Want to Retire in North Carolina? Here’s What You Need to Know.

Retirement

Aug 12

If you’re like most people trying to pinpoint where to live during your golden years, you may be considering the state of North Carolina as a potential retirement destination.

Should you decide to relocate to the Tar Heel State (a nickname originating from NC’s prosperous tar manufacturing industry back in the 1700s and 1800s), know that you’ll follow in the footsteps of thousands of others aged 60+ who made the move there in 2022. According to SmartAsset, the state ranks fifth—behind only Florida and Arizona—as a top retirement destination and is perennially in the top five.

In this post, we’ll share key details you need to know about the state before deciding to make a move.

Top reasons to retire in North Carolina

Beyond incredibly diverse landscapes and a milder climate than many other states, there are plenty of other reasons to retire in North Carolina. Here are just a few:

You’d be in good company

Although Florida and Arizona have long occupied the top of “best places to retire” lists, we analyzed five years of SmartAsset data to identify just how popular North Carolina is as a retirement destination.

A total of 862,924 people aged 60+ were represented in their “top 10 retirement destinations,” with locations varying slightly each year; 8.5% of these retirees ended up in North Carolina. For reference, only Florida (in first place at 41.8%) and Arizona (in second place at 16.4%) ranked higher.

North Carolina is a moderately tax-friendly state

North Carolina is retiree-friendly with respect to Social Security benefits, inheritance, and estate taxes, as these taxes simply don’t exist in the state: allowing you to pocket more money and leave more to your heirs.

However, North Carolina does charge state income tax and taxes most retirement sources—such as 401(k)s, pensions, and IRAs—hence the “moderate” tax-friendly label. The state also charges a flat tax rate of 4.50% that will gradually decrease to 3.99% in 2027. Note that income from federal government and designated North Carolina/local government retirement plans is exempt for anyone with five or more years of government service (as of August 12, 1989).

While North Carolina’s tax rate is lower than many states, state income tax in Florida—the top-ranked retirement destination—rings in at a whopping $0. While this may seem like modest savings, every dollar counts if you’re on a fixed income: especially considering just how expensive retirement really is.

The Tax Foundation ranks North Carolina smack in the middle of all states with respect to sales taxes, as its combined state and local sales tax average is 6.996% (state tax is 4.75%, with localities adding up to 2.75%). Groceries are exempt from state sales tax, but a local tax of 2% may apply.

Anyone wishing to live in North Carolina on a part-time basis prior to full retirement—to reap the aforementioned tax benefits—must prove they spend more than 183 days in the state within a tax year to claim the Tar Heel State as their primary residence.

Housing is fairly affordable in North Carolina

According to the Zillow Home Values Index, the median NC home value of $335,610 —as of the date of this post— is lower than the U.S. as a whole ($362,332). Compare this to $535,276 in New Jersey (where many of our readers reside), and you can see that—generally speaking—homes in North Carolina are very affordable. The state’s median even falls below that of Arizona ($433,642) and Florida ($400,195).

Property taxes are lower than average

WalletHub data indicates North Carolinians also don’t pay a lot in property taxes, with residents in only 16 other states taxed at a lower rate. Based on a median home value of $234,900, the corresponding annual property tax bill in North Carolina would ring in at approximately $1,724 (NC charges an effective rate of 0.73%).

Full-time residency can also help further reduce property tax bills via three types of property tax relief programs.

If you’re at least 65 years old, have an annual income at or below $36,700 (for 2024), and/or are disabled, you can qualify for the state’s elderly or disabled exclusion: omitting the first $25,000 or 50% of your home’s appraised value, whichever is greater, from taxation.

The state also offers a property tax homestead circuit breaker program that limits the amount of annual property taxes residents must pay on their permanent residence to 4% of their annual income. Residents must be at least 65 years of age and make less than $36,700 (2024) to qualify, but those with incomes between $36,700–$55,050 are eligible for a limited amount of 5% instead.

Finally, the disabled veteran property tax homestead exclusion gives disabled veterans—or the surviving spouse of a disabled veteran who has not remarried—the ability to exclude up to the first $45,000 of a permanent residence owned and occupied by a qualifying owner from taxation (co-owners who are not spouses but individually eligible can receive a total exemption of $90,000).

Homeowners insurance is reasonable

According to insurance.com, the national average homeowners policy cost—based on a dwelling coverage amount of $400,000 and $1,000 deductible—is $2,601. The average rate for North Carolina, meanwhile, is $2,141: slightly higher than Arizona ($1,906) but much less expensive than Florida ($4,984).

Although it’s not required, a wind mitigation home inspection can result in substantial savings for anyone opting for coastal living in North Carolina or elsewhere—as insurance providers are legally obligated to provide discounts for a “passing grade.” This type of inspection is very common in coastal areas of the Southeastern United States.

Automobile insurance is a tad lower than the national average

Should you opt to retire in North Carolina, your auto insurance rates will likely mirror the national average or fall slightly below the same. More specifically, insurance.com reports that the average full coverage cost (100/300/100 with comprehensive/collision and a $500 deductible) is $1,741per year in North Carolina, compared to an average of $1,895 nationwide.

In-home healthcare services are moderate

If you should one day need to self-fund long-term care, know that many of these services—ranging from in-home care to a nursing home facility—are generally less expensive in NC than the national average. For example, the monthly cost of a home health aide in North Carolina is approximately $5,339 but averages $6,292 nationally.

Free education opportunities

If you’re looking to soak up additional knowledge and attend school in your free time, know that tuition and registration fees are waived for residents over the age of 64 at any of North Carolina’s community colleges or 17 UNC campuses. Just know you won’t receive any academic credit for coursework, and a total of six credit hours are offered per semester (if space is available for undergraduate courses).

Top reasons to retire outside of North Carolina

As with all other retirement destinations, retiring in North Carolina also has some drawbacks. These include:

Asthma and allergy considerations

The North Carolina environment is sometimes tough on people who suffer from asthma and allergies; however, where exactly you reside in the state makes a big difference in this regard.

Based on the most recent Asthma and Allergy Foundation of America data, the Raleigh area has a higher-than-average rating for allergies while Charlotte and Winston-Salem are about average in this respect. Meanwhile, for those suffering from asthma, there weren’t any areas in North Carolina that scored below “better than average” in their asthma rankings.

Hurricanes

The Universal Property Insurance Company analyzed the most hurricane-prone states based on data collected between 1851 and 2018. Perhaps surprisingly, North Carolina ranked third in this regard—behind only Florida and Texas—after experiencing 55 direct hits, seven of which fell between Category 3 (111 to 129-mph winds) and Category 5 (winds of 157+ mph) status. Per the North Carolina Department of Natural Resources, the state averages one hurricane (that makes landfall) every 3.25 years. The NC coast is of course most susceptible to a direct hurricane strike; click here to view the most hurricane-prone areas within the state.

Mixed healthcare quality

We queried various research studies on the quality of healthcare by state. While each report used different benchmarks, results were similar across the board: with North Carolina generally receiving marks that were either average or fell below those of other states.

More specifically, WalletHub ranks North Carolina as the 41st-best state with respect to top healthcare systems while the state climbs to 24th place among U.S. News & World Report rankings. The Agency for Healthcare Research & Quality (AHRQ)—a U.S. Department of Health & Human Services agency—meanwhile, ranks NC better than average compared all other states. The Tar Heel State also ranks 10th among all states for Medicare quality.

Despite these generally subpar rankings, that’s not to say high-quality hospitals don’t exist in NC. In fact, U.S. News & World Report ranks several North Carolina hospitals among the best in the nation; Duke Hospital was named the top hospital in NC, just ahead of University of North Carolina hospitals.

Fairly prevalent consumer fraud

Recent Federal Trade Commission data ranked North Carolina #11 with respect to consumer fraud: with a total of 117,231 reports filed in 2023, representing 1,131reports per 100,000 residents.

The most common fraud categories were identity theft (18%), users and furnishers of credit bureau information (18%), and imposter scams (14%). The top identity theft type was credit card fraud (41%). Median fraud losses were $469, lower than those in Florida ($600) and Arizona ($700).

A less robust peer group than Floridians

North Carolina is home to over 1.7 million people ages 65+, comprising nearly 17% of the state’s population (per Journal of Consumer Affairs research). However, if happiness and longevity are two of your objectives, then Florida—home to more than 4.5 million people ages 65+ (nearly 21% of the state population) may be a better place to spend your golden years.

Best places to retire in North Carolina

In many ways, researching and spending time in prospective locations is a lot like online dating; you persistently “swipe” (research) various “profiles” (destinations) in the hope of eventually finding “the one.” However, as numerous options will likely boast several key qualities you’re looking for—at least on paper—you won’t be able to identify any as a “keeper” until you meet them (by visiting) and spend time with them (by staying a while).

That said, you can rely on a few good resources out there to help narrow down your list. For example, the 2024 U.S. News & World Report “Best Places to Retire” study (based on various factors including taxes, affordable housing, happiness ratings, and desirability) ranks Winston-Salem #17 among the top 25 U.S. cities to retire in. Raleigh-Durham is close behind at #25.
Likewise, WalletHub’s “Best & Worst Places to Retire” list names Raleigh (#30), Durham (#82), and Charlotte (#100) among its top 100 cities.

In sum: North Carolina as a retirement destination

While retiring in North Carolina does have some challenges (just like any other state), it’s consistently proven—via both retirement destination rankings and the sheer volume of retirees who move there—as a great place to spend your golden years. That said, we recommend you visit various locations for at least a few weeks before ultimately deciding on a permanent relocation spot.

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