Tim Regan

Whether you’re a native Illinoisan or looking to explore a new place in your golden years, there are plenty of reasons why you might want to join the more than 2 million seniors that call our great state “home.”

You might think retirement is the same no matter where you go, but there are a variety of laws, expenses and taxes that can affect your income and lifestyle.

Read on to explore nine frequently asked questions about an Illinois retirement and begin the next phase of your life with confidence. 

9 FAQs About Retiring in Illinois

1. What’s the cost of living for Illinois retirees?

One recent study found the average U.S. retiree spends about $4,345 a month on essential expenses like housing, transportation, food and healthcare. Of course, that cost varies quite a bit depending on where you live and your specific lifestyle needs. 

Related: Click here to listen to Retirement Readiness Episode 19, “Financing Retirement: Social Security, Pensions and Personal Savings”

Illinois clocks in below the national average cost of living, despite being the sixth most populated state. A CNBC article states that the cost of a “comfortable” retirement in Illinois sits around $60,000 as of December 2023. Keep in mind, that number accounts for all the essentials, plus a little extra for your rainy day fund, hobbies or other “fun” expenses. However, your exact mileage may vary depending on your goals and which city you’re in. 

Additionally, keep in mind that while the great Midwest offers generally lower prices when it comes to groceries and filling gas tanks, housing costs are considerably higher the closer you get to big cities like Chicago (which has a typical home price north of $286,792!).

2. Does Illinois tax Social Security?

Nope! While some states like Colorado and Connecticut tax Social Security benefits, Illinois does not.

Download a free copy of the ebook, “7 Social Security Secrets”

3. How does Illinois tax 401(k) accounts?

Illinois is also one of the 13 states that exempts most retirement income, including 401(k) distributions, from state income tax. Pensions, Roth IRA accounts and traditional IRAs that have been converted to Roth accounts also enjoy exemptions from income tax. 

Related: Click here to listen to Retirement Readiness Episode 13, “The Hidden Costs of Retirement Planning: 401(k) and IRA Accounts”

While residents in sunny California might face anywhere from 1% to 12.3% state income tax on 401(k) distributions for 2023, the typical Illinois retiree won’t pay any!

4. How is income taxed in Illinois – and how does it compare to other states?

Some states have no income tax, while others have a flat tax rate (which applies to everyone) and/or a progressive income tax (which gets higher the more you earn). Illinois has a flat income tax rate of 4.95%. 

States that surround Illinois have a variety of income taxes:

• Iowa has a progressive income tax rate between 4.4%-6%
• Missouri has a progressive income tax rate between 0%-4.95%.
• Wisconsin has a progressive income tax rate between 3.5%-7.65%.
• Michigan has a flat income tax rate of 4.05%.
• Indiana has a flat income tax rate of 3.15%.
• Kentucky has a flat income tax rate of 4.5%.

*Data courtesy of NerdWallet

While Illinois’ income tax rate sits on the higher end of those numbers, keep in mind that it also offers exemptions for most retirement income streams. 

5. What does Medicare cover in Illinois – and what does it cost?

As of April 2023, there are 1,582,598 individuals enrolled in Medicare in Illinois. Medicare covers a variety of services depending on which Part you are signed up for and the plan you choose. In general, here’s what you can expect:

• Part A: Covers hospital stays, inpatient care, blood transfusions and more. 
• Part B: Covers outpatient care like doctor’s office visits, as well as transportation. 
• Part C: Also known as Medicare Advantage, this is a private insurance option that usually combines Parts A and B. They might also include dental or vision coverage.
• Part D: Covers prescription drug costs. 

These stay the same regardless of where you reside in the U.S., although the plans offered vary depending on your state. In Illinois, top plan providers include Aetna, Blue Cross Blue Shield, Cigna, Humana and UnitedHealthcare.

While most people pay $0 in premiums for Medicare Part A, the average cost can go up to $506 per month in Illinois. Part B costs an average of $164.90 per month. 

Related: Everything You Need to Know About Medicare’s 8-Minute Rule

Illinois also has a program called SHIP, or the State Health Insurance Program, which offers free resources and counseling to Medicare members and their caregivers as they navigate through the program. 

6. What is the average cost of long-term care in Illinois?

It’s difficult to pinpoint an exact number for long-term care costs, especially because your exact care needs will likely vary from others’. However, we can take a look at current numbers for the cost of long-term care in Illinois to get an idea of what each option looks like price-wise:

Type of Care	What’s Included	Average Reported Cost
Assisted Living Facility	These are generally a good choice for independent seniors who need help with daily tasks but not round-the-clock medical care.	Estimates range from $42,840 to $58,848 per year depending on your care needs and whether you have a private or shared room.
Nursing Home (Private Room)	Nursing homes usually provide more extensive healthcare services than assisted living facilities.	Average costs are estimated to be between $185 per day ($67,525 per year) to  $93,840,
In-home Health Aide	An in-home health aide provides personalized service in the comfort of your own home, which may include housekeeping offerings in addition to medical care.	Reports range from $64,064 to $70,000 per year for a full-time aide, while hourly costs are estimated at $23.50.

 

Related: Listen to our Retirement Readiness Episode 10, “How to Pay for Long-term Care”

7. Does Illinois have an estate tax?

Yes, Illinois has an estate tax on estates worth $4 million or more. The tax amount is graduated and maxes out at 16% depending on the size of your estate.

8. What does estate planning look like in Illinois?

Estate planning can include several aspects, from healthcare directives to the distribution of your assets and more.

According to the Illinois Department of Public Health, there are four main advanced health directives recognized within the state: “a health care power of attorney; a living will; a mental health treatment preference declaration, and a Practitioner Orders For Life-Sustaining Treatment (POLST).” Each of these offer a variety of ways to plan for your healthcare in the event that you can no longer make decisions yourself. 

As far as your assets, it’s important to distinguish that a “living will” isn’t the same thing as a regular old will – you’ll still need to draft up a separate document detailing who you want to inherit all your things.  

If you don’t have a will in place when you pass away, Illinois defaults to distributing your property like this:

• If you have a spouse and no kids, your spouse inherits all your assets.
• If you have a spouse and child(ren), they split your assets.
• If you have no spouse or children, your assets will go to next of kin, such as your parents. 

Another interesting aspect of estate planning in Illinois is that you can execute a will remotely (with remote witnesses) under the recent Electronic Wills and Remote Witnesses Act.

9. Is Illinois a great place to retire?

In our humble and unbiased opinion, we would say: Yes! 

Of course, where you choose to retire depends on your individual needs and preferences. It is worth noting that Choice Mutual ranked Illinois the 5th best state to retire, citing its tax advantages and home prices!

So if you’re looking for a state with a relatively low cost of living and tax-friendly retirement policies, Illinois could be a good option for you. These eight frequently asked questions are a great way to get familiar with the financial implications for seniors in the great Prairie State and learn more about the benefits of an Illinois retirement. 

Plan Your Retirement with PrairieView

Our team can help you create a retirement plan based on your goals – and ideal location. Click here to schedule a complimentary appointment and learn more.

 

[Disclosures]

PrairieView Wealth Partners, LLC is a registered investment advisor. Information in this message is for the intended recipient[s] only. Please visit our website prairieviewwealthpartners.com for important disclosures.

PrairieView Wealth Partners, LLC often communicates with its clients and prospective clients through email and other electronic means. Your privacy and security are very important to us. PrairieView Wealth Partners, LLC makes every effort to ensure that email communications do not contain sensitive information. If you are not the intended recipient of this communication, please delete and destroy all copies in your possession, notify the sender that you have received this communication in error, and note that any review or dissemination of, or the taking of any action in reliance on, this communication is expressly prohibited. We remind our clients and others not to send PrairieView Wealth Partners, LLC private information over email. If you have sensitive data to deliver, we can provide secure means for such delivery. Please note PrairieView Wealth Partners, LLC does not accept trading or money movement instructions via email. Please visit our website prairieviewwealthpartners.com for important disclosures.

Please remember to contact PrairieView Wealth Partners, LLC if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you want to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

The information provided herein is for informational purposes only and does not constitute financial, or legal advice. Investment advice in an advisory capacity can only be rendered after delivery of PrairieView Wealth Partners, LLC’s disclosure statement (Form ADV Part 2) and execution of an investment advisory agreement between the client and PrairieView Wealth Partners, LLC.

Are you gearing up to retire in 2024?

Retirement is an exciting time – you get to turn off that daily alarm clock and turn your attention to your goals, be that family, hobbies or other adventures. But the transition to retirement also involves a lot of moving parts, and even with all the excitement, it can feel overwhelming. 

To help make sure you’re on track for a successful 2024 retirement, we’ve put together this guide, which covers everything from Social Security must-knows to tips for emotional wellbeing. 

Retiring in 2024? Here’s What You Need to Know

Social Security

Social Security is a government program that provides financial support to eligible individuals and families in instances of retirement, disability or death, aiming to ensure a basic level of income for those who can no longer work or have lost a breadwinner. 

Click here to download our free ebook “7 Social Security Secrets”

If you qualify, Social Security is a great addition to your post-retirement income plan – but it’s also an ever-changing program. If you’re planning to hang up your working hat in 2024, it’s important to know what your specific benefit could be and how that could affect your spouse or other family members. In some cases, it may even be beneficial to delay collecting your benefits!

1. Get familiar with COLA

COLA stands for “cost-of-living adjustment.” It’s a part of the Social Security formula that decides how much of a benefit you’ll receive. But the COLA can change often – for example, it will bump up 3.2% in 2024, giving the average Social Security beneficiary about $59 more each month.

2. Know your maximum benefit

The timing of when you start receiving Social Security benefits can significantly impact your overall retirement income. Other relevant factors include:

• The 35 highest-earning years of your career
• Your spouse’s (or even ex-spouse’s) benefits
• Age
• COLA

In general, the longer you wait until you begin collecting – up until age 70 – the larger your benefit will be. 

The maximum benefit also changes each year, making it more difficult to pinpoint your number. However, the Social Security Administration (SSA) does offer an online portal where you can view any current or future benefits. You can access that Social Security Benefits Lookup portal here. 

Related: Social Security: When Should You Start Collecting Benefits?

3. Collaborate 

Social Security planning can feel complicated, and your overall payout will depend greatly on when you decide to opt in. WIth that in mind, it’s a great idea to coordinate with your spouse to see how your benefits could overlap or impact one another. 

You may also wish to reach out to a qualified financial planner who can give you personalized advice based on your goal of retiring in 2024. 

Income and Expenses Planning

Now that you have an idea of what your Social Security benefit will likely be, it’s time to make a budget. 

Keep in mind that once you retire, your expenses will probably change, too – you may travel to see family more or pick up new hobbies. And healthcare expenses are likely to increase during that time as you age and need more frequent trips to the doctor. These factors, along with inflation, mean that your retirement could have a higher price tag than you initially imagined. 

Additionally, it’s important to keep a timeline perspective. While the average retirement lasts about 18 years for men and 21 years for women, you could potentially spend 30 or more years in retirement. Pacing your spending can help ensure you have enough funds to live off of during that time. 

So, it’s crucial to list out and review both your expected income and expenses. Expenses could include:

• Mortgage and utility bills
• Food and travel
• Life insurance
• Healthcare costs
• Hobbies 
• Car and gas money

When reviewing your potential income, consider:

• Savings
• Investments
• Retirement accounts
• Social Security and/or pensions

You have options as far as when and how much you’d like to take from your retirement accounts, so we recommend that you meet with an advisor to make a customized withdrawal plan to optimize your income. 

Legal and Estate Planning

Whenever there’s a big change in your life, be that a death, marriage, career change or even retirement, you should look over your estate planning documents.

Whether you’ve already submitted your resignation or are still in the process of retiring, you should review these items:

• Will: A will outlines how you want your assets to be distributed after your death.
• Power of attorney: This designates someone to manage your financial affairs if you become unable to do so.
• Healthcare power of attorney: A healthcare POA authorizes someone to make healthcare decisions on your behalf if you are unable to do so. A healthcare directive is also useful in that it outlines how you’d like certain medical decisions to be made. 
• Beneficiaries: Make sure to designate who you’d like to inherit any retirement accounts, life insurance policies or other assets. 
• Business succession plans: If you own your own business, consider how you’d like the transition of ownership and management to occur in the event of disability or death.

Keep in mind that many of these documents require the guidance of an estate planning attorney, so you may need to reach out to yours in order to make necessary updates. If you don’t already work with an estate planner, reach out to your financial advisor for a recommendation.

Related: Estate Planning in Retirement: How to Plan for the Distribution of Your Assets After You Pass Away

Healthcare Options

One recent study found that the average American couple that retired in 2023 will pay about $315,000 for healthcare costs throughout the rest of their lives – yet most couples estimated that cost to be just $41,000. Furthermore, it’s reported that 70% of Americans over the age of 65 will need some form of long-term care in their golden years. 

These numbers aren’t meant to scare you, but to prepare you for what could be very large expenses coming your way post-retirement. 

As you transition out of work this year, it’s critical that you investigate long-term care options in your area, and even consider investing in long-term care insurance. There are several policies out there that can help ease those costs, although you should keep in mind that each policy has different premiums, coverages, exclusions and more. 

Medicare is also a great way to offset healthcare costs in retirement. There are four main “Parts” to Medicare, each of which cover different healthcare-related costs like prescriptions, in-patient care or outpatient services. Most people qualify for Medicare benefits starting three months before they turn 65. 

Related: Everything You Need to Know About Medicare’s 8-Minute Rule

While planning for poor health isn’t ever a fun activity, remember that having a plan for potential health-related challenges in advance can alleviate financial burdens on both you and your loved ones.

Emotional and Physical Wellbeing

Did you know that “one in three older adults reported infrequent contact (once a week or less) with people from outside their home in 2023?”

Retirement can create a very sudden change to your social life and daily routine, which can in turn affect both your emotional and physical wellbeing. That’s why it’s important to have a plan not only for your finances, but for your social life as well.

Think about clubs you could join, explore volunteer opportunities and intentionally work to stay connected with friends and family. As you explore new hobbies, consider adding in an activity that can help you to stay active. 

Many retirees choose to pick up a part-time job after retiring, even if they don’t necessarily need the money. Part-time work can give you a routine schedule while also providing a continued sense of purpose and fulfillment. 

Related: Health and Wellness in Retirement: How to Maintain Good Physical and Mental Health As You Age

Retiring is a milestone that deserves thoughtful preparation and planning. By addressing financial, lifestyle, legal and healthcare considerations, you can set the stage for a rich and fulfilling retirement in 2024.

Plan Your 2024 Retirement with PrairieView Wealth Partners

Whether you’re ready to transition into retirement or are still building up your savings, we can help you craft a plan toward your goals and achieve a two-comma life.

 Click here to connect with a member of our team and get started today. 

[Disclosures]
PrairieView Wealth Partners, LLC is a registered investment advisor. Information in this message is for the intended recipient[s] only. Please visit our website prairieviewwealthpartners.com for important disclosures.

PrairieView Wealth Partners, LLC often communicates with its clients and prospective clients through email and other electronic means. Your privacy and security are very important to us. PrairieView Wealth Partners, LLC makes every effort to ensure that email communications do not contain sensitive information. If you are not the intended recipient of this communication, please delete and destroy all copies in your possession, notify the sender that you have received this communication in error, and note that any review or dissemination of, or the taking of any action in reliance on, this communication is expressly prohibited. We remind our clients and others not to send PrairieView Wealth Partners, LLC private information over email. If you have sensitive data to deliver, we can provide secure means for such delivery. Please note PrairieView Wealth Partners, LLC does not accept trading or money movement instructions via email. Please visit our website prairieviewwealthpartners.com for important disclosures.

Please remember to contact PrairieView Wealth Partners, LLC if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you want to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

PrairieView Wealth Partners, LLC is an SEC registered investment adviser. SEC registration does not constitute an endorsement of PrairieView Wealth Partners, LLC by the SEC nor does it indicate that PrairieView Wealth Partners, LLC has attained a particular level of skill or ability. This material prepared by PrairieView Wealth Partners, LLC is for informational purposes only and is accurate as of the date it was prepared.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Advisory services are only offered to clients or prospective clients wherePrairieView Wealth Partners, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by PrairieView Wealth Partners, LLC unless a client service agreement is in place.  This material is not intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. PrairieView Wealth Partners, LLC is an accounting firm. Please consult with your tax professional regarding your specific tax situation when determining if any of the mentioned strategies are right for you.

We’ve learned, grown and achieved a lot in the past 12 months here at PrairieView – and we’re so excited to see what 2024 will bring for our team and clients. With that in mind, we’ve rounded up our top 10 blogs and podcasts for your review, from cleaning up your credit to collecting Social Security benefits and more. 

But the new year doesn’t mean you should leave everything behind in 2023! In fact, it’s been reported that intentional reflection is key to success, both professionally and personally. As you build your goals and financial plan for the year, looking back is just as important as looking forward.

Whether you’ve already implemented these tips or are continuing to grow, these pieces can offer perspective and guidance along the way. 

Our Top 10 Blogs and Podcasts of 2023 – And How They Can Help You in 2024

1. [Blog] 6 Common Questions and Answers about Social Security Survivors Benefits

What happens to Social Security benefits when a loved one passes away? 

Often referred to as “survivors benefits,” these funds are meant to replace loss of income due to the death of a family member who would have otherwise collected their own Social Security.

But from qualifying and applying to calculating your maximum amount, there are often several questions surrounding survivors benefits – and we’re here to help. Click below to explore six common questions (and answers) about this federally funded program. 

Read the full blog. 

2. [Podcast] Episode 19: Financing Retirement Through Social Security, Pensions and Personal Savings

The best retirement plans usually involve more than just a savings account. Social Security, pensions, Roth IRAs and 401(k)s are all solid options – but how do you know which is right for you?

The answer is likely some combination of the above, depending on your age, goals and other factors. In this podcast episode, we dive into how you can plan your future income, what amount you should save each year and other important considerations.

Listen to the episode. 

3. [Blog] How to Calculate Your Maximum Social Security Benefit

Continuing with the theme of Social Security, did you know that your total benefit amount can vary widely?

For example, someone who retires in 2023 at 70 years old could receive up to $4,555 per month from Social Security, while a 62 year old would be capped at just $2,572 per month!

Your age, work history and the cost of living can also make a difference in your total payout. And while you can’t see exactly what the future will hold, it’s pretty easy to estimate your future benefits (especially with the nifty calculators available online). Click below to start crunching the numbers and uncover your potential earnings.

Read the full blog. 

4. [Podcast] Episode 24: Estate Planning in Retirement

Estate planning can help protect you and your loved ones in the event that you pass away or become otherwise incapacitated. It’s especially important for those who have young children to keep in mind. But if something were to happen to you tomorrow, would a lump sum inheritance really be best for your kids?

Luckily, there are options available (no matter who your beneficiaries are). In this episode, we’re covering the basics of trusts for estate planning purposes, including tax implications you may need to keep in mind. 

Listen to the episode. 

5. [Blog] At What Age Do I Qualify for Medicare?

What happens to your health insurance after you retire? For more than 60 million Americans, Medicare is the answer. 

Medicare is a federally funded insurance program available to those 65 or older, as well as other individuals who meet disability criteria. But what if you’re still working at that age?

We’ve got you covered. Click below to learn more about what age you need to be to apply for and collect Medicare, along with other helpful information.

Read the full blog. 

6. [Podcast] Episode 23: Credit Clean-Up Tips to Get Your Kids Ready for College

Your teen is all grown up and ready to move into the dorms – but are their finances ready?

If not, you may end up risking your hard-earned retirement savings or taking out unnecessary loans come college time. 

Teaching your kids about the importance of credit can help prepare them to make sound, responsible decisions as adults. In this episode, we’re going over simple ways you can help build credit for your child while they’re still at home, while also teaching them about what factors influence their credit in the short- and long-term. 

Listen to the episode. 

7. [Blog] What Does Dave Ramsey Say About Real Estate Investing (and Is He Right?)

If you’re thinking about investing in real estate, this one’s for you!

We’re taking a look at seven pieces of real estate advice from Mr. Dave Ramsey himself, from realtors to budgets and even loans you should (and shouldn’t) consider. 

With a hot market and high interest rates dominating 2023, now is a great time to brush up on your real estate knowledge – and this blog can help you get started. 

Read the full blog. 

8. [Podcast] Episode 21: Tax Advantages of Installing Solar Panels on Your Home

Solar panels could lower your electricity bill – and maybe even your taxes. 

That’s because American homeowners can receive up to 30% of a tax credit for the cost of materials and installation related to solar panels. However, the credit isn’t going to offset the other 70% of initial costs, and the incentives available aren’t permanent. So how do you know if solar panels are the right (financial) move for your family home? 

Our team tackles this trending topic in episode 21 of “Retirement Readiness,” available at the link below. 

Listen to the episode. 

9. [Blog] Social Security: When Should You Start Collecting Benefits?

Remember when we said that a variety of factors could influence your Social Security payout? We’re digging deeper into those factors in this blog, which explores how you can estimate your potential benefits and look up current benefits, as well as four things to consider before applying. 

Each individual is different, and there’s no one “right” answer, but the more knowledge you have on the program, the more confident you and your loved ones can feel in your decision. 

Read the full blog. 

10. [Podcast] Episode 28: Part-time Work in Retirement

Let’s round out the list with a fresh take: Part-time work in retirement can be a good thing. 

While many people think your golden years are all about relaxing, a part-time job or volunteer work can actually provide much-needed structure, purpose and social interaction for retirees (as well as potential income).

Want to learn more? Take a listen at the link below to learn more about the pros and cons of part-time work in retirement. 

Listen to the episode. 

Wherever you are in your financial journey, these top 10 podcasts and blogs from 2023 offer insights that can round out your knowledge and inspire financial growth in the new year. And, of course, keep an eye out for fresh content over on our website!

Make a Plan with PrairieView

If you’re interested in personalized financial guidance and timely insights, click here to connect with a member of the PrairieView team and get started today. 

 

[Disclosures]

PrairieView Wealth Partners, LLC is an SEC registered investment adviser.   SEC registration does not constitute an endorsement of PrairieView Wealth Partners, LLC by the SEC nor does it indicate that PrairieView Wealth Partners, LLC has attained a particular level of skill or ability.  This material prepared by PrairieView Wealth Partners, LLC is for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Information presented herein is accurate as of the date it was prepared. Advisory services are only offered to clients or prospective clients where PrairieView Wealth Partners, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by PrairieView Wealth Partners, LLC unless a client service agreement is in place.  This material is not intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. PrairieView Wealth Partners, LLC is not an accounting firm. Please consult with your tax professional regarding your specific tax situation when determining if any of the mentioned strategies are right for you.