Many people are concerned about how an area's climate will affect their physical health, but they think little about how the state they are considering will affect their financial health.

The July 1992 issue of Moneyexamined state taxes in four major areas that affect retirees: property, pensions, sales tax, and Social Security. The taxes on a typical retired couple's income varied from $133 in Alaska to $7,449 in Wisconsin. An August 1995 article in Kiplinger's Personal Finance Magazineexamined tax burdens for retirees from a different perspective and came to similar conclusions. Both articles found that property and sales taxes are more of a burden on retirees than state income tax.

Forty of the 50 states give a variety of tax breaks to retirees. Seven have no state income taxes for all residents, and eight gave property tax relief to homeowners over 65. Fourteen give homestead exemptions to all homeowners.

Most states will allow you to deduct some portion of your government, military or private pension when calculating your income tax. Currently, Alabama, Hawaii, Illinois, and Pennsylvania fully exclude almost every type of pension from taxation.

States will also vary on other taxes: inheritance, personal property, and sales. Your tax burden in a state depends on the combination of your personal financial characteristics and the way the state taxes its citizens.

You will want to consider the following hints from Bob Carlson's Retirement Watchnewsletter of July 1995 when making decisions about where to live:

• Narrow down the states based on non-tax factors such as climate and other characteristics discussed earlier.

• Look closely at the state's income tax. Fifteen states tax Social Security the same way the federal government does. Ask the state's department of taxation to send you a copy of the instruction booklet for income tax returns to determine how the state's tax laws will affect your retirement income.

• Find out the sales tax rates. A state may have a low income tax but a high sales tax. Many states, such as Illinois, allow localities to add extra sales taxes to the state sales tax.

• Currently, five states have no sales tax, and only Illinois and New Mexico tax prescription drugs. Most states don't tax food purchased at the grocery store, and six states don't tax clothing sales.

• Find out how property is taxed. Find out what type of property is taxed, what the tax rates are, and what the exemptions are. For instance, Florida has no income tax, but in addition to a high sales tax there is an intangible personal property tax that taxes a person's investment portfolio. Some states give breaks to seniors in the form of lower tax rates or deferred taxes.

• Look for local income taxes. States can levy income taxes either at the state, county, or city level.

• Find out about estate and inheritance taxes. Sixteen states now levy an inheritance tax that beneficiaries pay, and five impose an estate tax paid out of estate assets.