Today you can expect to live a longer, healthier life than ever before. But how do you make sure you’re also living well? For Baby Boomers headed for retirement, the answer lies in a well-crafted retirement strategy that can encompass everything from a full portfolio of products to comprehensive planning and support in executing plans.

Choosing Your Retirement Destination

What will you look for as you approach your "golden" years? Do you want an affordable condo on the golf course, with room for visiting grandchildren? Would you like to remain in a community surrounded by old friends and family, or would you prefer living in close proximity to new friends? Is access to excellent medical facilities a priority?

In addition to considering these lifestyle questions, as you decide where your retirement haven will be, you should research the effect of state tax structures on your projected retirement income. Here is a look at the following key tax areas:

• Earned and unearned income taxes. If you plan on continuing to work, some states treat seniors like everyone else on their income tax rolls, some specifically give seniors tax breaks on earned income, and others do not tax earned income for any of their residents. Tax rates on unearned income may also vary from state to state. Be aware that several states tax former residents on Individual Retirement Account (IRA) withdrawals. Thus, if you move, you may have to file income tax returns in two states. And, watch out for unexpected local income taxes.

• Pension income taxes. In many cases, the key to financial survival for seniors is income from military, government, and private pension plans. Some states exempt all pension income from taxation, while others exempt certain types and/or amounts of pension income.

• Social Security benefit taxes. Some states do not tax Social Security at all, while others follow federal tax formulas for determining their tax on such benefits. Still others have developed their own formulas to determine the income tax on Social Security benefits.

• Property taxes. This is another area where some states offer advantages to seniors. In addition, remember to check on personal property tax laws, especially on cars and boats.

• Sales taxes. Many states—and sometimes localities within each state—tax clothing, gas, household goods, and sometimes even food and prescription drugs. When you look at what you have budgeted out of your fixed income for these items, remember to add sales taxes if they will apply when you move to your retirement haven.

• Estate taxes. While not directly affecting your cost of living as a senior, do not overlook estate taxes when determining the feasibility of settling in one state over another. In some states, your spouse may be taxed on a portion of his or her inheritance that in another state would pass to him or her free of state estate tax. Changes in state estate tax codes should be watched carefully as states study ways to make their financial environments "friendlier" to seniors.

No single tax consideration should be used to determine the most favorable tax environment for your retirement years. You need to analyze your overall financial situation and then look at your retirement options. Your main goal should be to spend your senior years where you will be relatively free from financial stress—to live the happy, healthy life you have earned.