Posted by: Richie Bernardo

Retirement might be the end of the line, but it doesn’t have to be the end of financial security or life satisfaction. Timing is often a primary concern with retirement, as it generally coincides with the age at which we become eligible to draw Social Security or pension benefits. Hopefully the choice will be ours and not dictated by our circumstances — the unfortunate case for nearly a third of nonretirees who haven’t put away a single penny for retirement, though not necessarily through any fault of their own.

But in addition to when you want to retire, a good question to ask is where, which can be difficult to answer if you haven’t adequately planned for your golden years. Even in the most affordable areas of the U.S., most retirees cannot rely on Social Security or pension checks alone to cover all of their living expenses. Social Security benefits increase progressively with local inflation, but they replace only about 40 percent of the amount you earned if you were an average worker, according to the Center on Budget and Policy Priorities.

If retirement is still a big question mark for you because of finances, consider relocating to a state that lets you keep more money in your pocket without requiring a drastic lifestyle change. To help you find that permanent, affordable place to call home, WalletHub’s analysts compared the 50 states and the District of Columbia across 31 key indicators of retirement-friendliness. Our analysis examines affordability, health-related factors and overall quality of life. Read on for our findings, expert commentary and a full description of our methodology.

1. Main Findings
2. Ask the Experts
3. Methodology

Main Findings Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/18592/state-retirement.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2j4L5C1;

Overall Rank	State	Total Score	‘Affordability’ Rank	‘Quality of Life’ Rank	‘Health Care’ Rank
1	Florida	69.22	1	11	24
2	Wyoming	67.81	4	25	19
3	South Dakota	67.06	15	33	2
4	Iowa	66.26	26	6	5
5	Colorado	64.85	27	17	7
6	Idaho	64.12	14	31	16
7	South Carolina	64.00	7	37	33
8	Nevada	63.64	6	9	42
9	Delaware	63.59	10	40	25
10	Wisconsin	63.34	33	5	4
11	Pennsylvania	63.23	20	4	32
12	Montana	63.08	23	24	13
13	Arizona	63.04	21	16	21
14	Missouri	61.73	22	18	28
15	Michigan	61.69	28	12	26
16	Washington	61.31	31	20	17
17	Utah	61.25	25	35	18
18	Texas	61.11	3	36	44
19	Virginia	61.08	19	23	31
20	Georgia	60.55	11	32	41
21	Minnesota	60.49	45	2	1
22	Maine	60.41	37	7	14
23	North Carolina	60.27	18	26	37
24	New Hampshire	60.24	35	19	11
25	Ohio	59.59	24	22	36
26	Oregon	59.47	30	30	22
27	Kansas	58.83	34	14	23
28	Oklahoma	58.47	12	39	43
29	Tennessee	58.26	5	38	47
30	Nebraska	57.78	40	28	8
31	Illinois	57.15	32	15	38
32	California	56.90	42	8	20
33	Louisiana	56.74	9	43	46
34	Indiana	56.67	29	29	40
35	Massachusetts	56.58	47	3	10
36	Alabama	56.46	2	47	50
37	Maryland	55.73	39	21	27
38	North Dakota	55.09	43	42	6
39	West Virginia	54.48	13	44	48
40	Mississippi	54.48	8	49	51
41	New York	53.54	46	1	30
42	Arkansas	53.45	17	48	45
43	Kentucky	53.27	16	45	49
44	Vermont	52.79	48	10	12
45	New Mexico	52.61	36	41	39
46	New Jersey	52.55	41	27	35
47	Hawaii	51.85	50	34	3
48	Connecticut	51.34	49	13	15
49	District of Columbia	50.96	44	51	9
50	Alaska	50.82	38	50	34
51	Rhode Island	43.84	51	46	29

 

Ask the Experts

Choosing a place to settle for retirement requires careful consideration of various factors such as your finances, health and how you plan to spend your time. For advice on such matters, we turned to a panel of experts in fields such as aging and taxes. Click on the experts’ profiles to read their bios and responses to the following key questions:

1. 1. What is the most common mistake that retirees make when choosing where to settle?
   2. What are some tips for living on a fixed income in retirement?
   3. What are the top factors retirees should consider in choosing which state to retire in?
   4. Should states work to attract retirees? What are the pros and cons to having a large retiree population?
   5. Should retirees be exempt from certain state and local taxes?
   6. How might changes to the tax code influence retirement security?

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• Kirk Kinder Founder & President of Picket Fence Financial
• Patricia L. Currey Founder and CEO of Currey Financial Consulting, LLC
• Diane M. Pearson Wealth Advisor and Shareholder at Legend Financial Advisors, Inc
• Geoffrey J.D. Hewings Emeritus Director of the Regional Economics Applications Laboratory & Professor of Geography and Regional Science, of Economics, and of Urban and Regional Planning at the University of Illinois
• Timothy M. Hayes President of Landmark Financial Advisory Services, LLC and Member of The Garrett Planning Network, Inc.
• Aimee Drolet Rossi Professor and Marketing Area Chair in the Anderson School of Management at the University of California-Los Angeles

Kirk Kinder Founder & President of Picket Fence Financial

What is the most common mistake that retirees make when choosing where to settle?

I would say moving to an area after having limited exposure to that region. People often take a trip or two to an area, then decide to move there. Short vacations or visits don't really give you a true understanding of the region. I recommend spending a couple months as a renter, to really get a feel for the area.

What are some tips for living on a fixed income in retirement?

Make sure you have an emergency fund of some type. Fixed-income retirees can manage quite well, until an unexpected expense shows up. That throws their entire budget into jeopardy.

What are the top factors retirees should consider in choosing which state to retire in?

I think the qualitative factors should outweigh the quantitative. Does the area treat retirees well? Is there an opportunity to find friends or pursuits that fit your interests? Are the health care services strong?

Should states work to attract retirees? What are the pros and cons to having a large retiree population?

If I were a governor, I would work to attract retirees. These folks tend to have discretionary income which can help the service industries of a state. Beyond that, retirees tend to improve communities through charitable activities and giving time/treasure to the community.

Should retirees be exempt from certain state and local taxes?

Many states already do this. So, a retiree interested in finding a tax-friendly state has many options. Should it be mandatory -- no. I think each state should be able to decide how they want to run their state. Also, I don't think it is right to always give retirees breaks, when young families are struggling financially.

Patricia L. Currey Founder and CEO of Currey Financial Consulting, LLC

What is the most common mistake that retirees make when choosing where to settle?

Beyond the obvious financial issues (not doing enough research on the cost of living in the new place), I think the most common mistake is going someplace too far from family and friends. This probably depends upon whether this is an “interim” step, or a final stop along the way. I am a big fan of the continuing care retirement communities (CCRCs), but they may be out of reach for some. If you can afford it, this is a good alternative that would allow you to choose to be far from “home.”

I read something recently that I thought was good advice. Rent a house or condo in the new place initially, to find out if it’s the right place to settle. One year should tell you if you will have the visitors you expect, and if the area has everything to offer that you wanted.

What are some tips for living on a fixed income in retirement?

Start now with tracking your expenses. Use a financial program. I am not suggesting that you have to budget every dollar, but you might be surprised how many people have no idea of where their money goes. With this information, you can make adjustments along the way to avoid a more serious problem.

What are the top factors retirees should consider in choosing which state to retire in?

Taxes, cost of living, distance from family and friends, weather, availability of quality health care and CCRCs. Crime rates and availability of senior services clearly are important.

In evaluating the best states to retire, what are the top five indicators?

Crime, health care, weather, social scene for seniors, cost of living.

Should states work to attract retirees? What are the pros and cons to having a large retiree population?

No. Cities need a diverse population to balance services and quality of life. Providers of services are needed as much as consumers of those services. Same with housing and taxes, schools and government.

Should retirees be exempt from certain state and local taxes?

No. I am a firm believer that everyone should pay their way.

How might changes to the tax code influence retirement security?

I think it’s too soon to know the ins and outs of the changes. Overall, I don’t think it’s a significant negative (although people will complain about losing tax deductions). Lower rates should equalize any of these deductions, and I hope it’s a step toward a more straightforward tax system. I believe that breaks for business will ultimately lead to a better retirement for workers through a better economy, earnings and investments.

Diane M. Pearson Wealth Advisor and Shareholder at Legend Financial Advisors, Inc

What is the most common mistake that retirees make when choosing where to settle?

Many retirees do not take into consideration the income tax and estate (inheritance) tax that can affect them long-term. Many of our clients reside in Pennsylvania; when they retire, some desire to move to a “warmer” state. We will do an analysis for them to understand what the income tax complications will be. Pennsylvania does not tax retirement plan distributions. We also evaluate their estate. Pennsylvania does have an inheritance tax that many states do not, but other states may have a more expensive probate process.

What are some tips for living on a fixed income in retirement?

Cash flow discipline can be difficult if a client never practiced it while they were working. Working with an advisor and determining a reasonable annual cash flow need and distribution game plan is crucial.

What are the top factors retirees should consider in choosing which state to retire in?

Cost of living, income tax rates and estate complications.

Should retirees be exempt from certain state and local taxes?

My experience has been that most states do not have a local tax on retirees. The state tax question is tricky because every state is different.

Geoffrey J.D. Hewings Emeritus Director of the Regional Economics Applications Laboratory & Professor of Geography and Regional Science, of Economics, and of Urban and Regional Planning at the University of Illinois

What is the most common mistake that retirees make when choosing where to settle?

Choosing a place based on vacation stays.

What are some tips for living on a fixed income in retirement?

Developing a realistic post-retirement budget, and recognizing that medical expenses are likely to consume a larger share of expenses (some tomatoes suggest double).

What are the top factors retirees should consider in choosing which state to retire in?

• How does the cost of living vary from current location -- understanding total taxes (state, local, property), utility expenses, etc.
• Access to family.
• Do you have a network in the new state?
• Quality and availability of appropriate medical care.
• Opportunities for post-retirement employment (labor force participation rates among those above 65 are growing rapidly, as many retirees find that they do not have sufficient funds to afford them a comfortable lifestyle).

In evaluating the best states to retire, what are the top five indicators?

• How well are retirees treated?
• Does the state/community have an office on aging (those above 65 will represent 20 percent of total populations by 2030), and are there opportunities for continuing education?
• Part-time and full-time job opportunities, especially for older workers.
• State and local tax policies.
• Are their appropriate specialists in the medical community?

Should states work to attract retirees? What are the pros and cons to having a large retiree population?

Pros -- yes, if they represent 20 percent of the population, there should be a careful evaluation of their economic contribution:

• Spend more on medical expenses -- generates the largest employment ripple effect of any industry sector.
• Have significant disposable income.
• Contribute to taxes, but do not consume many services (such as education).

Should retirees be exempt from certain state and local taxes?

No -- since they consume services (e.g., use of EMT services may be much higher).

How might changes to the tax code influence retirement security?

Deductibility of state and local taxes/mortgage interest may not be a problem, since many seniors have paid off mortgage. Changes in taxation of investment income may positively affect total retirement income.

Timothy M. Hayes President of Landmark Financial Advisory Services, LLC and Member of The Garrett Planning Network, Inc.

What is the most common mistake that retirees make when choosing where to settle?

Moving to a new area or city simply on the basis of a single attractive feature (like the weather, for instance) -- without first investigating the area or visiting for a long enough time beforehand, to know for certain that you’d like to live there.

What are the top factors retirees should consider in choosing which state to retire in?

In order of priority/importance:

• Availability of health care and support services;
• Proximity to family;
• Ease of travel (and/or access to mass transit).

In evaluating the best states to retire, what are the top five indicators?

• Recreation;
• Education;
• Culture;
• Weather;
• Taxes.

Should retirees be exempt from certain state and local taxes?

Yes, they should either be exempt from school taxes, or subject to a much lower assessment than a family with children in the school district.

Aimee Drolet Rossi Professor and Marketing Area Chair in the Anderson School of Management at the University of California-Los Angeles

What are the top factors retirees should consider in choosing which state to retire in?

It is not that clear now, especially with the GOP tax bill, which punishes certain states that have traditionally been attractive to retirees. California, for example, may now be too expensive for many people (not just the elderly) because of the SALT provision. However, unlike other states, California provides additional health care coverage for poorer residents (who already enjoy lower tax rates in California, compared to wealthier residents). California was likely more attractive to folks sending kids to college, since state tuition is much lower here than in states, like Illinois. Note that many states, such as Oregon, have deals so that people earning income in California cannot avoid California state taxes by moving. Apart from that angle, seniors are attracted to milder climates, culture, and good health care.

In evaluating the best states to retire, what are the top five indicators?

In my view, they would be:

• Quality and affordability of health care;
• States with a progressive (rather than regressive) income tax;
• Milder climate, especially in view of climate change;
• Culture (things to do that also promote socializing, which is the most important way to retain cognitive health);
• Proximity to caregiving services (relatives or others).

One of the craziest things to do is to lump together all older adults ages 60-90. Life expectancy is around 86. Age 80 is when most severe cognitive decline is likely to occur. Bottom line is that people may be wiser to choose one location for 65-75, and then another. We spend most of our lives as "elderly adults," but it is such a rich period. It would be strange to force a 20-year-old to commit to a location for 25 years.

Should states work to attract retirees? What are the pros and cons to having a large retiree population?

Yes. Research indicates that older workers are more accurate and perform better (so long as they have more time) compared to young adults. That experience is remarkably valuable, and businesses are wise to tap that resource. The only con I'd see to a large retiree population would be if younger workers were supporting them (for example, through payments to pensions). For example, in Japan, there are nine elderly adults for each young adult. It's a major burden on the economy. Since older adults (Baby Boomers) have more money than any other segment, I don't see what the drawback would be (economically speaking).

Should retirees be exempt from certain state and local taxes?

No. In a state with a progressive income tax, that is meant to help take care of poorer residents, there is absolutely no compelling reason for them to not pay taxes. Also, in many states, they already enjoy lower property taxes because assessments don't catch up with market values (California is an excellent example of this).

How might changes to the tax code influence retirement security?

SALT and the inability to deduct more than 10k are the biggest shocks to the system right now. However, the removal of the individual mandate will affect seniors' premiums (going way up), and that kills any positives coming out of the tax bill. Seniors don't use the child deduction. Not being able to deduct full costs of medical care -- another killer.

Methodology

In order to identify the most retirement-friendly states, WalletHub’s analysts compared the 50 states and the District of Columbia across three key dimensions: 1) Affordability, 2) Quality of Life and 3) Health Care.

We evaluated those dimensions using 31 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for retirement.

We then calculated the overall score for each state and the District using its weighted average across all metrics and constructed our final ranking based on the resulting scores.

Affordability – Total Points: 40

• Adjusted Cost of Living: Double Weight (~16.00 Points)
• General Tax-Friendliness: Full Weight (~8.00 Points)Note: This metric is based on WalletHub’s States with the Highest & Lowest Tax Rates ranking.
• Tax-Friendliness on Pensions & Social Security Income: Full Weight (~8.00 Points)
• Annual Cost of In-Home Services: Half Weight (~4.00 Points)
• Annual Cost of Adult Day Health Care: Half Weight (~4.00 Points)

Quality of Life – Total Points: 30

• Share of Population Aged 65 & Older: Full Weight (~2.14 Points)
• Elderly-Friendly Labor Market: Full Weight (~2.14 Points)Note: This metric takes into account both the percentage of people aged 65 and older working and the number of part time employees for every full time employee for people aged 65 and older.
• Share of Population Aged 65 & Older Below Poverty Level: Full Weight (~2.14 Points)
• Access to Public Transportation: Full Weight (~2.14 Points)Note: This metric measures the percentage of commuters who use public transit as a proxy for the availability of public transportation.
• Mildness of Weather: Double Weight (~4.29 Points)Note: This metric is based on WalletHub’s Cities with the Best & Worst Weather ranking.
• Museums per Capita: Full Weight (~2.14 Points)Note: This metric was measured by the square root of the population.
• Theaters per Capita: Full Weight (~2.14 Points)Note: This metric was measured by the square root of the population.
• Golf Courses Capita: Full Weight (~2.14 Points)Note: This metric was measured by the square root of the population.
• Access to Adult Volunteer Activities: Full Weight (~2.14 Points)
• Violent-Crime Rate: Full Weight (~2.14 Points)
• Property-Crime Rate: Full Weight (~2.14 Points)
• Quality of Elder-Abuse Protections: Full Weight: Full WeightNote: This metric is based on WalletHub’s States with the Best Elder-Abuse Protections ranking.
• Air Quality: Half Weight (~1.07 Points)
• Drinking-Water Quality: Half Weight (~1.07 Points)Note: This metric measures the percentage of the population potentially exposed to water exceeding a violation limit.

Health Care – Total Points: 30

• Family & General Physicians per Capita: Full Weight (~2.61 Points)
• Dentists per Capita: Full Weight (~2.61 Points)
• Nurses per Capita: Full Weight (~2.61 Points)
• Health-Care Facilities per Capita: Full Weight (~2.61 Points)
• Quality of Public Hospitals: Full Weight (~2.61 Points)Note: This metric is based on Centers for Medicare & Medicaid Services’ ranking of public hospitals.
• Emotional Health: Half Weight (~1.30 Points)
• Share of Population Aged 65 & Older with Health Insurance: Full Weight (~2.61 Points)
• Share of Population Aged 65 & Older with Good or Better Health: Full Weight( ~2.61 Points)
• Share of Population Aged 65 & Older with a Disability: Full Weight (~2.61 Points)
• Share of Population Aged 65 & Older Who Are Physically Active: Full Weight (~2.61 Points)
• Life Expectancy: Full Weight (~2.61 Points)
• Death Rate for Population Aged 65 & Older: Full Weight (~2.61 Points)

 

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Federal Bureau of Investigation, Council for Community and Economic Research, U.S. Bureau of Labor Statistics, Retirement Living Information Center, Genworth Financial, United Health Foundation, County Health Rankings, Measure of America, Centers for Disease Control and Prevention, Centers for Medicare & Medicaid Services, Charity Navigator, Gallup Healthways, GolfLink and WalletHub research.

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