Many of us will consider relocating when we retire. But we may not be packing the sunscreen and swimsuits when we do. States like Florida and Arizona used to be synonymous with retirement, but not anymore.
That’s because weather is only one of several factors retirees consider when choosing a place to spend their retirement years. Other factors, like cost of living and access to healthcare, are more important in making a decision on where to spend the rest of your life.
Cold-weather states may not be the best places to work on your golf game or take up paddle boarding, but they do offer better cultural amenities, lower tax and crime rates and large senior populations. And, yes, weather also is a factor, but cost of living and quality of healthcare options are far more important to people planning for retirement.
These are the best and worst states for retirement.
Bottom Line: New Hampshire
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New Hampshire’s biggest draw may be its retiree-friendly tax code. The state has a 5 percent income tax, but it only applies to dividends and interest, not to salaries and distributions from retirement savings accounts like IRAs and 401K plans. The state also has no sales tax, and there is little political will to change a system that primarily relies on revenue from property taxes.
Being in the Northeast, New Hampshire has a higher cost of living than other parts of the country, but the Granite State is still about 20 percent cheaper than neighboring Massachusetts and 10 percent lower than nearby New York State.
Property is a bargain, with a median home price of $261,400 in the fourth quarter of 2016, compared to $417,400 in the Greater Boston area.
Bottom Line: Colorado
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While its tax system is not as attractive as New Hampshire’s, Colorado still offers breaks for retirees, who are allowed to deduct between $20,000 and $24,000 of their retirement income. And the state’s property taxes are among the lowest in the nation. Overall, Colorado’s tax burden is 9.02 percent, below the national average of 10 percent.
A retirement in Colorado may also be a longer retirement, as the state boasts an above-average life expectancy and the nation’s second-lowest obesity rate.
Colorado also is identified with active lifestyles and has an abundance of options for skiers, hikers and outdoor enthusiasts.
Bottom Line: Maine
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Retirees won’t be alone in Maine. Its median age is second only to Florida, and it has the highest percentage of baby boomers after New Hampshire.
The state has addressed its growing senior population with five Area Agencies on Aging throughout the state that offer public programs, health insurance counseling, fitness classes, community cafes, and a family caregiver support program. Maine’s cost of living is just 0.5 percent above the national average, although property prices can be steep in desirable vacation locations like Kennebunkport and Mount Desert Island.
Like its neighbor, New Hampshire, Maine offers some of the lowest violent crime rates in the United States. Portland offers coastal access and is a two-hour drive from Boston while boasting its own burgeoning restaurant and cultural scenes. Maine Medical Center in Portland is one of the best performing hospitals in the country, according to U.S. News & World Report.
Bottom Line: Iowa
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While Iowa didn’t score higher than nine in any of the eight categories ranked in the BankRate study, it was above average in every category considered with two exceptions — culture, where Iowa ranked 35th and weather, where Iowa ranked 36th.
In other words, Iowa offered a good balance of all the amenities retirees look for when they consider a place to live: a low crime rate, a decent-sized senior population, and access to top-notch healthcare.
Iowa also ranked 14th in cost of living. That was the best rank of any of the cities ranked in the top 10 by Bankrate, making it the best choice for people who want to ensure their retirement savings goes far.
Bottom Line: Minnesota
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There’s no getting around it: Minnesota is cold. Only Vermont, North Dakota and Alaska have weather worse than Minnesota, according to Bankrate. Minnesota averages 44.3 inches of snow per year, well above the national average of 25 inches.
But retirees who can look past the cold weather and maybe even embrace the snow (snowmobiling, anyone? Minnesota has 20,000 miles of marked trails) will be rewarded with the country’s third-best healthcare system and assisted living facility costs well below the national average.
And no state in the top 10 ranked higher than Minnesota, at No. 4, in overall well-being. Maybe that has something to do with the friendly people: the term “Minnesota nice” was backed up by a 2013 University of Cambridge Study that ranked Minnesota the sixth most agreeable, based on 13 years’ worth of mood tracking data.
Bottom Line: Massachusetts
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The Bay State’s reputation as “Taxachusetts” is an outdated misnomer, especially when it applies to retirees.
The current state income tax is just 5.1 percent, and the estate tax exemption is just $1 million. On the downside, Massachusetts ranks 45th in the nation in cost of living, and median home prices rose 7.3 percent to $374,000 in recent years.
There are, however, few states that offer as many cultural resources as Massachusetts, and the state’s hospitals are world-renowned.
Bottom Line: South Dakota
Social Security, pensions and other forms of retirement income are all tax-free in South Dakota, thanks to the fact that the state does not have income taxes. The state also has low sales taxes and moderate income taxes, making it an attractive option for retirees.
Median home prices in South Dakota are $163,700, fueling a cost of living that is 11 percent lower than the national average. While retirees are drawn to South Dakota for a slower pace of life, the economy is booming.
Unemployment was 3.6 percent in late 2019, meaning retirees who want to take on part-time work will be able to find opportunities.
