The Pros and Cons of Retiring in Delaware

Delaware offers a unique mix of financial benefits, including no state tax on Social Security and a lower cost of living, making it an attractive option for retirees. With charming coastal towns and active adult communities, it provides a variety of lifestyle choices.

However, Delaware's small size means fewer urban amenities and coastal living comes with seasonal crowds and occasional storms. In this guide, we’ll explore the pros and cons of retiring in Delaware to help you decide if it's the right choice for your future.

THE PROS OF RETIRING IN DELAWARE

Considering Delaware for your retirement? Here’s why it might be the right choice:

TAX-FRIENDLY ENVIRONMENT

Several tax benefits in Delaware make it an appealing option for retirees, such as:

• No tax on Social Security benefits: Retirees can enjoy their Social Security income without state taxation.
• Favorable retirement income taxation: While Delaware taxes some retirement income, it offers exemptions for pensions and 401k income up to a certain amount.
• No sales tax: Delaware is one of only a few states with no sales tax, helping retirees stretch their budgets.
• Low property taxes: Delaware boasts one of the lowest property tax rates in the country, around 0.43%.¹

MILD CLIMATE

Delaware’s climate provides the perfect balance for those who enjoy the outdoors:

• Mild winters: Winters are relatively mild, allowing for comfortable year-round living
• Warm summers: Summers are warm but manageable, with plenty of beach days along the Atlantic Coast
• Plenty of sunshine: July and August deliver up to 11 hours of sunshine per day,² ideal for golfing, hiking, fishing and simply soaking up the outdoors

BEAUTIFUL COASTAL COMMUNITIES

The coastal towns in this state are perfect for retirees seeking a relaxing seaside lifestyle:

• Rehoboth Beach: A favorite for retirees, offering a blend of peaceful living and cultural events
• Lewes: A historic, charming town ideal for quiet coastal living
• Dewey Beach: Known for its vibrant nightlife and active beach scene

ACCESSIBLE HEALTHCARE

You can also find strong healthcare support for retirees in Delaware, including:

• Leading hospitals: Facilities like ChristianaCare and Bayhealth deliver high-quality medical services
• Medicare Advantage plans: A variety of options are available to suit different healthcare needs
• Senior care facilities: An established network of senior services helps ensure quality care as residents age

AFFORDABLE LIVING

Compared to many nearby states, Delaware’s cost of living is more manageable:

• Affordable housing options: Areas like Harrington, New Castle and Delmar offer lower housing costs compared to the national average.
• Low utility costs: Utility bills in Delaware are generally 6% below the national average.³
• Lower transportation costs: Thanks to Delaware’s compact size, getting around is typically easier and cheaper.

THE CONS OF RETIRING IN DELAWARE

There is no question that Delaware has a lot to offer retirees, from tax advantages to charming coastal towns. But like any destination, it’s important to weigh the potential downsides. Here are a few considerations to keep in mind:

COASTAL STORM RISKS

Delaware’s coastal location exposes some areas to storm and flooding risks, especially during hurricane season and nor’easters. While direct hurricane hits are rare, heavy rains and strong winds can still cause property damage – particularly in beach towns and low-lying regions.

HIGHER HOUSING COSTS IN POPULAR AREAS

Although Delaware’s overall cost of living is about 7% lower than the national average, it’s a different story in sought-after retirement spots.⁴ Beachfront communities like Rehoboth Beach and Bethany Beach have seen significant real estate appreciation, with average home prices in Rehoboth reaching around $780,000.⁵ Retirees seeking more affordable living may want to look inland, where towns like Seaford, Harrington and Milford offer more budget-friendly housing options.

LIMITED PUBLIC TRANSPORTATION

While Delaware offers some public transit through DART First State, coverage can be sparse once you step outside larger urban centers like Wilmington and Dover. Many suburban and rural areas have little to no public transportation access. For retirees who value mobility and independence, owning a car is typically necessary – and should be factored into budgeting and planning, especially for day-to-day errands, medical appointments and social outings.

SEASONAL WEATHER CHALLENGES

Delaware experiences all four seasons, which can be a perk for those who love a change of scenery. However, winters can bring their share of challenges. Snow, icy conditions, and cold snaps are common between December and February, occasionally making travel tricky and limiting outdoor activities. While winters here are generally milder than in many northern states, retirees should be prepared for colder days with indoor hobbies, layered clothing, and some winter safety measures for their homes and vehicles.

IS DELAWARE RIGHT FOR YOUR RETIREMENT?

Retiring in Delaware offers plenty of advantages – from low taxes to charming small towns and quick access to major cities along the East Coast. If you're looking for a financially smart place to enjoy your next chapter, the first state has a lot to offer.

You may find Delaware especially appealing if you:

• Want to maximize your savings with no sales tax and low property taxes
• Appreciate a balance between coastal living and proximity to urban centers
• Value affordable healthcare options and active, welcoming communities

Of course, it's important to weigh a few potential trade-offs. Seasonal traffic in popular beach areas, cooler winters compared to Southern states and limited public transportation outside of larger towns could impact your lifestyle depending on your preferences.

As with any major life decision, the key to a rewarding retirement is thoughtful planning – making sure your finances, healthcare needs and personal goals all align.

PLAN A RETIREMENT THAT FITS YOUR FUTURE

At Edelman Financial Engines, we help retirees create personalized strategies built to support long-term security, tax efficiency and sustainable income. Whether Delaware sounds like your perfect retirement destination or you're still weighing your options, our advisors can help you build a clear path forward.

Ready to start planning? Connect with an Edelman Financial Engines advisor today and take the next step toward a secure, confident retirement.