Choosing the best place to retire is a personal decision. No
amount of number-crunching can make it for you. Only you can decide how
close to your grandkids you want to live or whether you want to
hit the road or even
head abroad.
However, an examination of some of the objective factors that matter to
retirees--in particular those tied to safety and economic security--can
help you narrow the options. With this goal in mind, we rated all 50
states and the District of Columbia in terms of how well each suits the
unique needs of retirees.
Our rankings favored states that are affordable and
economically healthy, as well as those with lower crime rates. We also
took into account the presence of a robust retirement-age population.
Finally, we weighed the tax situation for retirees in each state. Note
that we did not account for weather because some retirees yearn for
year-round warmth while others might prefer the changing seasons.
SEE ALSO: Cheapest Places You'll Want to Retire
We
found the worst places for retirees scattered throughout the country.
And though they are geographically diverse, they have one thing in
common: All have above-average living costs that can strain fixed
incomes. The following states might be great places to work, raise a
family or visit, but they hold the least appeal when judged strictly as
retirement destinations.
10. Texas
Total population: 25.6 million
Share of population 65+: 10.7% (U.S.: 13.4%)
Cost of living: 1.5% above the U.S. average
Average income for 65+ households: $49,842 (U.S.: $48,665)
Retiree tax picture: FriendlyRetirees
may feel lonely in the Lone Star State. Just two other states have a
smaller percentage of residents age 65 and older. In fact, the median
age in Texas is a strapping 33.8 years old, the third-youngest in the
country (the U.S. median age is 37.3).
Another deterrent for
retirees: The poverty rate for seniors is 11.3% in Texas, compared with
9.4% in the U.S., and the overall state poverty rate is 17.6%, versus
15.4% for the U.S. Texans of all ages must also cope with above-average
crime rates.
Certain metro areas rise above the state's drawbacks: The city of Sherman actually made our list of
Cheapest Places Where You'll Want to Retire, due to the metro area's low costs and the state's tax-friendliness for retirees. We also recommend
Austin as a great place for golfers to retire, based on its 32 public courses and low greens fees.
9. Utah
Total population: 2.8 million
Share of population 65+: 9.3%
Cost of living: 3.4% above average
Average income for 65+ households: $48,925
Retiree tax picture: Not FriendlyThe
Beehive State may be buzzing with life, but it's not necessarily the
style retirees are seeking. Utah's population has the second-lowest
share of people 65+ in the U.S., trailing only Alaska. Indeed, it's the
youngest state in the country, with a median age of 29.6, nearly eight
years younger than the national median. That small pool of older
residents is also 63.8% married--the highest share in the U.S.--which
may make Utah particularly unattractive for single retirees.
High
costs are another detractor. The median home value for the 65-and-up
population in Utah is $203,300, 23.7% higher than the U.S. median of
$164,400. Unfriendly state tax laws for retirees add to their burden:
Utah is one of the few states that taxes Social Security benefits.
SEE ALSO: Worst Social Security Mistakes You Can Make
St. George, however, offers a pocket of affordability in Utah. The metro area made our list of
Cheapest Places Where You'll Want to Retire, due to extraordinarily low living costs reported by local retirees, not to mention the natural scenery and outdoor lifestyle.
8. Oregon
Total population: 3.9 million
Share of population 65+: 14.5%
Cost of living: 14.3% above average
Average income for 65+ households: $39,872
Retiree tax picture: Least Friendly
Taxes in the Beaver State gnaw away at fixed incomes. Among the
10 Least Tax-Friendly States for Retirees,
Oregon levies one of the highest state income tax rates in the country,
ranging from 5% to 9.9%. And although Social Security benefits are
exempt, most other retirement income is taxable. Not that there's much
to tax. Oregon seniors bring in below-average household incomes--18.1%
less than the national average of $48,665, to be exact. There is no
state sales tax.
Despite low incomes, expenses are high. In
addition to the overall high cost of living, the median home value in
Oregon for seniors is $227,400, versus $164,400 for the U.S. as a whole.
At least you can defer paying property taxes if you are age 62 or older
and meet income requirements. But when you sell, move or die, those
taxes will come due.
Oregon's rate of property crime is above average, as is the state's overall poverty rate.
7. Nebraska
Total population: 1.8 million
Share of population 65+: 13.7%
Cost of living: 2.0% above average
Average income for 65+ households: $39,441
Retiree tax picture: Least Friendly
The
smallest state on this list (not counting the District of Columbia)
offers equally small incomes. Despite being home to billionaire Warren
Buffett, Nebraska's typical household income is woefully below average.
Aging Cornhuskers have the lowest average household income on this list,
at 19.0% less than the national average.
Those low incomes may now get retirees a break on taxes, at least. Though it's currently one of the
10 Least Tax-Friendly States for Retirees,
starting in 2015 Nebraska has introduced new rules exempting some
residents from paying taxes on Social Security benefits, depending on
income. Otherwise, benefits are taxed to the same extent as the federal
rate. There are no breaks for most other retirement income. Also,
there's an inheritance tax of 1% to 18%, depending on the beneficiary's
relationship to the deceased.
SEE ALSO: 9 Reasons Women Will Never Retire
On
the plus side, rates of both violent crimes and property crimes come in
below the national average, as do Nebraska's poverty rates for both
seniors and the general population.
6. North Carolina
Total population: 9.7 million
Share of population 65+: 13.4%
Cost of living: 2.1% above average
Average income for 65+ households: $39,769
Retiree tax picture: Mixed
The
mild winters and pretty scenery may not be enough to lure you into Tar
Heel country. Typical household incomes in North Carolina don't track
with the state's above-average living costs. The average for all
households is $64,490, the second-lowest among the 10 states we examine
here and 14.0% less than the U.S. average. Older residents fare even
worse, with income for 65+ households falling 18.3% below average.
Poverty
is a concern. Ten percent of seniors live below the line, versus 9.4%
nationwide. More troubling, the poverty rate for the whole state is
17.5%, compared with 15.4% for the U.S. Property crime in North Carolina
is above average.
As for taxes, besides Social Security benefits,
which are exempt, most other retirement income is subject to tax.
Effective in 2015, North Carolina switched to a flat income tax rate of
5.75%. There is no inheritance tax or estate tax, and older homeowners
may qualify for a property-tax exemption.
5. Minnesota
Total population: 5.3 million
Share of population 65+: 13.3%
Cost of living: 3.6% above average
Average income for 65+ households: $41,991
Retiree tax picture: Least Friendly
The Land of 10,000 Lakes may drown retirees in taxes. Yet another of the
10 Least Tax-Friendly States for Retirees,
Minnesota taxes Social Security benefits the same as the feds. Most
other retirement income, including from military, government and private
pensions, is also taxable. And the sales tax and income tax rates are
high, at 6.875% and 5.35% to 9.85%, respectively.
Most older
residents won't have to worry about those top tax rates. The average
household income for Minnesotans 65 and older falls 13.7% below the U.S.
average--and far beneath the thresholds for the highest tax bracket.
SEE ALSO: 11 Common Medicare Mistakes
Yet
the state's cost of living is above average. According to health care
research firm HealthView Services, lifetime health care costs for a
healthy 65-year-old couple retiring this year and covered by Medicare
parts B and D and a supplemental insurance policy total $403,562 in
Minnesota. The U.S. average is $394,954. And the median home value for
65+ homeowners is $173,600, compared with $164,400 for the U.S.
4. New York
Total population: 19.5 million
Share of population 65+: 13.8%
Cost of living: 52.7% above average
Average income for 65+ households: $61,754
Retiree tax picture: Least Friendly
One pricey Big Apple spoils the entire Empire State. In 2014, the city reigned as the
most expensive place to live in the U.S.,
with costs soaring 120.4% above the national average. New York also
sports the highest living costs of any state in the country. No wonder,
despite the above-average incomes of residents age 65 and older, the
same age group suffers a poverty rate of 11.3%, worse than the national
9.4% rate.
Health care and housing are notably expensive in New
York. A healthy 65-year-old couple retiring this year will face lifetime
health care costs totaling $413,597, the most expensive on this list
and 4.7% higher than average. New York has the second-highest median
monthly rental costs for seniors after California on this list,
according to the Census Bureau. And the median value of a home owned by
someone 65+ is $270,600 in the state, compared with $164,400 in the U.S.
Homeowners also face some of the highest property taxes in the country.
3. New Mexico
Total population: 2.1 million
Share of population 65+: 13.8%
Cost of living: 3.6% above average
Average income for 65+ households: $42,160
Retiree tax picture: Mixed
When
it comes to taxes, the Land of Enchantment presents a lackluster
reality to its retired residents. Social Security benefits are subject
to tax, though at least some of the income can be included in an
exemption allowed for people age 65 and older. There's also a statewide
gross receipts tax (similar to a sales tax) of 5.125%. County and city
taxes can add another 3.56%.
Other notable negatives: Safety may
be an issue. For every 100,000 residents in New Mexico, there were 3,705
property crimes, including burglary and car theft, and 613 violent
crimes, such as rape and murder, in 2013. (Comparatively, across the
U.S., 2,731 property crimes and 368 violent crimes occurred per 100,000
people.) The poverty rate for older residents is also high at 12.1%,
versus 9.4% for the U.S.
SEE ALSO: 6 Savvy Moves to Stretch Your Retirement Savings
If you're eyeing the Southwest for its sunny climate and multicultural vibe, check out
Arizona, one of our
10 most tax-friendly states for retirees,
instead. The Grand Canyon State does not tax Social Security benefits,
prescription drugs or groceries, and its top income tax rate of 4.54% is
lower than New Mexico's 4.9%.
2. California
Total population: 37.7 million
Share of population 65+: 11.8%
Cost of living: 34.7% above average
Average income for 65+ households: $60,440
Retiree tax picture: Least Friendly
Another one of
the least tax-friendly states for retirees,
the Golden State could be a foolish retirement choice. Except for
Social Security benefits, retirement income is fully taxed, and
California imposes the highest state income tax rates in the nation (the
top rate is 13.3%). The current state sales tax of 7.5% is also
daunting. The sales tax can reach as high as 10% in certain cities and
counties that collect additional local levies.
If that doesn't
burden your budget enough, living costs will likely add to the stress.
The biggest state in the country bears the third-highest cost of living,
behind New York and the District of Columbia. The median home value for
those 65+ in California is $368,600, more than double the national
median. Retirees who rent will fare no better: Monthly rental costs for
renters 65 and older are the steepest in the nation.
1. District of Columbia
Total population: 619,371
Share of population 65+: 11.4%
Cost of living: 39.9% above average
Average income for 65+ households: $90,755
Retiree tax picture: Not Friendly
America's
seat of power is no place to retire. Spanning just 68.3 square miles,
the District's population is tiny, and only a small share of those
residents are 65+--a total of 70,363 people. The median age in D.C. is a
green 33.8 years old, compared with 37.3 for the U.S., which makes the
metro area a better choice for
new grads than for retirees.
The nation's capital has the second-highest cost of living in the U.S. after New York, and the greater metro area is among the
most expensive in the country.
Specifically for folks 65 and older, the median home value is $424,400,
the highest on this list and second only to Hawaii. And though it
boasts the highest average income for 65+ households in the country--the
D.C. area is
home to a great many millionaires--it
also suffers a painfully high 14.0% poverty rate among seniors (tied
with Mississippi for most impoverished). Violent crimes occur at 3.5
times the national rate, and the property crime rate is also higher than
average.
High taxation (without representation, no less) is
another deterrent. D.C.'s top income tax rate is 8.95%, among the
highest in the country, according to the Tax Foundation. The sales tax
is 5.75%. One bright spot on taxes: Social Security benefits, as well as
up to $3,000 of military, federal and D.C. pensions, are tax-exempt.
Culled from kiplinger in yahoo finance