6 Biggest Money Mistakes When Retiring in Texas
Written by
Vance Cariaga
Edited by
Nicholas Morine
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Texas has been a major people magnet for many years — and that continued in 2023, when the Lone Star State saw the biggest numeric population growth in the nation, according to the Census Bureau. Texas also ranks in the top 10 in the country regarding net gain of retirees, a SmartAsset study found. Despite its popularity, there are any number of financial missteps you can make when retiring in Texas.
As with any state, Texas has its cheap areas and its expensive areas. But because of its massive size, those areas can be hundreds of miles apart. This means you can live in a cheap, rural part of the state but be several hours away from the nearest big-city amenities. Or you can live in a big city and pay high prices for the privilege.
Here’s a look at the six biggest money mistakes when retiring in Texas.
Misjudging the Cost of Living
Officials in Texas love to tout its affordability compared with other states, but it is not as cheap as you might think. A recent report from WalletHub ranked Texas only 32nd on its list of best and worst states to retire. Texas scored lower than average in quality of life and healthcare, and landed in the middle of the pack in terms of affordability. Big cities such as Dallas, Houston, Austin and San Antonio can be very pricey depending on where you live.
Thinking You Won’t Need a Car
Based on square miles alone, Texas is bigger than every European country except Russia. To get around the state, you will need to buy and maintain a car. Texas ranks 28th in the country concerning public transit usage, according to U.S. News & World Report. Even in the cities, “It will most likely take you twice as long to get somewhere on public transport as it would by car,” Lonely Planet reported.
Underestimating Property Taxes
Texas has no personal income tax, but it does have the sixth-highest property tax rates in the U.S. for owner-occupied housing. According to The Texas Tribune, it is also difficult to get property tax relief since most of the funds collected through property taxes go toward schools and public health programs.
And Underestimating Sales Taxes
Shoppers in Texas must pay a 6.25% sales and use tax on purchases. Local jurisdictions have the authority to add another 2% in taxes for a combined rate of 8.25% on many purchases, including clothing and household goods.
Miscalculating Utility Costs
A 2023 report from the Missouri Economic Research and Information Center ranked Texas 19th in the nation in overall affordability based on housing, grocery, utility, transportation, healthcare and other costs. However, the Lone Star State ranked in the lower half in average utility costs, mainly due to weather patterns that can get extremely hot during the summer and extremely cold during the winter.
Overlooking the Cost of Storm Damage
Speaking of weather: Texas has numerous weather threats, ranging from hurricanes in the east to high winds in the west. Among the states, Texas ranked third in the country when it comes to the worst storm damage, according to a 2023 analysis from 24/7 Wall Street. Weather-related damage per person is about $207 a year — the 9th highest in the country.
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