kind of blows my mind because you have to think about your ordinary Tuesday. And what does that look like for you? For example, if you move to Florida and your grandkids or children live in Delaware, Pennsylvania, New Jersey, Maryland, Virginia, New York, now living in Florida, that involves a flight instead of a quick drive. And that adds up because now you're looking at flights, luggage, rental car, or being picked up from the airport, somewhere to stay. Are you staying with your grandkids? Or are you staying with your kids? You could have last minute travel. If you want to go to the kids' elementary schools, because they have grandparents day, or maybe they have a talent show, or they have a baseball game that you want to attend. All of a sudden, those last minute trips could add up. And maybe you're not there to see all of the things that you want to see on the daily that can easily cost anywhere from 2000 to $4,000 per year in just that expense alone. Not to mention the emotional and mental tax that may have on you knowing that you're missing out on key moments in your grandkids life. Now for those that decide to live in Delaware, all of a sudden, they can get to the surrounding it can be a day trip. So now we're only factoring in maybe staying somewhere overnight, maybe just the gas to get there, maybe the cost of food to get there. But then all of a sudden, you are involved in your grandkids daily life, you won't miss that baseball game, you won't miss that talent show, or even the science fair that they really want you to come to. And all of this matters financially. And here's the best part. If you live in Delaware, they could actually come visit you. At that point, you don't have any of those flights involved. And they could come visit you maybe for a day trip, you guys could go to the Delaware beaches, you could check out Rehoboth, you go to Funland, you go to Lewis Beach, you go to Cape Huntly Open State Park. There's so many things to do outdoors in Delaware with just a quick drive from the surrounding states. So listen, if you are someone that is very family oriented, that is something to consider in your financial budget. Because if you are living farther away, you do need to factor in those costs when it comes to your daily life. Okay, so the last category that I want to talk about is long term suitability. And this is the one that I really want you to think about. Because the question isn't just, which state is cheaper? The better question would be, which state is my overall retirement budget going to last longer? Because retirement isn't just the what are the next 12 months look like? It's more so where the next five years look like 10 years, 20 years, 30 years. And is the money that I'm getting in retirement going to last me those 30 years, depending on which state I decide to live in. So if you are on a fixed income, and say Florida may be cheaper right now for you, what does that look like in 20 years? What does that look like in 30 years? Are you going to be okay if you purchase a home and it starts to build up around you? Or it takes you over an hour to get to the doctor's office? Are you going to be okay if a major storm comes through and maybe you need to pay that $45,000 deductible that you were not planning for? In Delaware, the picture generally is more predictive, just because we don't get those hurricanes very often. We have low homeowners insurance policies, lower auto insurance, we also have lower property taxes, no state sales tax. And typically people are happier because they're near their families. While they're not on top of one another, they are within driving distance. But listen, Delaware also has its disadvantages, especially like in Sussex County, for example, where a lot of my clients are looking, we just went through a property reassessment. And yes, after years and years of not having a reassessment, the property taxes in Sussex County did get reassessed, and they did go up. So the home prices in Sussex County have risen significantly in the past few years. The same with Middletown, the same with Newcastle County, honestly, the same with Kent County. So just take that into consideration when you are looking for a retirement home in Delaware. So really what you need to do is sit down and really think about what your average day looks like, what you're looking for in retirement, what type of home, what type of community, and then compare the two states. Don't just go off of statewide averages, because I'm telling you, it's not going to work out. It's going to make you even more confused. It's not going to be comparing apples to apples. And really at the end of the day, that's what you need to sit down and do. But like I said, I have made a very quick guide, and it is down below in the description, comparing the two states. So this way, you don't have to watch 1,000 videos, and it's all in one place, and you can really sit down and look at it. If you are considering Delaware retirement, I would absolutely love the opportunity to help you. My information is down below in the description. So feel free to send me an email, or set up a phone call on my calendar, or a quick video call. I really hope that video helped. If it did, be sure to give me a thumbs up. Be sure to subscribe to the channel, and I will see you on next week's video. Hey, thank you so much for getting this far into the video. If you are interested in more retirement content, please check out this video right here. And if you would love to tour Delaware communities with me, check out this playlist right here. And don't forget, subscribe to my channel.