May 25, 2010 — You’ve probably been at a party where you discovered you didn’t know a soul. Remember the feeling you got when a total stranger came up to you with a friendly smile and welcomed you? With that one warm greeting your anxiety probably went down, you stopped second-guessing your decision to come, and you started to enjoy the party. When it comes to retiring to a strange place, states and towns that seek out retirees might give you that same warm feeling. This article will explore what we think makes for retirement-friendly states, cities, and towns.
Types of friendliness
States (and towns and cities) have several types of friendliness that they could offer:
- Economic. This is mostly available in the form of tax relief, of which there are many types available. Cost of living is another important kind of friendliness. Although we will explore economic factors in some detail, they are by no means the only kind of friendliness available.
- Education. Communities and states that sponsor adult education programs make themselves appealing to retirees.
- Standards and certification. A number of states have Certified Retirement Community programs under various names. The idea is to promote minimum standards to attract retirees who know that they can expect minimum services.
- Information. It’s always a wonder to us why more states don’t provide a little help to residents and prospective residents about why someone should retire there – and where are the best places within that state. Fortunately, some do make an effort and that can be helpful.
- Infrastructure. Along with education, states and towns that support infrastructure improvements make themselves more appealing to prospective retirees. Examples of infrastructure projects include initiatives in public transportation, libraries, recreational facilities like golf courses and bike trails and more, health care facilities, and senior/community centers.
- Friendly, friendly. Some states have better reputations for the friendliness of their people.
Some communities and states concentrate on economic (mostly tax) incentives to make themselves attractive to retirees. It is a sound strategy, since most experts believe that attracting new people to a town is the economic equivalent of adding several jobs to that community. It’s called the mailbox economy – someone moves to a new town from somewhere else. Then their pension, social security, and dividend checks start arriving in their new mailbox. That money gets spent in local stores and services, and some of its gets siphoned off into property and other taxes. All of that economic activity in turn creates more jobs.
Other communities put the focus more on quality of life issues. As in, build an attractive community where retirees have interesting things to do with their leisure, and people will come. That strategy works too.
What doesn’t work is the problem that is playing out in many places in the northeast and midwest right now. Taxes are high, public budgets are in deficit, and few institutions are willing or able to concentrate as retirees as a growth industry. Instead, many baby boomers are pulling up stakes and moving to a friendlier environment, taking their disposable income with them, and leaving more homes to be sold in a depressed market.
Lets address the states that meet the various kinds of friendliness discussed above. In some instances there is so much data that we will refer you to other links for fuller information.
1.Economically friendly States
- No Income Tax
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no income tax. TN and NH do not tax wages. Delaware, Georgia, Illinois, Minnesota, New Mexico, Utah, Virginia, and West Virginia exempt or limit income taxes on retirement income. Alabama, Hawaii, Kansas, Louisiana, Massachusetts, Michigan, and New York exempt military and government pensions.
- No State Sales Tax
Alaska, Delaware, Montana, New Hampshire, and Oregon don’t have sales taxes.
- Property tax protection
Florida, Arizona, California, New Mexico, and a few other states have programs to limit annual property tax increases. Most states in the south have very low property taxes (although sometimes they offer fewer services as well). Check the websites of the retirement states you are interested in to find out they offer one of these programs.
- No tax on Social security
14 states tax social security, and many of those are in the northeast. See Topretirements’ State Retirement Guides for more help there.
- Estate and Inheritance taxes
14 states collect estate taxes (on what you are worth when you die) and 7 states collect on inheritance taxes (on what your heirs receive from your estate). See “Best States to Die in“.
- Cost of Living
In general the states with the lowest cost of living are in the south and the midwest. LA, MS, AL, GA, OK, TX, AR, TN, KY, and MO have lower costs of living than just about every other state. As an example, Zillow.com reported the median sales price of a U.S. home to be $183,700 in May, 2010. Contrast that with the figure in Alabama, $106,200.
Towns that offer adult education or lifelong learning opportunities are attractive to many retirees who want to have a stimulating retirement. You should look at individual towns and cities to find the friendliest places from an educational standpoint. Look for college towns like Oxford, OH, Hattiesburg, MS, or Maryville, TN. Try to find towns that are home to state universities, which often have classes available to people of any age. Similarly with community colleges, which are set up for anyone to attend. Lastly, towns that boast Institute of Learning (they often go by other names) are always good bets. Some CCRCs and active adult communities, such as Laguna Woods Village actually have campuses or partnerships right within the community. You can use our Advanced Search to find more college towns. Or use one of the search boxes on the site to browse for “lifetime learning”, “learning”, “learning institute”, or “college”.
3. Standards and Certification
Six states have developed certified retirement community programs to encourage retirement in those states. Most of them certify certain towns as having met minimum standards for healthcare, housing, recreation, etc. The 6 states are:
Texas, Louisiana, Kentucky, West Virginia, Mississippi, and Tennessee. For more information on these programs see certified retirement communities.
Sadly, there is not a lot of activity by the states encouraging retirement relocation. In our opinion they are missing the boat, because there are many baby boomers who are very interesting in finding and comparing different states and communities for their retirements – in fact that is probably why you are reading this article. Alabama has a program to encourage affluent retirees to the state; they have a website and a publication called the Advantage to that end. South Carolina has information about possible retirement towns at its state welcome centers on major roads. The states with certified retirement community programs have websites with information about retirement in those states (see #3 above). The AARC (American Association of Retirement Communities) has recognized some states with retirement relocation programs. Many towns have very active publicity and advertising campaigns to promote their towns as retirement destinations – Longview TX and Sumter, SC are 2 examples. Although ultimately you might not be attracted to the towns that are advertising in magazines or websites like this one, at least you will know that they want you!
It is hard to generalize when it comes to the infrastructure issue. One thing to look for is a state or town that has a healthy budget – they might be in a position to spend. If the state is in fiscal disarray you will probably have to count on infrastructure already built. Certainly the cultural attractions and railroads of the northeast should count as attractive infrastructure that has long been there. Towns in Arizona or Florida that have spent to develop spring training facilities which are frequently enjoyed by retirees. States in the northwest and the west like Oregon, Washington, Idaho, Wisconsin, and Colorado have spent wisely, in our opinion, to develop extensive bike trails and parks. The city of Seattle probably has the finest new library in the U.S. Recreational amenities attract people – for example the Robert Trent Jones Trail in Alabama gave that state a wonderful collection of 11 golf courses that attract tourists and retirees. Some cities have invested in light rail projects to improve their car-choked transportation systems (Phoenix is a good example).
To find a state with friendly infrastructure, you should check out the resources of the towns you are interested in, which you can do on this site.
6. Friendly people. Some states have better reputations about the friendliness of their citizens. And Topretirements would rather not get into that discussion? Even if the stereotypes really do exist, the reception you get from your new neighbors will be subject to great variation. For example the northeast has a reputation for being standoffish, but don’t believe there aren’t a lot of welcoming people there. A few states are known to be discouraging to people who are viewed as ruining the state – Oregon and Washington are known to be inhospitable to folks from California (but we are sure there are exceptions to the stereotype). For our money you can’t beat the friendly people of the midwest and states like West Virginia. But if you move into an active adult community where all of the people have come from somewhere else, you are almost always guaranteed a warm reception.
What do you think. Please share your thoughts about the friendliest places for retirement in the Comments section below.