August 21, 2019 — There seems to be a never ending supply of articles touting the best and worst states to retire in. People obviously enjoy reading them. The trouble is that many of the websites publishing them have no expertise in retirement, and a result the lists they come up often have no connection to where people actually want to retire.
A good example is the recent list from Bankrate.com, which must have been overjoyed to see their picks reprinted in the New York Times and many other big media outlets. For the record, Bankrate.com is a website that promotes credit cards and loans, very similar to what wallethub.com does (but which generally produces more credible lists). Other frequent list generators are GOBankingRates.com and Smartasset.com, the latter of which is a site promoting financial advisors. Search on Google for “best places to retire” and sites like these will have prominent rankings, because it is good for their financial businesses. See the top listing in this screen capture, Homesnacks.net – anyone see their connection to retirement? (see more list companies at end)
Here is the list of Best States to retire from Bankrate.com:
- South Dakota
- North Carolina
Their Worst States to Retire
- South Carolina
- New Jersey
- New York
How they came up with their lists. To develop their lists Bankrate used five criteria: affordability (40%), crime, culture, weather, and wellness. All those sound good, but something went seriously wrong in the formula, somewhere. It’s the only way we can explain how they ended up with such strange choices. But before we go further, let’s make two caveats. One, generalizing about an entity the size of a state is very hard to do with any accuracy. States cover huge areas and have tremendous variability within themselves, as do their cities. Two, finding a place to retire is a personal decision. If a state or city appeals to you, that’s all you need to know – someone else’s criteria don’t apply.
The Best States to Retire. Looking at the Bankrate’s best states list, only 3 of their “best” choices are in the Sunbelt (Florida, North Carolina, and Hawaii). Almost all the rest are in the midwest. While we agree their Sunbelt choices were mostly sound (although it is hard to see Hawaii coming through on affordability), people don’t very often move to the midwest for retirement. In general if they retire to Nebraska, Iowa, or Missouri, they already live there. Looking at where people over 60 actually move, here are the top 5 (courtesy of Smartasset.com): Florida, Arizona, North Carolina, South Carolina, and Nevada. All of those are in our top states for retirement. In contrast to the Bankrate list, no state in the midwest showed up in, or near, the top 10 states where people over 60 are retiring.
Their Worst States for Retirement. It is truly hard to see how they could have arrived at South Carolina as the worst state to retire. It has a great climate, favorable tax structure, and many wonderful places to retire. Or elsewhere in their top 10 for that matter, what is wrong with Oregon, Nevada, or Washington (the latter two which do not have a state income tax)? When it comes to the states where people over 60 are actually moving, South Carolina is in 4th place, Nevada in 5th, and Oregon in 7th. So either retirees are choosing the wrong states to move in retirement, or Bankrate knows something all those people don’t. By contrast, Topretirements thinks (2018 list) that the 7 worst states for retirement are: New Jersey, Connecticut, New York, Rhode Island, Massachusetts, Illinois, and California. So we agree with Bankrate on 4 choices: NJ, IL, NY, and CA.
More List producers
The credit card and financial companies aren’t the only ones putting out “Best Places to Retire” list. Many websites who produce content in this space come out with some good lists, notably AARP, International Living, 55Places.com, and Livability.com. Sites like TheStreet.com, USNews & World Reports, Money, TheStreet, Huffpost, Ideal-Living frequently attract attention with their lists, which are often good.
What criteria should go into a Best/Worst Places list?
When it comes to choosing which states or cities should be included on a best or worst places list, we think cost of living, state income taxes, treatment of retirement income are very important factors. That is because so many of us will be challenged to maintain our standard of living in retirement on reduced resources. Climate is also a huge factor, with the Sunbelt states getting extra points because they offer retirees year round outdoor activity options. Although medical care and crime are important considerations, they are very hard to evaluate on a statewide or even city basis. Where you live within a state or region has a much bigger impact. Likewise, factors like traffic, walkability, recreational and cultural opportunities cannot be generalized on a statewide basis.
Our conclusion. We think lists like these are useful in informing our thinking about where we should retire. We just wish many of them were better steeped in reality. In the case of the Bankrate list, it is attaching the wrong weights to their rankings, choosing the wrong ones (for example property taxes don’t seem to be included)… or millions of retired Americans are making foolish choices about where to retire. We are betting on the former. See the Topretirements.com list of Best States for 2019 and Worst States 2018 for comparison.
For further reading:
Comments? Please share your thoughts about the usefulness of these kind of “best” lists? Are they helpful? What do you think are the best and worst states for retirement. Please share your thoughts in the Comments section below.