Which States are the Best For Retirement?23 min readReading Time: 19 minutes
Planning your retirement starts with knowing how different states meet your financial capabilities and needs. Safety, taxes, healthcare capacity, quality of life, and affordability are the main things to look for before relocating. If you have the means to move from your current home, it makes sense to relocate to a state that is better suited for your new lifestyle. Senior citizens are constantly looking for affordable quality healthcare, yet not all access the same quality care because of where they live. Moving will allow you to live in a state with lower tax burdens and overall better life in terms of finances. You also get to meet your peers, which most retirees look forward to when joining a new community.
Best States to Retire In
If you account for different factors like safety and wellness and assess your needs, you will find the best state to relocate to. All 50 states have the not-so-good points and the good points when it comes to retirement. How to approach retirement questions will be answered once you find a suitable home. Know what you can compromise with your limited finances and what you can before relocating. These are some of the best states to retire in.
No state is associated with retirees more than Florida. Aside from nice weather, it has a high population of people aged sixty-five years and older. That means there are many retirement community homes to choose from. The state is extremely retirement tax-friendly, meaning pension income, social security retirement benefits, and any other income will be untaxed. Also, withdrawal from retirement accounts will not be taxed. This alone can mean thousands in tax savings for you compared to other states. Healthcare is favorable for seniors, and it’s easily accessible. The nice weather will also provide you with endless things to do throughout the year. The state also scored well on culture; it’s the total package for most retirees, which is why it has more 65-year-olds than any other state.
There is also no state income tax in Texas; retirees will not worry about paying taxes on their retirement incomes. Your savings will last longer, and you can focus the money on other pressing things like healthcare. However, if you have other income on top of the social security, it will be subject to federal taxes. Relocating there will be beneficial, especially if you live in an unfavorable state that can’t sustain your lifestyle after retirement. The thriving state is full of cultural activities that allow you to explore new things. Property tax in Texas is one of the highest among all the states. You should consider whether that is a deal-breaker or not based on your budget and financial position. However, the state helps the elderly to finance property taxes through exemptions for senior citizens. Aside from the unfavorable property tax, it ranks highly because of many other factors that favor retirees.
3. West Virginia
West Virginia is the third best state for retirees for a reason. The state hosts several senior home communities and nursing homes. Affordable homes are also one of the most attractive features of the state. You will not lack access to quality healthcare. As you know, all of these states have their good and bad side. West Virginia has high retirement income tax for some of the residents. But seniors can claim deductions to offset some of the tax on social security benefits and other incomes. You may also lack something to do during the cold winter months. However, everything comes down to the cost of living, and the state can sustain you in your limited income when you retire. You also need to take into account other factors like lifestyle and safety. Their crime rate isn’t highly rated; unlike other states, it’s easy to establish roots after retirement.
Nevada is the best for a retiree looking to make their savings last a long time. Withdrawals on any retirement accounts are not taxed the same as social security benefits. The state also doesn’t have any income tax when your spouse is working, or you have children living with you. Retirees or seniors pay property tax. There are no tax exceptions based on retirement or age in the state when it comes to property. However, the property tax is determined at the county level, so you can shop for property in a tax-friendly county. Nevada also has relaxed gambling laws and a lot of recreational facilities for seniors. That also means gambling addiction is a serious issue in the state. The senior population is favorable; it will be easy to form a community if you relocate to Nevada. The city you decide to settle in should have favorable healthcare facilities that can be easily accessed.
5. New Hampshire
New Hampshire doesn’t have an individual income tax, which means all the benefits and income will go untaxed. As much as the retirement income is not taxed, you might owe the state some taxes if you have investment income. If you want to relocate based on finances and cost of living, this state should be an option. But you should know that if you have plans to buy a retirement home in the state, you will pay one of the highest property taxes in the USA. With regards to financial factors that are most critical to retirees, it’s a worthy destination. You can take advantage of the non-existent personal income tax to hold on to your savings for longer. Also, most seniors enjoy the rural areas away from the city crowding. New Hampshire has the second-lowest crime rate in the country. The family physicians per capita are the fourth highest. All these factors make the state financially favorable for you.
There are several towns and cities in Wyoming that are popularly known for retirement communities. The state has well-funded social and health programs for senior people. It’s a tax-friendly destination because of the absence of income tax. The sales tax in Wyoming is among the lowest in all the fifty states. That will affect your cost of living positively. You can save more with these rates and make your retirement a comfortable process financially. No other taxes will significantly affect your retirement aside from the sales, property, and income tax, and they are all significantly low. Also, the number of retirees in the state keeps increasing; integrating into a peer community will be easy. There is no shortage of recreational and fun activities for older people in Wyoming. Despite all the goodness the state has to offer, you must have a financial retirement plan.
Idaho State is the number seven destination for retirees due to the low medical costs and cost of living compared to other states. The tax benefits for the seniors are also a reason to consider the state for your perfect retirement. Unlike most states in this list, Idaho has taxes on some retirement incomes, but they are low. The state is a mixed bag when it comes to taxes because the sales and property taxes are low, which can be consoling even if the income tax exists. But in overall statistics, the state offers a low cost of living. It’s still a viable option when you are keen on your finances during retirement. The state has low criminal rates, lower than the national average, which adds to why most people retire there. Safety is a priority for many people; if you feel the same way, you should consider Idaho for retirement.
Taxes are necessary, both state and federal taxes; when retiring, you have to find a state with the most favorable rates like Pennsylvania. House affordability also makes the state suitable for a senior person. There are a lot of quality senior housing homes and communities to pick from. When you are a resident, your retirement income will not be taxed. The city of Lancaster in the state was ranked the second best to retire because of affordability and other factors. Most retirees these days receive private or public pensions. Neither of the two pensions is taxed in Pennsylvania. It’s one of the most generous states, which makes it perfect for someone who is retiring. In the state, once you pass 65 years, you might be eligible for a rebate on the housing costs whether you are renting or own a home.
Eighteen percent of the total population in Arizona are adults who are sixty years and above. There are endless housing and other facilities for the elderly. During the winter months, the senior population grows by almost three hundred thousand retirees seeking a temporary settlement for the winter. You will also catch major tax breaks when you decide to relocate there. The state doesn’t tax social security benefits. It will make a significant impact if you will be living on savings when you retire. There is no inheritance, estate, and gift tax. The existing taxable incomes receive low rates to make it easy for the resident. However, you should know that private pensions will be fully taxed. For military or federal government pension, the first $2,500 will be exempted. The weather is also a big attraction.
Oklahoma’s cost of living is almost below the national average. When you are on a fixed income, you will enjoy the affordability. Property tax is very low; retirees who are looking to make the state their permanent home will not have a hard time. They also provide a full exemption on the social security income. Moving to Oklahoma will be a fair bargain because even if the sales taxes are high, the property tax is low. You will manage to make ends meet even under a strict budget. Seniors in the state can freeze the tax valuation increase when they meet certain income requirements. Homestead exemption is also a tax benefit that exists for seniors and retirees. Unfortunately, sales tax in the state applies to groceries which is not the case for many other states.
Worst States to Retire In
It is important to identify favorable locations for retirement, as the first half of the article described. It’s also equally essential to identify the least desirable states for retirement. Savings, income, and retirement financial planning should be the drivers in choosing a retirement state. But you also have to consider other things like overall wellness, hobbies, and interests. To determine whether a state is not suitable for retirees, cost of living, tax, healthcare availability, and quality must be examined. When it comes to your safety, health, budget, and overall quality of life, the state you live in matters. Read on to find out some of the worst states for retirees.
Connecticut is not very tax-friendly towards retirees. Withdrawals are fully taxed, and social security is partially taxed. The state also has very high property taxes compared to other states in the U.S. healthcare, and the overall cost of living is very expensive. A retiree wanting to survive on benefits and savings will have a hard time. The weather isn’t favorable for most part of the year, which is also a deal-breaker for many. But their life expectancy is the second-highest in the nation. The state can’t be affordable for low-income earners, retirees, and seniors. The state only exempts the social security tax on seniors with Adjusted Gross Income below a specific level. You should always go for states with zero retirement income tax if you want to save money.
If you are attracted to Oregon’s natural attractions, you should know you will pay dearly for your spot in the state. Many Americans have flooded in the state for years because of the profitable tech jobs. The influx of new people has increased the cost of living dramatically. Only Hawaii, Alaska, and California are more expensive. Senior and retiree facilities are not an exception; you will pay the same as every other resident. You will also pay very high state taxes on retirement income. With the cost of living and taxes, you will go through your savings in no time. There is a serious struggle in finding housing. Even in the rural areas, the landlords are hiking rents to accommodate the growing population. However, it’s not all bad; cultural diversity can be interesting, and there is always something to do in the state.
Most analysts don’t agree with Colorado’s appeal to senior and retiring citizens. The cost of assisted living is higher than the national average. Their cost of living is also one of the highest except for a few states. Being cautious with money is part of retirement; it will be difficult to survive on savings if you relocate to Colorado. Other people consider Colorado among the best states for retirees because they are among the best in delivering quality elderly healthcare. The downside is the facilities and services will cost you a lot. Finding a community will not be easy because less than ten percent of the population comprises 65-year-olds and above. Crime is also a major concern in the state. Your lifestyle will be highly interrupted unless you have unlimited funds. The income tax system will allow a large cut on all retirement incomes.
Retirement income is fully taxed in California, and you should know the state has the fifth-highest income tax nationally. The only exception is the social security benefits. The golden state has quality healthcare facilities and vibrant cities, but it’s one of the most expensive places to live in the U.S for anyone. It will be even harder for a retiree with stretched funds to survive there. The sales tax is exceedingly high; that’s why the cost of living is high too. You also have to consider that homeowner’s insurance is a must. The state is disaster-prone; wildfires can threaten your retirement home. Not to mention heatwaves, landslides, and earthquakes that can occur at any time. You should consider the state your ideal retirement destination if you can manage the taxes and still live comfortably.
Nebraska spilled down the rankings because of the highest insurance premiums nationwide. A single health incident can cost you almost everything. Affordable health insurance is on the top of every retiree’s list. The state has quality healthcare, but it comes at a very high cost. It’s not tax-friendly because of the steep property and income for retirees. The state also taxes any retirement social security income that the federal government taxes. The state is also among a handful of states that have an inheritance tax. Aside from the high taxes, the weather is not favorable. If you want to spend your retirement comfortably, you have to stay most of the time indoors. The cold is not pleasing, but the winds are worse. It may affect your health and overall quality of life.
6. New York
Retirement in the Empire State will present you with a lot of challenges. Residents experience some of the highest local and state taxes in the country. But the senior citizens are normally eligible for tax relief programs. The housing costs are also outrageous, especially for you if you are living on savings. It is hard to find even a studio apartment that costs less than $1,500, and even if you do, it will be tiny. The unaffordable state, however, may be favorable for healthcare accessibility. You need to assess your priorities and needs before choosing a state. Even the fast-paced life in New York may not be desirable to retirees. Most look for rural areas to enjoy some peace and quiet. Rural New York, unfortunately, is plunged with the same high cost of living. If your wealth allows, you can give the state a shot in your retirement plan.
Aside from the long and very cruel winters, Vermont is very expensive. Vermont will give you quality healthcare in your vulnerable years but at unfavorable rates, especially if you depend on savings. The state also taxes most of the retirement income you will be receiving, including social security benefits. Federal railroad retirement benefits are the only ones that are exempted. Other public and private pensions are taxable. Property taxes are very high, but the sales taxes are significantly below average. The upside of relocating to Vermont is the natural attractions that favor active and outdoor retirees. When you look at it from a financial standpoint, you will realize the retirement will not go as smoothly as you wish. The food and fuel prices rival New York City if they are not higher. That means the affordability rate is very low for most senior and retired citizens.
8. North Dakota
Social security is taxed in the state the same way it is federally. The property tax and sales tax rates are very close to the national average. The state has a very low population density, and only less than fifteen percent are 65 years and above. Finding the same peer groups will be difficult, but it also means you will have ample spaces, and you can avoid the city crowing. The retirement taxes will make it difficult to hold on to the little money you have because the cost of living is not favorable. Pension and retirement accounts are all taxed. Thankfully they have affordable housing retirees can acquire. You may consider relocating there if you want to buy a home in your retirement plan. What makes the state least attractive is the social security, pension income, and retirement accounts taxes. You have to consider every aspect if you want to avoid moving again after staying in a state for a short time.
Taxes are the number one complaint from most residents and analysts. The high property taxes are seen as unaffordable for many people. The state also has unfunded pension liabilities, long-term debt, and huge debt imbalances. These are some of the complications that make the state unfavorable for retirees. If you have to stay in the state, ensure you check to see if you are eligible for any tax-relief programs. It’s one of the worst places to be a taxpayer; to survive, you have to take advantage of every relief available. Also, outdoor living is a challenge most part of the year because of the frigid winters and humid summers. The state also ranks highly in violent crime rates. The lagging public health, climate, crime, and financial issues of the state are what make it unfavorable for you. If you cannot make it, consider moving to a more favorable state.
10. New Mexico
Retirement account distributions, pension pay-outs, and social security are all taxed in New Mexico. The sales taxes are also above average, but their property taxes are a little low. However, nearly twenty percent of the residents live below the poverty line. The unwealthy state also comes with high crime rates. The crime rate is almost double the national average. Financial safety and security are a priority when you are considering retirement states. However, if you retire in this state, you might encounter a low cost of living. But you should be prepared to pay the retirement income taxes. It will be very difficult to make monthly payments if you move there with high-interest debts. Accessing quality healthcare will also be an issue. Not to mention the dry air and altitude that is problematic to most people.
11. Rhode Island
Rhode Island is at the bottom of the list because of the above-average cost of living. However, aside from Massachusetts, the state has more doctors per person than any other state. But not everyone can afford to enjoy the healthcare benefits. Their taxes are also high, with property tax being the highest. Social security benefits are taxed but only on wealthier seniors. Considering that the state is not in great financial shape, you can’t expect things to change any time soon. You will continue paying full taxes on retirement account withdrawals and partial taxes on social security. Unless the state you are in is worse in terms of taxes and cost of living, consider retiring there rather than moving to Rhode Island. But the state will be bearable if you have a lot of cash to afford healthcare and housing in your golden years.
Worst States to Retire In
Medical expenses take a big part of the retirement budget. Choosing a state to retire in should also be based on how affordable elderly healthcare is, the quality, and accessibility. This data will help you make a safe financial choice that will help you live comfortably even with limited funds. According to Medicare, this is how the states ranked with the health cost, quality, and accessibility.
1. Assisted living or nursing home per capita
Best state: Wisconsin
Worst state: Vermont
2. Out-of-pocket spending
Best state: Utah
Worst state: Washington, D.C
3. Average Medicare premium advantage
Best state: South Carolina
Worst state: North Carolina
4. Average monthly insurance premium
Best state: Minnesota
Worst state: Wyoming
5. Medicare supplement premium
Best state: New Mexico
Worst state: Connecticut
6. Prescription drug price per capita
Best sate: North Dakota
Worst state: Tennessee
7. Average monthly insurance
Best state: Minnesota
Worst state: Wyoming
1. Physicians per capita
Best state: Washington, D.C
Worst state: Mississippi
2. Home aides per capita
Best state: New York
Worst state: Florida
3. Nurse practitioners per capita
Best state: Connecticut
Worst state: Hawaii
4. Quality public hospital system
Best state: Hawaii
Worst state: Louisiana
5. Geriatricians per capita
Best state: Hawaii
Worst state: Idaho
1. Fall deaths
Best state: Alabama
Worst state: Wisconsin
2. Stroke mortality
Best state: New York
Worst state: Mississippi
3. Heart disease mortality
Best state: Minnesota
Worst state: Oklahoma
4. Alzheimer’s mortality
Best state: New York
Worst state: Mississippi
5. Cancer mortality
Best state: Utah
Worst state: Mississippi
Ranking All the 50 States
These states are ranked starting from the best to worst depending on the overall cost of living. Anywhere you choose to retire will be fine as long as all your needs are being met. But in terms of overall quality of life, safety, health, and budget, the state you pick matters. Rankings can differ depending on what the statistics are based on. But the cost of living is a priority despite the ranking.
- West Virginia
- New Hampshire
- South Carolina
- South Dakota
- North Carolina
- New Jersey
- New York
- North Dakota
- New Mexico
- Rhode Island
When you are thinking about moving to a new state to kick start your retirement, you have to think about finances. Aside from the overall cost of living, some other financial factors and details will determine your spending habits in your new home. Taxes, as you have seen, are the main factor you have to consider. Find states that offer different exemptions to retirees and seniors, and they should also have low or no individual tax on retirement income. You also have to think about health care expenses. It can be assisted living, home care, or nursing homes. Specialized and quality healthcare is likely sufficient in densely populated states, but it may be expensive.
Housing costs should also be factored in in your moving plans. You won’t enjoy retirement if you are paying rent or mortgage with all your income. Luckily the property taxes for all the states are easily available. Go through the two lists above and decide which one favors you most. The running costs of a home will also affect your finances. Most states offer relief to retirees and elderly people when it comes to housing. Double-check every state before you pack and leave. Hidden taxes can cripple you and your savings in such a short time. Remember to check the weather conditions as well and see if you can manage the new state. With that said, the best and worst states to retire in will be determined by your finances and needs.