For Retirees, There Are Extra Costs to Living in Vermont

https://www.sevendaysvt.com/news/for-retirees-there-are-extra-costs-to-living-in-vermont-42715905

Elder law attorney Robin Goeman has some advice for the retirees she counsels on estate planning and asset protection in the Green Mountain State: Leave.

"I strongly encourage them, if they have out-of-state children, to consider whether relocating would be a good part of their plan," Goeman said. She cited the cost of living in Vermont and difficulties in securing health care and other forms of assistance.

"It's just the urban-rural divide," Goeman said of the latter. "There are not enough supports."

Soaring property taxes, a new payroll tax, costly housing and big heating bills all contribute to the high cost of living in Vermont. Policymakers know that Vermonters want relief. Three lawmakers have introduced measures aimed at reducing the taxes levied on seniors. While such measures have been considered in past years, advocates hope that this one, with the issue of affordability front and center, is different.

Vermont has the third-highest per capita state tax collections in the U.S., with property tax the primary driver, according to Kevin Chu, executive director of the Vermont Futures Project, an economic research organization. Many state leaders consider the cost of living in the Green Mountains to be the biggest impediment to a thriving economy.

Older Vermonters often live on fixed incomes, making them particularly sensitive to rising costs. And they're the fastest-growing age group in the state. By 2030, one in three Vermonters will be over 60, according to Age Strong VT, a Vermont Department of Health initiative.

These over-60 residents face particular financial challenges. If they do need work that pays well, they often find it more difficult to get a job. If they have to hire people to help with the tasks they used to do themselves, such as shoveling snow, driving to appointments and housecleaning, it's expensive. If they need residential care, the options are limited and also expensive.

Older people require more health care services, some of which aren't fully paid for by Medicare, the federal health insurance program for people over 65. And while 70 percent of older adults will need long-term care as they age, nearly half don't know how they will pay for it, according to Age Strong VT.

Moving is an option for those with the financial means. John Goodrich, who retired in 2015 as vice president and general manager at Weidmann Electrical Technology in St. Johnsbury, said Vermont's high taxes prompted him to build his retirement home in New Hampshire.

"I'm saving a lot of money by being on the other side of the [Connecticut] river," Goodrich said. But that solution is not for everyone. He noted that moving is expensive, and people who are low-income don't feel as big an impact from Vermont's taxes.

Goodrich still plays tuba in the St. Johnsbury town band, but many Vermonters move farther away, a decision that can have social costs. Florida, which has no income tax, is a common destination. Older Vermonters establish official residency there, enjoy warm winters and head back north for the summers.

Longtime Montpelier lobbyist Candy Moot is one of those. She splits her time between homes on Seymour Lake in Morgan and near Naples, Fla. Vermont's cost of living played a role in her decision to move, she said, but so did the fact that her husband had had enough of northern winters. The sociable Moot has plenty of new friends, including a 12-person group that gathers at her home to play the dice game Bunco. But she misses her extensive network in Vermont.

"It takes a long time to make an old friend," Moot said.

Those who stay in Vermont sometimes find that getting the health and home care services they need can be a challenge.

"Vermont is a glorious place to be a retiree when your health is wonderful," Goeman said. "But you're not going to get the same level of care here."

Further, seniors who chose to stay do so despite the fact that Vermont is one of just a dozen states that tax Social Security income and retirement benefits, including withdrawals from traditional IRAs and 401k and 403b accounts, both income sources for retirees.

New Hampshire's lack of taxes on Social Security and pension benefits is part of what drew Goodrich to move there. "Those things together really make a difference," he said.

Health care costs are rising around the country, and last year Vermonters paid the highest costs nationwide for individual health insurance coverage. Choices for Care, a long-term care program paid for by Medicaid, provides help, but users have to spend down their own money to be eligible. It's difficult to find assisted living or nursing home beds, in part because of staffing shortages — a problem that also makes it difficult to hire home health aides, housekeepers and others who could help the elderly stay at home, attorney Goeman said. She added that the salaries paid for these services tend to be higher in Vermont than in other states.

While some local and state programs and grants offer help, they don't fill all the gaps, according to Erin Clark of East Montpelier, a home health nurse who recently started a nonprofit called Generations Vermont. She's looking for a location in central Vermont where she can provide adult day care services.

"It's the folks who don't qualify for Medicaid but aren't independently wealthy who don't get their needs addressed," Clark said. "They depend on their children or an ailing spouse. They struggle to try to help each other."

Although people are moving out of Vermont, others are moving in. The state had a net gain of 7,500 residents in 2023, according to a report that the state treasurer's office released in December. If the population does grow meaningfully, that will be good news for Vermont, because an increase in residents will help spread the tax burden.

Tax department data suggest new arrivals these days tend to be high income and those departing tend to be lower income, Vermont Treasurer Mike Pieciak said. But he cautioned against drawing conclusions from the data.

"It's all very specific to someone's experience and pocketbook issues," Pieciak said. "Someone who is coming from a state with high property taxes and high insurance costs might say, 'This looks like a good deal for me. I'm willing to pay the premium [to live here].'"

Vermont officials and advocates have taken a few steps to mitigate costs for seniors, and low-income Vermonters of all ages already get a break on their property taxes. In recent years, lawmakers have altered a partial income tax exemption on Social Security benefits so that the benefits aren't taxed for individuals who make $50,000 or less and joint filers making $65,000 or less.

Also exempt: the first $10,000 in military retirement pay for income-eligible service members. Rep. Bill Canfield (R-Fair Haven) estimates he's introduced a tax break on veterans' pensions eight times since he took office in 2005. This year, he's proposing to eliminate the tax on military benefits entirely, a move that he estimates would cost the state about $3.2 million annually. Sen. Brian Collamore (R-Rutland) has introduced a similar measure.

Canfield thinks his bill, which has 74 cosigners, would attract younger veterans to Vermont.

"They are probably in their forties, they maybe still have children in school and would contribute to their communities," said Canfield, who served four years in the U.S. Navy in the Vietnam era.

He added that he hopes the bill will gain more support from his Statehouse colleagues this year. "It's a different atmosphere in this building after the election, but I have no guarantees," he said.

Another bill would phase in a full exemption of Social Security benefits over the course of eight years. Lead sponsor Rep. Daniel Noyes (D-Wolcott) said his constituents often ask him to tackle the Social Security tax, and he's tried in previous sessions.

Many people are trying to help seniors age at home to save money and remain in a community they know.

Rep. Mary-Katherine Stone (D/P-Burlington), an occupational therapist who works with the hospital discharge planning team at the University of Vermont Medical Center, has introduced legislation that would provide seniors with a tax credit for installing things such as wheelchair ramps or shower bars, vital amenities not covered under most insurance or Medicare. Without those supports, she said, people who could be released from the hospital wind up staying extra days.

Stone is frustrated that state leaders have not done more to ease the transition from hospital to home.

"It's ridiculous," she said. "Even for people who have had a stroke and don't have the mobility to walk up and down the stairs safely, they have to pay for it out of pocket. Or we're calling the neighbors to see if they can cobble together enough money to get plywood for a ramp."

Pieciak, too, wants to help Vermonters better plan for their retirements. In December, he announced a new initiative, Vermont Saves, that offers a retirement plan for Vermonters whose employers don't do so. The program, which began in December, requires employers with five or more employees to sign up by the end of February. Their employees will be automatically enrolled in a Roth IRA and can choose to make regular contributions.

Pieciak considers the Low-Income Heating Assistance Program to be one of the most important ways that Vermont helps seniors. HomeShare Vermont, a nonprofit organization that finds roommates for people who have homes in northwestern and central Vermont, is another.

"If individuals are able to downsize in their communities, then hopefully they pay less property taxes, less cost for maintenance, and that opens up a home that a young family can move into," Pieciak said.

Noyes, the Wolcott state representative, holds a weekly Senior Caucus with Rep. Theresa Wood (D-Waterbury) during the legislative session and said he plans to introduce a bill this year that would create a commission to implement the state Department of Health's Age Strong VT plan, a 10-year blueprint aimed at improving life for seniors. He envisions a program that would study affordability, transportation, health services and other needs and advise the legislature.

"It's one entity to make sure older Vermonters are not forgotten when we're implementing policy," Noyes said.