Florida's status as one of the most retiree-friendly states in the country is due in no small part to its warm weather and beautiful scenery. The lack of taxes on retirement benefits and estate contributions sure does not hurt either. Since Florida also does not have an income tax, they aren't taxed on retirement income either. That gives Florida an edge as a retiree haven that some other states just don't have.

As our population ages and life expectancies continue to climb, more people are stretching their retirement income for longer periods of time. This means that the issue of retirement income taxation is more important than ever before; having to factor in for tax deductions could take years off a retiree's livable income and it could impact other estate-related issues as well. The fact that Florida doesn't tax such income can be an incentive for some people to spend their sunset years in the Sunshine State.

Florida's 2004 elimination of the state estate tax also has a huge impact on bringing in the retirees. Estate taxes can eat up a huge amount of the total assets you are passing along to your loved ones; moving to a state without the tax means more money is inherited. The federal estate tax is on hiatus until 2013 for estates totaling less than $5,000,000, and for those higher than the cut-off amount, the highest rate of estate tax has been lowered to 35 percent. Still, though, not having to pay a state-level estate tax can mean a huge savings that your beneficiaries won't have to pay out of their inheritance.

Tax considerations alone cannot make the decision about where you plan on spending your retirement, but they play an important role in determining how much money you need to comfortably retire -- which could influence at what age you retire -- and how much you will be able to leave to your loved ones after you pass away.

Source: Christian Science Monitor, "Retirement plans? Don't forget about state, local taxes.", Karla Bowsher, Feb. 16, 2012