Retirement: Best places to retire: Lincoln, Nebraska

Kiplinger's Money Power

Even if you've been concentrating on beach or mountain locations for your retirement, don't rule out America's heartland, especially if you enjoy the outdoors as much as urban living.

In Lincoln, Neb.(population: 280,364), locals can spend time strolling through the Haymarket district, an old warehouse district that is now a popular area for shopping and dining. Or explore the new Railyard entertainment district, home to numerous live-entertainment venues and a public market. Catch a concert, Broadway show or performance by Lincoln's Symphony Orchestra at Lied Center. Or check out what's going on at the University of Nebraska-Lincoln or the Pinnacle Bank Arena, which hosts the college's basketball games as well as a variety of entertainers -- including recent shows by Billy Joel, the Red Hot Chili Peppers, and Tim McGraw and Faith Hill.

And hit the brakes on those jokes about the prairie's boring terrain. With 6,500 acres of parks and 1,475 acres of wilderness, nature lovers will find plenty to explore. The area's flat geography is a boon for cyclists and runners alike. More than 130 miles of hiking and biking trails -- more than half of which are commuter trails connecting various portions of the city -- make it easy to stay active and even run some errands on two wheels.

Much like Omaha, which is about an hour's drive to the north, Lincoln's economy has seen rapid growth in recent years, driven by commercial development, several local hospitals and universities, and a growing number of entrepreneurs and start-up companies. The city boasts one of the lowest unemployment rates in the country.

Last year, the median sales price for a single-family home in Lincoln was $207,500, 7 percent higher than a year earlier; the median property tax for Lancaster County is $2,838. But with plenty of homes on the market, buyers typically have the upper hand. Retirees who prefer to be close to the city's core may enjoy the apartments and condos in the Haymarket district. Those looking for a little more space often gravitate to the Country Club and Bishop Park neighborhoods south of downtown, or Eastridge, which has many single-story homes.

The Cornhusker State offers little in the way of tax breaks to retirees. Most retirement income, including pensions and retirement-account withdrawals, is taxed at ordinary income tax rates, which run as high as 6.84 percent for married couples filing jointly who earn more than $59,180 a year. Nebraska has an inheritance tax with rates ranging from 1 percent to 18 percent; assets inherited by spouses and charities are exempt. The total rate for state and local sales tax is 7.25 percent.

(Kaitlin Pitsker is a staff writer at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.)

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