February 3, 2018 — A lot of people would like to know which state is the best for retirement. There are many ways to answer that question, and in fact over the years we have tried several. Here are a few of the approaches we have used in the past (you can find links to each at bottom of page):
– Most popular state. The State Retirement guides at Topretirements that were read the most by our visitors and Members.
– Best state by factor. Taxes on retirees, low property taxes, cost of living, climate, variety of interesting places to live
– Lowest tax states. A big factor for many people
– Comparison of competitive “Best States” lists. We compared lists from Bankrate and Wallethub against each other and to where actual retirees moved (there was very little agreement!).
At the end of the day identifying the best state for retirement is a very personal question. In fact it boils down to, what is the best state for YOUR retirement. It might even be where you live now, since 80% or more retirees do not cross state lines to retire.
In this installment of the best states for retirement we are going to attack the question in two ways. First, we’ll look at where the most retirees are actually moving, using net migration. Secondly, we will explore the factors that you should consider when choosing your best state for retirement.
Where people actually move
It’s hard to beat the notion that the best states for retirement are the ones where people actually move for retirement. Paraphrasing what the old slogan says, retirees are voting with their… Uhauls. SmartAsset.com has done a great job extracting U.S. Census data to track the net migration of people ages 60 and over.
Here is the SmartAsset 2017 list of the states with the highest positive net immigration (more moving in than out) of people over 60 years old :
3. North Carolina
4. South Carolina
So why did these states gain over 60 population?
Florida had by far the most net immigration – over 77,000 retirees. Nevada made the list with a net immigration of 2400 folks (the data is from 2015). New to the 2017 list were Idaho and Alabama – those states displaced Texas and Tennessee from 2016. Here are some comments on why each state might have made the list (links for each state go to our mini-retirement guide for each state).
Florida. There a lot of good reasons to retire in Florida: no income tax, no inheritance tax, Homestead Law, warm winters, plenty of places to live. Interestingly enough, only two Florida cities made SmartAssets’ top 10 city list – Jacksonville (#2) and relatively affordable Cape Coral (#9).
Arizona. Ditto on warm winters, beautiful scenery, many affordable places to live including active adult communities. The latter probably drives why AZ had 5 of the top 10 net immigration cities list. AZ is relatively tax-friendly – it doesn’t tax Social Security, has relatively low property taxes, and has the 36th highest Tax Burden from the Tax Foundation. Mesa, home to many active adult communities, won the distinction of being the American town with the most over 60 net immigration.
North Carolina. The Tar Heel state has a reputation as a relatively tax friendly place to retire. Although its tax burden was ranked 20th, changes in the past few years have probably improved its ranking. There are some exemptions for retirement income.
South Carolina. Sometimes it seems like the two Carolinas are in a competition for which state can be the more tax-friendly. People over 65 get a $15,000 exemption on qualified retirement income. The State has slightly warmer winters and plenty of nice places to retire like Beaufort.
Oregon. One of the 3 non-Sun Belt states with the most retiree immigration, Oregon has a fairly mild climate. Its other attractions include no state sales tax, interesting cities like Portland, and amazing outdoor experiences in places like Bend.
Idaho. New to the SmartAsset.com list in 2017, Idaho also a lot more to offer than its famous potatoes. For one, its outdoor recreation is hard to beat. Cost of living is relatively low, at least compared to the coasts, and so are property taxes (people over 65 get a significant break on their primary residence).
Georgia. Warmer winters, lower cost of living (13th lowest by the MERIC Index), and lower taxes are some of the reasons why people over 65 are moving to the Peach State. College towns like Athens are a big draw.
Alabama. One of the two newcomers to the 2017 list, we were a little surprised about its inclusion. Its very low taxes and cost of living must be very important reasons for that. The Gulf Coastal areas are well set up for retirement, while Huntsville in the north offers a diverse small city environment.
Nevada. It was not much of a surprise that the Silver State benefitted from net over 60 immigration. It has warm winters and plenty of active adult communities with all kinds of amenities. Somewhat amazingly, it is one of only two states with net over 60 immigration that has no state income tax (the other is Florida).
But like we said, the best state for retirement is still personal
It is useful to look at the states and towns where people actually retire, because there have to be some good reasons why they are choosing them. But in the end, your own considerations might be more important. Here are some of the factors you should consider in choosing a state to retire in (see Best States for Retirement 2017 – MultiFactor for more rankings).
– Climate. If you are looking to escape the cold winters of the northeast or Midwest, the Sunbelt or the Pacific Northwest might be appealing. Others like living near the mountains or desert, be on a lake, or want to escape high humidity.
– Cost of living. The coasts of the U.S. tend to be a lot more costly than the inland states. You can usually sell your expensive house in the Boston suburbs, move to a nicer one in the Carolinas or Tennessee, and still end up with money in the bank. States like Mississippi and Alabama have very low costs of living.
– Tax-friendly. Although taxes shouldn’t be your only reason for moving to a new state for retirement, there can be significant cost savings in states with low property taxes and no/lower income or sales taxes. In addition, many states treat retiree income such as pensions (military, public, or private sector), retirement distributions, and social security payments more favorably than other states (see link at end of article for more on these tax-friendly states). Figuring out if a state is tax friendly to you can be complex and take some research – hiring an accountant to run the numbers for you is usually the best insurance.
– Lifestyle opportunities. Different states provide different lifestyle opportunities. From exciting cities to college towns to better and different recreational opportunities, some states can offer a superior lifestyle than the one you might have now. For example, if hiking or skiing is your thing, moving to a western mountain state might be your personal answer to the question.
– Friends or family. The opportunity to be near children, grandchildren, and friends often trumps other reasons for moving anywhere. And although it can be a good reason, we know a lot of people who retired near their children only to see the kids move somewhere else because of jobs or other factors!
– Interesting places to live. At the end of your life you will probably not be most grateful that you didn’t pay a lot of taxes to some state. Hopefully you will be grateful to have chosen a place to retire that gave you a happy life! So we recommend selecting a retirement state and town that is interesting and provides a rich life experience.
Our advice is to carefully consider the factors that matter to you when choosing a retirement state. Then go there to visit and stay awhile, to see if your hunches were correct, before you do anything drastic like buying a home. The truth is, according to MarketWatch, most Americans don’t go anywhere in retirement: “Some 6% of those ages 55 to 59 moved anywhere between 2014 and 2015…. Among 65 to 69 year olds, just 4.5% moved during that year and of them, 10% moved to a different region. according to U.S. Census Survey data”, and only a tiny fraction of them relocated to a different region of the country.
An article from the New York Times,”The Best Places to Move in Retirement: They’re All Over the Map“, makes interesting reading on the sometimes silly and inconsistent choices that show on up on “Best Places to Retire” lists. It is a good article worth reading with a lot of background on best places to retire lists.
For further reading:
Best States for Retirement 2014 – MultiFactor Analysis
Worst States for Retirement 2018
Best States for Retirement 2012
Most Tax Friendly States for Retirement
Best States for Retirement – Most Popular
Comments? What do you think is the best state for your retirement? Please share your thoughts as to why in the Comments section below.