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Best States to Retire

What are the best states for retirement? This study examines data in a number of key factors for retirees

Best Places to Retire in the US

Retiring is still the ultimate financial dream for most of us. To ensure this happens, proper planning is an essential part of this. One component you'll want to consider is where you will retire, as this can make a huge difference in your finances.

There are many financial factors to consider in regards to your retirement destination. For one, your cost of living expenses will play a huge role in shaping which places are affordable. Moreover, if you need to work, as many retirees do on a part-time basis, choosing a state with a low unemployment rate will increase your chances of finding the supplemental income you need.

While there are a plethora of other factors you can consider based on personal preferences such as crime rates, walkability to attractions and even climate, the most critical factor is financial. With this in mind, here is a closer look at the data on population and retirement trends; key resources to use when preparing for retirement and which states made the cut as the best to retire in.

Best States for Retirement - Key Findings

While there are a plethora of other factors you can consider based on personal preferences such as crime rates, walkability to attractions and even climate, the most critical factor is financial. With this in mind, here is a closer look at the data on population and retirement trends; key resources to use when preparing for retirement and which states made the cut as the best to retire in.

  • Some states have more or fewer tax policies that are friendly to retirees.
  • The financial behaviors of the growing population of retirement-age baby boomers can have an effect on which states are more desirable locations.
  • Life expectancy is higher in some states and lower in others.
  • Healthcare expenses can vary by state, which is a big factor for retirement destinations.

To begin, it's important to examine where people of retirement age (60s-70s) currently live. Using studies conducted by the Administration on Aging, we found the states with the highest retirement age population are: California, Florida, Illinois, New York, Ohio, Pennsylvania and Texas.

States with the Most Retirement-Aged Population

What's the correlation between these states though? What you will discover is that the results varied, depending on financial items. While climate certainly plays a role in areas such as California, Texas and Florida, it doesn't tell the whole story. For example, what makes Ohio appealing for those about to retire? With this in mind, we looked at several financial factors to see what the appeal was. A state's unemployment rate is a good indication of the overall health of the economy. Here are the states with the lowest unemployment rates:

Best States to Retire in for Taxes

When you are considering a state for retirement, one big factor is their tax friendliness toward seniors. If retirees earn an income, they tend to be in a lower tax bracket. However, there are a few tax policies that have a big impact on retirees. Here are some important state tax policies to consider:

  • Is there a state income tax? If you're not making a consistent income, extra costs like a state income tax can diminish any extra resources that you might want to earn.
  • Is there a state sales tax? Getting nickeled and dimed with every purchase can be an unnecessary burden on your budget. Some states have low sales tax or none at all.
  • How much are you going to pay for real estate? You might want to downsize and move into a smaller apartment. However, some states have high property taxes, even for smaller homes.
  • What about estate and inheritance taxes? If you want to leave your family money, your retirement state might expect a cut.

Here are some of the most tax-friendly states for retirees based on the above categories:

Most Tax-Friendly States for Retirees

Growth of Retiring Baby Boomers

Lastly, it's important to understand the financial behaviors and influences that affect the baby boomers –retired aged population- as this could shape where retiring is more desirable.

  • In a report by Investopedia, it discovered many retirees are not downsizing their living space. Instead of selling their family homes and moving to smaller living spaces - i.e. an apartment or senior living community, just the opposite is occurring.
  • The Bureau of Labor Statistics reported in 2014 that men approaching retirement age (62 to 64) that are looking for work increased from 45 percent in 1994 to 56 percent in 2012.

These points indicate two things: one, until or if many homes regain their values, many baby boomers don't want to sell because they would take a financial loss. Two, because some are still looking to work to bolster their retirement savings and increase their social security, employment is going to be a critical component of where someone retires.

Projected Growth of Retired Aged Population

All of this leads to the following conclusion: employment, housing values, taxes and healthcare expenses are going to be among the most important considerations for baby boomers since these will most directly influence their finances.

Healthcare Premiums by State

Strategies When Deciding on a Retirement State

The first factor that should influence your decision is your finances. It's important that you first sit down and calculate what your living expenses will be. To assist you in this regard, there are many online tools to help you, including calculators like the one supplied by Take Charge America. When you compile totals, it's important to examine a few months of expenses since some of them will fluctuate. To illustrate, instead of taking how much you spent on groceries in the past month, calculate the last three months of money spent at the store then divide that total by three to give you an average. The goal here is to accurately ballpark how much will come out of your retirement savings each month.

Next, the United States Department of Bureau of Labor recommends you calculate how much you'll receive from social security –if eligible. You can do this by visiting its website to use its quick calculator or by contacting them. This important to do because social security can account for as much as 40 percent of the income you earned before retirement age.

Once you have an accurate picture of your finances, then you can move on to decide if you want to move, and if so, to where. Since your financial outlook will have much to do with it, it's important to consider the following as you make your decision:

  • Do you own your home? If so, how much is it worth? How's the real estate market in your area? If you want to move, it's a good idea to find out your home's worth and the local market conditions to determine if now is the right time to sell.
  • Dovetailing off the previous point, what are your ideal living conditions? Homes require much in the way of upkeep, while condos and apartments do not. If you plan to travel much and don't want the time or expense it will take for home repairs, then it's a good choice to sell, if market conditions are right.
  • Next, you should consider what you plan to do recreationally after you retire. Does your current home have easy access to the things you want to do? Meanwhile, if you plan on moving, where will ease of access to recreational activities rank in your priorities?
  • Using the same principle, does your community offer easy accessibility to affordable healthcare services you might require?
  • Lastly, how much does climate play a role in shaping your decision?

These questions can help you narrow down your preferences and by default, locations that will appeal more to your needs.

Resources to Assist You in Your Retirement Planning

No matter which stage you are in concerning retirement planning, it always helps to meet regularly with a financial advisor or a personal banker, who can provide you with fresh insight into your finances, and even keep you on course to achieve your goals. They are also great resources to assist you when determining where you would like to relocate for retirement. To find assistance, you can consult your local bank, credit union, investment broker or even a reputable consumer credit counseling agency, as they offer retirement planning services.

Another good rule of thumb, especially if you plan to relocate after retiring is to find someone who retired and moved. Whether it's a family member, friend or trusted colleague, asking them questions about how they prepared, who helped them and how they handled the adjustment is an insightful way to learn more relocating.

Lastly, if you plan to relocate, it's important to visit the state to explore it for yourself. Find an area that resonates with you and offers many of the services you might require such as accessibility to recreational activities and healthcare. You can also use the visit to speak with a real estate agent or broker and ask them about the market and where they feel it will head in the future; this is an excellent way to receive insight that could help you make the choice as to what you would like to buy, be it an apartment, condo or home; and most importantly, where.

Meanwhile, if you are not quite ready to retire yet, but need more insight into the right financial strategies to prepare for it, there are many informative resources available for you. To illustrate, some websites, like the United States Department of Labor offers simple ways you can prepare for your retirement by contributing to your employer's retirement savings plan or doing an individual retirement account.

Furthermore, we also offer helpful articles to assist you. For instance, our piece on IRA accounts examines in detail what they are, how they can aid you in preparing for retirement and some things to consider when choosing one. We also have reviews on the top IRA providers, where you can learn more about their individual offerings to better assist you in setting up an account.

Moreover, our article on "Retirement Expenses to Look Out For," examines in scope all the expenses you need to account for during retirement, including healthcare, living and entertainment costs. It also offers suggestions to build more wealth for the 20 to 30 years of retirement you might have as well as touches on resources to assist you in preparing for retirement.

With these things in mind, we wanted to provide you with the definitive 10 best and 10 worst cities to retire in. To do this, we looked at two critical factors that influenced baby boomers –healthcare expenses (individual premium averages) and unemployment rates. Using these two metrics gives you a good indicator of the economy of a state thereby making it easier for you to find the one that's most suitable for your financial needs.

The Best States for Retirement

There are a number of factors to consider when choosing a place to retire. Many of them aren't quantifiable like where your family is or which state is your dream destination. However, there are a few statistical factors that can affect your final decision. To determine the best states for retirement we ranked each state in five following categories:

  • Life Expectancy - Some states seem to be better for the longevity of its citizens. If you are going to retire in a state, it might as well be known for having residents that enjoy long lives.
  • Tax Friendliness - Our tax friendliness is based on state sales tax, real estate taxes, state income tax and inheritance tax.
  • Violent Crime Rate - States with high violent crime rates aren't ideal for anyone, least of all people who are trying to enjoy retirement.
  • Healthcare Costs - As you grow older you may need to really your state's health care system. Some states have more affordable premiums than others.
  • The Cost of Living Index - A state's cost of living has a big impact on what your retirement budget looks like.

10 Best States for Retirement

RankStateLife ExpectancyTax Friendliness RankViolent Crime Rate Per 100,000COLIHealthcare Costs Per Capita
Rank:1State:IdahoLife Expectancy:79.5Tax Friendliness Rank:28Violent Crime Rate Per 100,000:212.2COLI:88.2Healthcare Costs Per Capita:5,658
Rank:2State:UtahLife Expectancy:80.2Tax Friendliness Rank:37Violent Crime Rate Per 100,000:215.6COLI:92.4Healthcare Costs Per Capita:5,031
Rank:3State:North DakotaLife Expectancy:79.5Tax Friendliness Rank:12Violent Crime Rate Per 100,000:265.1COLI:101.2Healthcare Costs Per Capita:7,749
Rank:4State:HawaiiLife Expectancy:81.3Tax Friendliness Rank:19Violent Crime Rate Per 100,000:259.2COLI:168.6Healthcare Costs Per Capita:6,856
Rank:5State:ArizonaLife Expectancy:79.6Tax Friendliness Rank:5Violent Crime Rate Per 100,000:399.9COLI:98.8Healthcare Costs Per Capita:5,434
Rank:6State:ColoradoLife Expectancy:80.0Tax Friendliness Rank:2Violent Crime Rate Per 100,000:309.1COLI:101.9Healthcare Costs Per Capita:5,994
Rank:7State:KentuckyLife Expectancy:76.0Tax Friendliness Rank:23Violent Crime Rate Per 100,000:211.6COLI:90.0Healthcare Costs Per Capita:6,596
Rank:8State:GeorgiaLife Expectancy:77.2Tax Friendliness Rank:7Violent Crime Rate Per 100,000:377.3COLI:91.7Healthcare Costs Per Capita:5,467
Rank:9State:IowaLife Expectancy:79.7Tax Friendliness Rank:40Violent Crime Rate Per 100,000:273.5COLI:92.0Healthcare Costs Per Capita:6,921
Rank:10State:KansasLife Expectancy:78.7Tax Friendliness Rank:16Violent Crime Rate Per 100,000:348.6COLI:90.9Healthcare Costs Per Capita:6,782

The Worst States for Retirement

Based on the same factors, we determined that some places are less desirable as retirement states. However, take a look at each factor individually. If one category is more important than another, it may affect your own personal thoughts on each state. For instance, even though it scored low in the other categories, Alaska was number one in tax friendliness.

10 Worst States for Retirement

RankStateLife ExpectancyTax Friendliness RankViolent CrimeCOLIHealthcare Costs Per Capita
Rank:50State:West VirginiaLife Expectancy:75.4Tax Friendliness Rank:46Violent Crime:302.0COLI:103.7Healthcare Costs Per Capita:$7,667
Rank:49State:TennesseeLife Expectancy:76.3Tax Friendliness Rank:48Violent Crime:608.4COLI:90.3Healthcare Costs Per Capita:$6,411
Rank:48State:South CarolinaLife Expectancy:77.0Tax Friendliness Rank:43Violent Crime:497.7COLI:97.5Healthcare Costs Per Capita:$6,323
Rank:47State:AlaskaLife Expectancy:78.3Tax Friendliness Rank:1Violent Crime:427.4COLI:133.5Healthcare Costs Per Capita:$6,272
Rank:46State:NevadaLife Expectancy:78.1Tax Friendliness Rank:21Violent Crime:635.6COLI:106.5Healthcare Costs Per Capita:$5,735
Rank:45State:New JerseyLife Expectancy:80.3Tax Friendliness Rank:51Violent Crime:261.2COLI:125.6Healthcare Costs Per Capita:$7,583
Rank:44State:MassachusettsLife Expectancy:80.5Tax Friendliness Rank:28Violent Crime:391.4COLI:130.4Healthcare Costs Per Capita:$9,278
Rank:43State:TexasLife Expectancy:78.5Tax Friendliness Rank:30Violent Crime:405.9COLI:92.6Healthcare Costs Per Capita:$5,924
Rank:42State:New YorkLife Expectancy:80.5Tax Friendliness Rank:30Violent Crime:381.8COLI:135.6Healthcare Costs Per Capita:$8,341
Rank:41State:WisconsinLife Expectancy:80.0Tax Friendliness Rank:45Violent Crime:290.3COLI:98.1Healthcare Costs Per Capita:$7,233

Best States for Retirement - Final Considerations

Though the facts and figures will lead you to the above best states, there are other things you should consider before choosing a place to retire. Some states that didn't make the top 10 list have more amenities that attract retirees. For instance, a Florida and California are popular retirement destination because of their comfortable climates and nearly constant sunshine.

If you are not yet at retirement age, it's important to start preparing for it as soon as possible. For instance, starting a 401(k) or an IRA account can open up your options when it comes to choosing a retirement destination.


America's Health Rankings


Bureau of Labor Statistics

The Tax Foundation

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