April 8, 2014 — Back by popular demand, here is our 2014 list of the best states for retirement (see links at bottom to our lists from previous years). This year we have taken a different approach – we’ve assembled “best of” lists by category. At the conclusion of the article we’ve listed those states that made more than one list, which you can use as an indication that they must be pretty good places for retirement!
See the counterpoint to this article: “Worst States for Retirement – 2014“.
The categories we’ve chosen are basically the opposite of those we used to choose our “2014 List of the Worst States for Retirement”, although we decided to also give weight to weather and a variety of places to live in our “positive” list:
– Taxes on retirees
– Low property taxes
– Cost of living
– Variety of interesting places to live
There are many other factors that might be important to you, such as availability and quality of medical care, crime, proximity to friends and family, or a desire to live in a particular state. For the purposes of this article we have not considered them, as they tend to be so local that it is not useful to look at them on a state-wide basis.
Taxes on retirees
The seven states that have no income tax automatically made the list. In those states you don’t have to worry about taxation of social security, pensions, interest and dividends, and other earnings – since nothing is taxed. We’ve presented them in alphabetical order. Note that we moved Washington to last place on the list because it has an estate tax with a smaller exemption than the federal, which is something some retirees might be concerned about. Also, any time the State name appears as a link, that link will take you to our min-retirement guide for that state:
Two other states only tax interest and dividends, making them friendly to retirees living on a pension or Social Security:
New Hampshire (also has no sales tax)
Low Property Taxes
As frequent visitors to Topretirements.com know well, we believe that property taxes are the worst kind of taxes for retirees. That’s because property taxes on your home have no connection to your income. So one year you might be making a nice salary and can easily pay the taxes on your home, the next year you are living on social security and there is no way you can pay them. Granted, many states and municipalities have Homestead or Senior programs that can help with these taxes, but usually that assistance is minimal to insignificant.
Below we have ranked the states with the lowest property taxes as a % of home value. Note that this measure is different than looking at property taxes ranked by absolute dollars paid – we think the % of home value is a slightly better measure (if your home is worth a lot and you pay a lot of tax on it but the % is relatively low, at least you have the option to trade your home for a less expensive one, and then pay a smaller amount of taxes on that one).
Here are the states with the lowest property taxes as a % of home value ( ): Source: Tax-rates.org, data is from 2009.
West Virginia (0.49)
South Carolina (0.50)
New Mexico (0.55)
Cost of Living
The majority of baby boomer retirees in America will not have sufficient resources to maintain their pre-retirement lifestyle. So it follows that one way to help overcome that short fall is to move to a state that has a lower than average cost of living.
The 10 U.S. states with the lowest cost of living (2013, source Missourieconomy.org)
Weather and climate
Our esteemed members and visitors will recognize of course that weather is quite subjective. If you live to snowshoe you won’t be happy living in Southern California. Some people hate humidity more than snakes (and not many people are fond of them or the big bugs often found in warmer climes). But, our research indicates more baby boomers are interested in places with warmer winters than they are in colder ones. So to help those people we’ve listed the U.S. states with the warmest winter temperatures. Note that we haven’t attempted to factor in climatic catastrophes, since almost no state is immune to some type of disaster – earthquakes, hurricanes, ice storms, tornadoes, sinkholes, etc.
The highest average winter temperatures (F.) by state (source: Currentresults.com): Note that these are state-wide averages – many of these states will have significant range from north to south)
Just to put another dimension on weather, average number of days of sunshine could be important to a lot of people. Here are the states with more than 120 “clear” days per year ( ) – interesting, they are all in the west:
New Mexico (167)
Interesting places to live
Here we enter yet another subjective dimension. One person’s definition of interesting might not be anywhere near another’s. So to try to be as objective as we can, we’ve listed the states where Topretirements has the most cities reviewed as retirement spots. It is a bit of a quantity vs. quality dimension, but it is a starting place that must say something about where people want to live in retirement.
As you can see there are multiple reasons to choose a state as the best place for you to retire. You can pick yours from the reasons that are most important to you. For one look at an overall contest, we’ve put together a list of the states that showed up the most times on these assembled lists, all of which, not surprisingly, are in or very near the Sunbelt.
Comments? Please share your comments on this list of Best States for Retirement. Are there some other states that should have made it? Do you agree with the considerations we used to produce these lists? Please share your thoughts in the Comments section below.