Retiring in New York: The Good, The Bad, and The Surprising Costs

New York might not be a traditional retirement destination like Florida or Arizona. But as a place to retire it has a lot going for it: lively and walkable cities, many top-flight health care facilities, natural wonders galore, and even relatively mild weather—for much of the year, at least. At the same time, living in New York can be expensive, especially if you want to take advantage of everything it has to offer.

Whether you already call New York State home and would like to stick around for your retirement years or live someplace else and are pondering a move, these are some of the financial issues you’ll want to consider.

Key Takeaways

• The state of New York offers a wide variety of places to retire, from fast-paced urban centers to quieter rural areas.
• The cost of housing can be high, especially in New York City and its nearby suburbs.
• New York has relatively high taxes but offers some breaks to retirees and people over 65.
• Health care services vary widely in quality but include many top-rated facilities across the state.

Cost of Living and Housing

Despite what much of the world might think, New York isn’t all concrete and skyscrapers. It’s a remarkably diverse state, ranging from densely populated cities to woodsy suburbs to vast tracts of farmland. In fact, New York is among the nation’s top five producers of milk, apples, grapes, and other agricultural products—not to mention No. 1 for cottage cheese and yogurt!

While one recent study ranked New York fifth overall in average living costs (after Hawaii, the District of Columbia, Massachusetts, and California), reducing any state to a single average can mask significant differences from one region or community to another.

For example, the Economic Policy Institute estimates the average cost of living for two adults in the New York area, which includes New York City, at $7,742 a month or $92,899 a year. By comparison, suburban Westchester County north of New York City runs $7,417 a month or $89,002 a year on average, while rural Chenango County in the south-central part of the state comes in at $4,881 or $58,566.

Cost of Living in NYC vs. Smaller Cities

If urban living appeals to you, you’ll also find substantial cost differences between the New York City metropolitan area and other large cities across the state. Here are a few examples, listed in order of average cost:

Besides cities of varying sizes, New York has many small towns to choose from, where living costs may be lower still. 

Average Cost of Homes Across Different Regions

The major driver of these differences is the cost of housing, which is notoriously scarce (and pricey) in some parts of New York City in particular. The state itself estimates that housing costs, including property taxes and utilities, account for about 40% of household expenditures for New York City residents. That’s a good deal more than the common financial guideline that housing costs generally shouldn’t exceed 30% of a family’s gross income. (Devoted New Yorkers, of course, would argue that the city’s cultural amenities more than make up for it.)

If you’re looking to buy a home, New York prices are likely to seem high compared with other parts of the country. And indeed they are in many cases, judging by the average U.S. home price of $419,200 in the fourth quarter of 2024.

While most New York City residents rent rather than own their homes (see next section), homebuyers in Manhattan paid a median price of $1.1 million in December 2024, according to Realtor.com. Bear in mind that given the nature of the city’s housing stock, many of these homes are condominiums or co-ops and not free-standing single-family houses, making comparisons to other parts of the state a little tricky.

Suburbs in close proximity to New York City also reflect those high costs. Scarsdale, long considered a particularly desirable community in Westchester County, matched the city’s median price of $1.1 million (although buyers probably got more square footage per dollar there than in the city). White Plains, another large Westchester suburb, reported a median price of $483,800.

Away from New York City’s gravitational pull, prices begin to come down to earth. For example, the three other large cities referred to earlier had median sales prices well below the national average:

Rochester, for example, had a median sales price of $214,000, Syracuse came in at $200,000, and Buffalo at $240,000.

In rural areas, prices can be lower still. In Chenango County, for example, the median sales price was $167,900.

So, where you choose to live is likely to be the single most important factor in whether retiring to New York is a practical option.

Renting vs. Owning a Home

As mentioned above, the majority of New York City residents are renters—69% by one recent estimate. Apartment rents there recently averaged $3,500 a month, although that can vary greatly based on the size of the apartment, the section of the city, and other factors.

Even retirees who are accustomed to owning their homes may find that renting—in New York City or anywhere else—has some advantages. For one thing, it’s a good way to try out a particular city or neighborhood without making a major financial commitment. For another, you might not want to take on another mortgage at this stage or even be eligible for one.

Taxes in New York

No one would call New York a tax haven. Software maker TurboTax, for example, ranks its tax burden as the highest of any state in the U.S., accounting for both state and local income, property, and sales taxes. By its estimate, New Yorkers pay 12.47% of their income, on average, in taxes. Compare that with, say, 9.38% for Illinois residents and 6.33% for Floridians.

While taxes can be a factor in the where-to-retire calculus, they shouldn’t be your only consideration.

“I always tell clients not to let the tax tail wag the dog,” said Michael Terry, a certified financial planner with Merit Financial Partners in Maspeth, N.Y. “It’s more important to ask yourself what you really want and focus on your goals.”

You might find that New York is a perfect fit, regardless of taxes—or that you’d be happier in New Hampshire or New Mexico or even New Zealand.

What’s more, New York’s taxes aren’t uniformly onerous. In some cases, retirees or anyone over a certain age gets a break. This is what you can expect:

Income Taxes

Like most states today, New York has a graduated, or progressive, income tax system, where higher brackets of income are taxed at higher rates. The state’s top rate, 10.9%, is among the highest in the country. Fortunately, that rate applies only to income over $25 million. If you’re married, file jointly, and earn $100,000, say, none of your income will be taxed at a rate higher than 6%.

In addition, certain types of retirement income are either excluded from taxation or subject to different treatment. Here’s a breakdown:

Social Security benefits. While the federal government considers Social Security retirement benefits to be part of your taxable income, New York State, unlike some others, does not. If Social Security represents a substantial portion of your income, this could be a big plus.

Pensions and other retirement income. If you have income from a traditional, defined-benefit pension plan, rules vary. Federal pensions are exempt from taxation in New York, as are New York State and local government pensions and certain others. If your pension comes from a different source, such as a private employer, it is taxable, although you may be eligible to exclude the first $20,000 in payments. Included in that $20,000 is any income you receive from 401(k)s or similar defined-contribution plans, as well as IRAs. Roth accounts in those plans are exempt from taxes in New York, as they are elsewhere.

Investment income. On the downside, if you have investments outside of your retirement accounts, New York will tax your capital gains as ordinary income, unlike the federal government and a handful of states, which tax long-term gains at a lower rate.

Note

Some locales, such as New York City, impose their own income taxes. In New York City, for example, taxpayers can pay anywhere from 3.078% to 3.876% on top of what they’re paying the state.

Property Taxes

Property taxes in New York aren’t the highest on the nation, although they’re usually in the top 10. The Tax Foundation, for example, recently ranked New York sixth overall, after New Jersey, Illinois, Connecticut, New Hampshire, and Vermont. Property taxes are set on the local level in New York and can vary from one place to another, even towns that are right next door. So if you’re shopping for a home, comparing local property taxes is a good way to save some money.

Local taxing authorities in New York also have the option to grant what the state calls “senior citizen exemptions” to residents over the age of 65 who meet certain income requirements. The exemption will reduce the assessed value of their home (which is used in the property tax calculation) by as much as 50%.

In addition, homeowners can be eligible for the state’s School Tax Relief Program, known as STAR, again subject to certain income limits. The basic STAR program applies to homeowners of any age, while Enhanced Star is for those 65 and up. According to the state, participants in basic STAR receive a benefit of roughly $290, while for Enhanced STAR it’s about $650.

Sales Taxes

New York ranks 10th overall in terms of state and local sales taxes, according to the Tax Foundation. Both the state, the counties, and individual cities can impose sales taxes. On average, New Yorkers pay about 8.53% in combined sales taxes, the foundation says.

On the plus side, many everyday purchases are exempt from sales taxes, including most groceries (except for prepared foods), prescription drugs, and over-the-counter medicines. Shoes and clothing under $110 are also exempt from state, but not necessarily local, sales taxes.

Tip

Fantasizing about retiring to a college town? New York State is second only to California in number of colleges and universities.

Climate and Weather

If you’re looking to spend every day of your retirement years in shorts and flip-flops, New York may not be for you. But if you enjoy the change of seasons, and don’t mind a little (or a lot) of snow in the
wintertime, it just might be.

Upstate vs. Downstate Weather

In general, the southernmost parts of the state, including New York City, have the mildest winters, while upstate New Yorkers are wise to invest in a good snowblower. Weather near the Great Lakes can be particularly brutal due to the so-called lake effect. The city of Buffalo, along Lake Erie, reliably makes national news most winters for its snowfall totals, sometimes requiring devoted Buffalo Bills football fans to shovel out their stadium on game days.

How Winter Weather and Disaster Risks Affect Insurance Costs

Harsh winters can interfere with your daily life, of course, making it more difficult to run errands, walk the dog, and enjoy the outdoors. So unless you’re an avid skier or snowshoer, you might want to focus your search downstate. Cold temperatures, snow, and ice can also have a financial impact in terms of bigger heating bills and even higher insurance premiums. Storm-related damage—collapsed roofs, burst water pipes, etc.—is a major source of insurance claims and a driver of higher premiums.

New York has largely dodged many of the worst weather-related disasters in recent years, although it’s by no means immune to them. Hurricane Sandy in 2012, for example, caused enormous damage, and dozens of deaths, along the Atlantic coast and all but shut down New York City for days.

The website Insurify reports that the average annual home insurance rate across New York in 2024 was $2,404. That’s lower than many other states, including such popular retirement destinations as Colorado, Florida, and South Carolina. 

Health Care and Senior Services

New York has an abundance of health care facilities, although their quality varies widely, experts say.

The federal Centers for Medicare & Medicaid Services, which rates hospitals based on mortality, safety, readmission rates, the patient experience, and timeliness and effectiveness of care, recently gave its lowest possible grade of one star to more than 25% of New York’s hospitals, according to a USA Today Network analysis. Only about 8% received a five-star rating, compared with about 13% of hospitals nationwide.

Similarly, the Leapfrog Group, a nonprofit focused on patient safety, ranked New York’s hospitals 34th in the nation on that measure in 2024.

So if you’re new to New York you might want to do some research, just in case. One useful resource would be the New York State Department of Health’s NYS Health Profiles website, which provides information on individual hospitals’ quality and safety as well as the services they offer.

New York City’s Health Care Infrastructure

The New York State Department of Health lists 63 hospitals in New York City. Some are major teaching hospitals affiliated with universities such as Columbia, Cornell, and New York University.

Of the 20 hospitals that made U.S. News & World Report’s 2024-2025 Best Hospitals honor roll as the best of the “Best” nationwide, three are in New York City: Mount Sinai Hospital, New York-Presbyterian Hospital-Columbia and Cornell, and NYU Langone Hospitals. Only one New York hospital outside of the city made the list: North Shore University Hospital at Northwell Health in Manhasset, on nearby Long Island.

Health Care Facilities in Upstate Regions

New York City may dominate the list of premier hospitals in the state, but many other cities have hospitals that score highly enough to make U.S. News’ “Best Regional Hospitals” list, including Albany, Buffalo, Poughkeepsie-Newburgh, Rochester, and Syracuse.

Senior Services

New York has a wide variety of services aimed at helping older residents age in place if they wish to or find an appropriate living facility when they are no longer able to. The state health department’s NYS Health Profiles website mentioned above also has searchable information on nursing homes and long-term care facilities, home care agencies, adult care (including assisted living), and other types of providers.

Another good resource is the New York State Office for the Aging. Its website offers information on all of these topics as well as ways to connect with local programs and services.

What if You Live in New York Only Part of the Year?

If you maintain a residence in New York and spend 184 or more days in the state during the year, you are considered a resident for tax purposes. If you spend less time than that, you are considered a part-year resident. Part-year residents must pay taxes on any income they received while living in New York as well as on any income they received from New York sources while living elsewhere.

Are New York Taxes Deductible on Your Federal Tax Return?

State and local income and property taxes are deductible on your federal tax return, but only if you itemize your deductions, rather than taking the standard deduction. What’s more, since the passage of the Tax Cuts and Jobs Act of 2017, you can deduct no more than the first $10,000 of these so-called SALT taxes in total.

That’s where things stand as of early 2025. However, lawmakers from high-tax states have pushed for raising the SALT cap and President Trump has indicated his support for the proposal. So stay tuned.

Does New York Tax Municipal Bonds?

If you live in New York and buy municipal bonds issued in New York, the income they produce is generally triple-tax-free, meaning that it isn’t taxed on the federal, state, or local level. If you buy municipal bonds from another state, however, they will be subject to state and local taxes in New York. Many mutual fund companies offer municipal bond funds geared for residents of particular states.

The Bottom Line

Like many big decisions in life, selecting a place to retire involves tradeoffs. New York can be an expensive choice in terms of taxes, housing, and overall cost of living. At the same time, it has advantages you’re unlikely to find elsewhere, at least in such abundance. As financial planner Terry notes, a good way to think about it is to focus on your goals, rather than simply on the dollars-and-cents aspects. “Assign a value to each of your goals and act accordingly,” he suggests.

If you decide New York isn’t right for you, that’s fine: you have a whole country, indeed world, to choose from. If, on the other hand, New York comes out at the top of your list, take some time to explore the state and see what city, town, or region most suits you and your budget. As the signs on the interstate say: “Welcome to New York!”