Want to Retire in North Carolina? Here’s What You Need to Know.
If you’re like most people trying to map out where to live during your golden years, it’s likely you are (or are perhaps) considering the state of North Carolina as a potential retirement destination.
Should you decide to relocate to the Tar Heel State (a nickname originating from the state’s prosperous tar manufacturing industry back in the 1700s and 1800s), know that you’ll follow in the footsteps of thousands of others aged 60 and older who made the move there in 2021. According to SmartAsset, the state ranks third (and perennially in the top five)—behind only Florida and Arizona—as a top retirement destination.
In this post, we’ll share key details you need to know about the state before making a move.
North Carolina is represented on “Best Places to Retire” lists
U.S. News & World Report publishes an annual “Best Places to Retire” study based on various factors including taxes, affordable housing, happiness ratings, and desirability. In their 2024 edition, Winston-Salem North Carolina ranked #17 among the top 25 U.S. cities to retire in: with Raleigh and Durham close behind at #25. Even if you don’t agree with this specific study methodology or anything else having to do with it, know that North Carolina—particularly Asheville—is often featured on other “top places to retire” lists sprinkled across the web: including in this Travel + Leisure article.
Retiree relocations to North Carolina: not just a one-year trend
Although Florida and Arizona have long occupied the top of these lists, we analyzed five years of SmartAsset data to identify just how popular North Carolina is as a retirement destination. The results? The state took third place in four out of the last five years, ranking fourth in 2017 behind South Carolina by less than 3,000 net moves.
According to this SmartAsset data, a total of 843,965 people aged 60+ were represented in their “top 10 retirement destinations” analysis (with locations varying slightly each year); and close to 10% of retirees within this group ended up in North Carolina. For reference, only Florida (in first place at 43.6%) and Arizona (in second place at 17.4%) ranked higher.
North Carolina is a moderately tax-friendly state
North Carolina is retiree-friendly with respect to Social Security benefits, inheritance, and estate taxes, as these taxes simply don’t exist in the state: allowing you to pocket more money and leave more to your heirs.
However, North Carolina does charge state income tax as well as taxes on most retirement sources—such as 401(k)s, pensions, and IRAs—hence the “moderate” tax-friendly label. The state also charges a flat tax rate of 4.75% that will gradually decrease to 3.99% in 2027. Note that income from federal government and designated North Carolina/local government retirement plans is exempt for anyone with five or more years of government service (as of August 12, 1989).
While North Carolina’s tax rate is lower than many states, state income tax in Florida—the top-ranked retirement destination—rings in at a whopping $0. While this may not seem like a lot of savings, every dollar counts if you’re on a fixed income: especially considering just how expensive retirement really is.
The Tax Foundation ranks North Carolina 26th in sales taxes, meanwhile, as its combined state and local sales tax average is 6.99% (state tax is 4.75%, with localities adding up to 2.75%). Groceries are exempt from state sales tax, but a local tax of 2% may apply.
For anyone wishing to live in North Carolina on a part-time basis prior to full retirement, you should know that to claim the Tar Heel State as your primary residence and hence reap the aforementioned tax benefits, you’ll need to prove you spend more than 183 days of a tax year in the state.
Housing is still fairly affordable in North Carolina
Zillow.com data claims the median home value in North Carolina (as of late 2023) is $320,324, lower than the United States as a whole ($346,653). Compare this to $495,846 in New Jersey (where many of our readers reside), and you can see that—generally speaking—homes in North Carolina are very affordable. The state’s median is even lower than that of Arizona ($423,568) and Florida ($392,904).
WalletHub data indicates North Carolinians also don’t pay a lot in property taxes, with only 17 states taxed at a lower rate. Based on a median home value of $197,500, your annual property tax bill would ring in at approximately $1,583 (North Carolina charges an effective rate of 0.80%). Arizona charges a little less (0.62%), but property taxes are slightly higher (approximately $1,648) based on median home price. Florida charges a little more (0.86%), bringing this number up to $2,143. For anyone out there wondering, New Jersey has the highest effective rate in the nation at 2.47%.
Full-time residency can also help further reduce your property tax bill through three types of property tax relief programs.
If you’re at least 65 years old, have an annual income that doesn’t exceed $33,800 (for 2023), and/or are disabled, you can qualify for the state’s elderly or disabled exclusion: meaning that the first $25,000 or 50% of your home’s appraised value, whichever is greater, is excluded from taxation.
The state also offers a property tax homestead circuit breaker program that limits the amount of annual property taxes residents must pay on their permanent residence to 4% of their annual income. To qualify, you must be at least 65 years of age and make less than $33,800 (2023). If you make more than $33,800 but less than $50,700, property taxes are limited to 5% of your annual income.
Finally, the disabled veteran property tax homestead exclusion provides disabled veterans (or the surviving spouse of a disabled veteran who has not remarried) with the ability to exclude from taxation up to the first $45,000 of a permanent residence owned and occupied by a qualifying owner. Co-owners who are not spouses but individually eligible can receive the total exemption of $90,000.
Homeowner’s insurance is lower than average in North Carolina
Per Bankrate.com, the national average cost for a homeowner’s policy is $1,428 for a $250,000 dwelling. The North Carolina rate falls below this at $1,294, similar to Arizona’s average of $1,268. For comparison purposes, Florida comes in at $1,981—with this number only set to increase due to the impact of hurricanes, flooding, wind damage, and insurers pulling out of the Florida market.
Although it’s not required, a wind mitigation home inspection can result in substantial savings for anyone opting for coastal living in North Carolina or otherwise—as insurance providers are legally obligated to provide discounts for a “passing grade.” This type of inspection is very common in coastal areas of the Southeastern United States.
Asthma, allergies, and hurricanes in North Carolina
The North Carolina environment is sometimes tough on people who suffer from asthma and allergies; however, where you reside in the state makes a big difference in this regard.
Based on the most recent data from the Asthma and Allergy Foundation of America, the metropolitan area of Greensboro has a higher-than-average rating for allergies while Charlotte and Winston-Salem are about average in this respect. On the other end of the spectrum, Raleigh and Durham top the list as the least challenging location for allergy sufferers (out of the 100 most-populated metro areas).
Switching gears, the Universal Property Insurance Company analyzed the most hurricane-prone states based on data collected between 1851 and 2018. Perhaps surprisingly, North Carolina ranked third in this regard—behind only Florida and Texas—after experiencing 55 direct hits, seven of which fell between Category 3 (111 to 129-mph winds) and Category 5 (winds of 157+ mph) status. Per the North Carolina Department of Natural Resources, the state averages one hurricane (that makes landfall) every 3.25 years. The NC coast is of course most susceptible to a direct hurricane strike; click here to view the most hurricane-prone areas within the state.
Healthcare quality is mixed in North Carolina
We queried various research studies on the quality of healthcare by state. While each report used different benchmarks, results were similar across the board: with North Carolina consistently receiving marks that were either average or fell below those of other states.
More specifically, WalletHub ranks North Carolina as the 42nd-best state in this regard; the Agency for Healthcare Research & Quality (AHRQ), a United States Department of Health agency, currently ranks North Carolina slightly above average (compared to all other states); and the state is ranked 26th by U.S. News & World Report.
Despite these not-so-stellar rankings, that’s not to say high-quality hospitals don’t exist in NC. In fact, U.S. News & World Report ranks several North Carolina hospitals among the best in the nation; Duke Hospital was named the top hospital in NC, just ahead of University of North Carolina hospitals.
Other North Carolina retirement considerations
Recent Federal Trade Commission data ranked North Carolina #12 with respect to consumer fraud: with a total of 110,090 reports filed in 2022, representing 1,060 reports per 100,000 residents.
The most common fraud categories were identity theft (22%), users and furnishers of credit bureau information (19%), and imposter scams (11%). The top identity theft type was credit card fraud (36% of incidents), and median fraud losses were $549: lower than those in Florida ($800) and Arizona ($804).
If you’re looking to soak up additional knowledge and attend school in your free time, know that tuition and registration fees are waived for residents over the age of 64 at any of North Carolina’s community colleges or 17 UNC campuses. Just know you won’t receive any academic credit for coursework, and a total of six credit hours are offered per semester (if space is available for undergraduate courses).
Finally, we stumbled across neighborhoodscout.com during our research and deemed it a great resource to share: arming you with the ability to review home values, crime rates, demographics, and more within North Carolina (or any other state, for that matter).
In sum: the state of North Carolina as a retirement destination
While retiring in North Carolina does have some challenges (just like any other state), it’s consistently proven—via both retirement destination rankings and the actual number of retirees who move there—as a great place to spend your golden years. That said, we recommend you visit various locations for at least a few weeks before you ultimately decide on a permanent relocation spot.
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Vision Retirement is an independent registered advisor (RIA) firm headquartered in Ridgewood, New Jersey. Launched in 2006 to better help people prepare for retirement and feel more confident in their decision-making, our firm’s mission is to provide clients with clarity and guidance so they can enjoy a comfortable and stress-free retirement. To schedule a no-obligation consultation with one of our financial advisors, please click here.
Disclosures:
This document is a summary only and is not intended to provide specific advice or recommendations for any individual or business.
