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While it might seem easy to identify desirable locations for retirement, as we described in the first half of this article series, The 10 Best States for Retirement, it can also be useful to consider the worst locations for retirees. Your income, savings and your retirement planning can be obvious drivers in selecting a retirement location, but you might also think about your interests, hobbies, and overall welfare.
As with the development of our list for the 10 best states for retirement, we acknowledge the subjectivity of this process. So, to keep things consistent, we used the same key factors to identify the 10 worst states for retirees. Factors that we considered include:
- Cost of Living
- Tax Rates
- Crime Rates
- Healthcare Quality / Availability
- Local Culture & Amenities
While California living seems desirable, the Golden State will be among the most expensive for retirees. Retirement income is fully taxed, with exception only for Social Security benefits, and the Golden State has the highest income tax nationally.
Of residents age 65 and older, 1 in 10 are living in poverty in California. Lofty housing costs and high sales taxes are some of the many factors that make California a financially challenging place to live for retirees. In addition, recent data identifies California as have the 14th highest violent crime rate per capita.
On the other hand, California ranks impressively for public health, which could be enticing to retirees who are not concerned with the high costs of living. After all, in California, there are more than enough entertainment amenities and natural wonders to keep retirees active.
9. New Mexico
In New Mexico, residents will find temperate climate along with an inviting and colorful Southwest culture. Despite this wonderful environment, the Land of Enchantment generally is an unwealthy state, with 19.5 % of the population living below the poverty line.
With a high poverty rate, generally comes a high violent crime rate. And in New Mexico, this relationship holds true, as the state has a violent crime rate that is more than double the national average.
Retirees looking to settle here would find low cost of living, but they can also expect to pay retirement income tax. New Mexico also ranks in the bottom 1/3 of states in public health, which can disproportionately impact retirees.
8. West Virginia
The Mountain State is mostly rural and offers a moderate climate, scenic views, and rocky terrain with plenty of nature to explore, but it might not be a top destination for retirees. Residents will find that their retirement income is taxed, and with poor state fiscal health, it is unlikely this will change anytime soon.
While West Virginia has experienced a decrease in crime, some areas of the state maintain a dangerous reputation for violent crime. Additionally, the population tends to be less healthy, which is evidenced by poor patient outcomes in health care. The state also ranks 4th worst for poverty. West Virginia’s weakness in these areas make it an unappealing retirement destination for most seniors.
Known as the Pelican State, Creole State, and Sugar State, you will certainly find amazing cuisine in Louisiana. Aside from creole fare, you will find low cost of living combined with low income. While Social Security retirement benefits and income from retirement pensions are not taxed at the state level, income from certain retirement savings accounts is taxable. In addition, residents will pay sales tax up to 11.45% in some areas. Louisianans experience a high rate of violent crime, coming in as one of the top 10 of most dangerous states.
Overall, the health of the population ranks poorly compared to other states, with high rates of obesity, smoking, and mental distress. Retirees will find limited access to geriatric care, which could present challenges during retirement. In Louisiana, you will find that the climate is moderate with mild winters, but very hot and humid summers.
The Last Frontier holds the smallest population of seniors in the United States. Having a cold climate with long and dark winter days, Alaska ranks as the worst climate in the country for retirees. The state is generally quite rural with high rates of rape, drowning and suicide per capita.
Although Alaska is one of nine states that do not tax retirement income plans, residents will find a high cost of living, mostly due to the added shipping / freight charges required to obtain goods from the mainland. The most notable payoffs for living in Alaska are no state sales tax, no state income taxes, and qualifying residents receive a stipend from the state’s oil wealth savings account.
Offering a small town, New England charm with a generally temperate climate, Connecticut might be thought of as one of the safest and charming locations for retirement. Once you move beyond the quaintness, however, you will find little to promote the wellness and welfare of the resident retirees. In addition, the frigid winters that highlight New England living are rarely seen as a positive.
Connecticut is known to be among the unfriendliest states for retirees, with high real estate taxes and taxation of retirement income. In fact, when considering combined sales and income tax, Connecticut ranks as the second most expensive state. Social Security income is partially taxed with withdrawals from retirement accounts being fully taxed. If you are planning to retire in Connecticut, be sure to consult a financial planner to navigate the complex tax situation.
4. New Jersey
Known for their greenery, shopping, restaurants, casinos, and golf, the Garden State is better fitted for a possible vacation spot than a retirement destination. New Jersey residents experience among the highest cost of living in the country, with retiree health costs ranking third highest.
The state also ranks poorly in fiscal soundness, with pension funding issues and little room for the tax situation to improve. On the bright side, Social Security is not taxed at the state level.
Although crime rates are relatively low statewide, there are pockets of dangerous places that would rank among the most dangerous in the nation. Those living in New Jersey experience overcrowding, heavy traffic, and brutal winters, leaving this spot as one of our least favorite for retirement living.
3. Rhode Island
In the Ocean State, you will be met with above average living costs, accompanied by high taxes. Given that the state is not in the best financial shape, it is unlikely that the tax situation will change any time soon, leaving retirees paying partial taxes on Social Security income and full taxes on withdrawals from retirement accounts.
Healthcare in Rhode Island is rated as mediocre, which can be less than desirable to an aging resident. Rhode Islanders also will experience humid summers, bitterly cold winters, risk of flooding, and exposure to hurricanes given the proximity to the Atlantic Coast. If you can put those things aside, you will find ample beach access, delicious seafood, and a rich history.
2. New York
With New York City coming in as the most expensive place to live in the United States, retirement in the Empire State can present some challenges. Residents will find some of the highest state and local taxes in the country, coupled with outrageous housing costs. These factors make the state too costly for many retirees.
City living is a bonus for the state that hosts the Big Apple, but the fast-paced life may not be desirable for most retirees. One can always choose to retire in rural New York, however many cities within the state are plagued with high costs of living, low employment rates, and / or high crime rates. While summers can be mild to hot, winters can be harsh, leaving little to do in the way of outdoor activities for a significant portion of the year. If your wealth allows, spending summers in New England can be fantastic, but there is a reason why many of New York’s wealthiest opt for the warm air of Florida during the winter.
Although Illinois is often thought of as a cultural hotspot, with suburban living and wine trails to enjoy, this state has significant long-term debts, unfunded pension liabilities, and big budget imbalances. These complications make Illinois our pick as the worst state for retirees.
The Prairie State’s high taxes on property, along with steep state and local taxes are seen as unaffordable and unfriendly to many retirees. Generally speaking, the population trends toward unhealthy, with health care costs for retired couples coming in higher than the national average. In addition, Illinois residents experience hot and humid summers with frigid winters, making outdoor living a challenge during a large part of the year. Finally, Illinois ranks 19th in violent crime rate, per capita, but an even more troubling 4th highest for murder. Despite hosting one of the Midwest’s most renowned cities, Chicago, the combination of budget issues, crime, climate and lagging public health make Illinois our #1 worst state for retirees.
How does our home state of Alabama stack up?
For many of us, Alabama is likely #1 on our list of retirement destinations. So, how does Alabama measure up against these top 10 states?
In our rankings, Alabama comes in at a strong #17 overall, well above the national average. Here’s a breakdown of how Alabama ranked against the other states in the 6 categories we evaluated:
- Cost of Living: Alabama’s cost of living is a strength in these rankings as it comes in below the national average. Housing costs are comparatively low, but transportation costs can be higher due to a weak system of public transport that creates a need for personal transportation in mostly rural Alabama.
- Tax Rates: Taxation in Alabama has its pros and cons. Although Alabama does have a state income tax, Social Security Benefits and Pensions are exempt from taxation, which is great for retirees. In addition, Alabama does apply sales tax to food and clothing, while some other states exempt these categories.
- Healthcare Quality / Availability: Healthcare was a weakness for our home state in these rankings. And as we know, healthcare is very important to retirees. Alabama has average healthcare costs when compared to other states. However, residents in rural areas may have fewer healthcare options, as there are fewer doctors per capita in Alabama than most other states. Due to these factors the overall health of Alabamians usually ranks in the bottom 10% of states.
- Local Culture & Amenities: Amenities are a major strength for Alabama in our rankings. This may come as a surprise to many, but we feel that Alabama is a hidden gem of adventure. In fact, we put Alabama in the top 20% of states for its unique features including: the gorgeous Alabama Coastline, Appalachian Foothills, numerous lakes and parks, award winning culinary scene, the Robert Trent Jones Golf Trail, Talladega Superspeedway, and almost perennial national champion college football teams.
- Climate: Depending on who (and when) you ask, you may get a mixed response on Alabama climate, but we considered Alabama’s diverse climate a strength. Mild winters are a huge benefit, while steamy, humid summers can be a turnoff for some people living outside the mountains. Alabama experiences 4 seasons (in most years and areas of the state), but fall and spring tend to be short lived. Tornados are also a downside to living anywhere between the 2 major mountain ranges of the U.S., but in recent years Alabama has seen more than its share of deadly storms. Major droughts are rarely an issue in Alabama, a huge positive for farmers and outdoor enthusiasts, and the occasional white Christmas isn’t unthinkable. In addition, the climate can vary dramatically from the southern coastline to the foothills of the Appalachians, so no matter your preferences, Alabama likely has a place for you.
- Crime Rates: A major weakness for Alabama in our rankings was the crime rate. When compared to other states, Alabama has a high rate of violent crime with 519.6 crimes per 100,000 people. The numbers are especially high for aggravated assault and murder, where Alabama reports the 5th most of these crimes of any state per capita. As crime rates typically correlate with poverty rates, Alabama’s 7th highest poverty rate in the nation is seen as a major contributor to these numbers. Alabama also has the 10th highest imprisonment rate in the country at 626 adults per 100,000 residents.
Keep in mind that choosing a retirement location is one that is very personal and should be considered as to what meets your personal interests, goals, and needs. Working with Meld Financial can alleviate many of the stresses related to your retirement planning. If you are looking for help saving and planning for your retirement, contact us. Our team of wealth managers consists of financial, legal and tax professionals who will help you develop your FINANCIAL FINGERPRINT™ and help guide you down the road to a successful retirement.
All 50 States, Ranked
We hope you’ve enjoyed our ranking of the best and worst states for retirees. If your state wasn’t mentioned and you are curious how it fared, take a look at our full 50 state rankings: