The Complete Guide To Retiring in Pennsylvania
Written by Ari Parker — Updated: Wednesday, September 18, 2024
Learn about retirement in Pennsylvania, from taxes and income to lifestyle choices
Pennsylvania is becoming a hot place to retire. In the US News and World Report list of best places to retire, the top 5 cities are all in Pennsylvania. This might be enough for you to sit up and take notice, but before you pack your bags, you should take a look at what the state has to offer. In our detailed guide, you will get a look at what retiring in Pennsylvania is like.
Key Takeaways
According to a US News and World Report, Pennsylvania is home to the top five cities for retirement.
Pennsylvania has no taxes on retirement income.
The state is large, but generally, Pennsylvania gets a lot of precipitation and the winters are cold.
Pennsylvania is a great place to enjoy outdoor activities and historic places.
22% of Pennsylvania’s population is on Medicare.
Pros and cons of retiring in Pennsylvania
While several Pennsylvania cities are on the list of the best places to retire, this doesn’t make Pennsylvania the best place for everyone to retire. There are a number of factors to consider when thinking about where you want to retire, and below is a summary of the pros and cons of Pennsylvania retirement.
Pros
Pennsylvania has a low cost of living compared to other states on the East Coast.
The state has no taxes on retirement income, including Social Security income, pensions, and 401(k)s.
With a relatively moderate climate and diverse terrain, Pennsylvania is a great place to enjoy a number of outdoor activities.
Steeped in history, Pennsylvania has numerous historical sites, monuments, and museums.
Pennsylvania has a quality healthcare and hospital care system.
Cons
As part of the Northeast, winters can be harsh and long, especially in certain parts of this large state.
The overall quality of Pennsylvania roads is low.
Air quality is a concern in many areas.
Pennsylvania has relatively high property tax rates.
Retirement taxes in Pennsylvania
One of the things that makes Pennsylvania attractive to retirees is its tax policy. Retirement income is not taxed at all. This includes Social Security income, pensions, military and railroad benefits, and withdrawals from retirement accounts like 401(k)s. Note that retirement account withdrawals are taxed if you withdraw the money before you turn 60.
Inheritance taxes vary based on who the money is left to. There is no tax if money is left to a spouse or a child under the age of 21. If the money is left to other direct descendants, it’s taxed at 4.5%. There's a 12% rate for siblings and 15% for all other recipients.
Property taxes in Pennsylvania can be high. Each district sets its own taxes, so rates can vary from a high of 4.73% to a low of 1.51%. Homeowners and renters over 65 can apply for the Property Tax/Rent Rebate credit. If you have an income under $45,000, you may also be eligible for a credit of up to $1,000. Certain areas allow an additional discount.
Retirement communities in Pennsylvania
When the US News and World Report made their list of the 25 to retire in the US, the top five cities were all in Pennsylvania. The top rated city is Harrisburg. Its advantages included quality healthcare, tax-friendliness, proximity to the Susquehanna River and state forests, and being within driving distance of New York, Philadelphia, and several other large cities.
The other four cities at the top of the list were:
Reading: the city is only 90 minutes away from Philadelphia and offers excellent healthcare.
Lancaster: among the things the city offers are low taxes, accessible healthcare for seniors, a growing foodie community, and many hiking trails.
Scranton: it’s close to both Philadelphia and New York City. 20% of the population is over 65. Several parks offer hiking trails and picnic grounds.
Allentown: offers some of the best healthcare in Pennsylvania. Skiing trails, hiking opportunities, and many museums can also be found in Allentown.
As a popular place for retirees, there are plenty of retirement communities to choose from. There are a whopping 853 retirement communities in Pennsylvania. Many are located in or near the popular Pennsylvania retirement cities listed above.
Climate and outdoor recreation in Pennsylvania
Pennsylvania’s climate consists of hot summers, cold winters, and a large amount of precipitation throughout the year. No part of the state can be considered warm year-round, but the southeast has a more moderate climate. Because of the high level of rainfall, flooding is a problem in most parts of the state.
If you or a loved one have chronic lung issues, Pennsylvania might be a bad place to retire. 47 counties in Pennsylvania had one or more problems with air quality.
Both the weather conditions and the diverse landscape make Pennsylvania a great place to enjoy a large number of outdoor activities. There are 124 state parks and hiking, camping, kayaking, and boating are all popular. One thing that is unique to the state is the Rails to Trails Conservancy Program which converts out-of-use railroad lines into trails. Pennsylvania is also steeped in history and filled with historic monuments, colonial buildings, and battlefields.
Housing and cost of living in Pennsylvania
Pennsylvania's average housing costs are lower than the average for the US. The average price a home goes for in the state is $239,958. (The national average is $362,481.) Most of the cities mentioned above as top places to retire have similar costs, right down to a low of $172,947 in Scranton. As mentioned above, property taxes can be high.
For other cost of living measures, Pennsylvania has varying levels. Food and grocery costs are about the same as the national average. Healthcare and the cost of other goods are slightly lower. Utility bills and transportation costs are slightly higher than the national average.
The sales tax in Pennsylvania is 6% on most goods and services. Food, clothing, computer services, heating materials, and prescription drugs are exempt from the tax. Purchases made in Allegheny County have an additional 1% tax, and purchases in Philadelphia have an additional 2% tax.
Resources for seniors in Pennsylvania
Pennsylvania’s Department of Aging is set up to take care of the needs of its senior citizens. On the department’s website you can find information about local agencies on aging, adult day centers, resources for caregivers, and senior community centers. They also offer the PACE service that provides eligible seniors with low-cost prescription drugs. Various other health and welfare services are available through the department.
Quality of healthcare in Pennsylvania
The United Healthcare Foundation rates Pennsylvania’s healthcare for seniors 24 out of the 50 states. Seven of the Healthgrades 50 Best Hospitals in the US are in Pennsylvania. St. Luke’s Hospital in Bethlehem earned high marks for stroke care, gastrointestinal and pulmonary care, and spinal surgery. Chester County Hospital was noted for cardiac care, critical care, and joint replacements. Milton S Hershey Medical Center is known for quality neurosurgery and pulmonary care.
Medicare in Pennsylvania
There are 2.8 million people on Medicare in Pennsylvania. Of those, 85% are 65 or older. The other 15% are on Medicare due to a disability or a qualifying health condition. 22% of Pennsylvania’s total population is on Medicare, which makes sense given the fact that the top five cities to retire are in Pennsylvania.
Most people qualify for Medicare due to age, but you may also qualify due to having a disability or qualifying health condition. Learn about Medicare eligibility here. If you’re eligible due to age, there’s a seven-month period around your 65th birthday during which you can enroll in Medicare. This is called your Initial Enrollment Period (IEP).
When you first enroll in Medicare, you'll enroll in Original Medicare. You can choose to stay on Original Medicare or switch to Medicare Advantage. You also have a couple of other coverage choices, which we explain in our overview of Pennsylvania Medicare plans.
Below are a few other resources you may find helpful as you learn about Medicare and your different options:
Retiring in Pennsylvania
There are several reasons why the top 5 places to retire list is exclusively occupied by Pennsylvania cities. Some seniors find the low cost of living, outdoor activities, and historic attractions to be just right for them. That said, many people find the air quality and cold winters are not right for them at all.