You should probably stay away from these retirement locations this year!
The decision to relocate somewhere new during your retirement is significant, with many factors to consider. One of the most important ones is knowing how much your state will tax your retirement income and the overall cost of living.
Those aspects alone put some states out of reach for many people over 65 because some places impose high property and income taxes.
That being said, you may live more leanly in exchange for a state that represents your values and offers the recreational and cultural opportunities you enjoy most, whether hiking or museum-hopping.
To help you make this big decision, we went through pages of data to come up with the 5 worst retirement locations to relocate this year… Is YOUR state on this list?
Here’s what we took into consideration
In choosing the worst retirement locations to live out your golden years, we considered the following aspects:
-Taxes: Overall tax-friendliness, including whether each place has an income tax and if sales tax and property tax rates are high.
Weather: You probably don’t want to sit indoors all day during your retirement, so we factored in extreme weather.
-Overall living costs: A Nationwide survey discovered that 43% of individuals considering relocating for retirement state that lowering their living costs is among the top 3 reasons for moving. This contains the total cost of living, including housing, utility, transportation, and grocery costs.
-Healthcare: We looked at the accessibility and costs of healthcare and the mortality for common conditions associated with aging.
Other quality-of-life factors: We also considered pollution, crime rates, infrastructure, and amenities when choosing the worst retirement locations.
… Based on these criteria, here are the 5 worst states to retire to this year:
New York
New York ranks 48th out of all the states, Puerto Rico, and the District of Columbia for overall living costs, with high housing costs. Even though New York doesn’t tax Social Security benefits, it has a state income tax and partly taxes private pensions and retirement account withdrawals.
And while New York gets mixed marks for elderly healthcare access, it ranks last among the states for trained nursing facilities per capita.
Hawaii
There are many things to love about living out your golden years in Hawaii, including the beaches, weather, and the air quality. Hawaii also boasts a powerful public hospital system and more geriatricians per capita than any other of the 50 states.
But sadly, it also has higher living costs than any other state, including the most pricey home prices. Social Security benefits aren’t taxed, though you’ll pay taxes on private pensions and retirement account withdrawals. The average retiree would need nearly $100,000 to retire in this retirement location.
Using the 4% rule for your retirement, you’d want a nest egg of at least $2.5 million to retire comfortably in the Aloha State. And given that you’re at least on a five-hour flight from the mainland, you should also factor in travel time and expenses if you want to visit friends and family often.
Massachusetts
If you’re looking for more tax savings in your retirement, you’ll most likely want to cross Massachusetts off your list. This retirement location taxes 401(k), most private pensions, and traditional IRA withdrawals. It also taxes any investment income, with a 5% tax on state long-term capital gains and a 12% tax on short-term capital gains.
US Census data indicates that it has the 3rd highest prices on homes out of all the 50 states. While this state generally gets strong marks for retiree healthcare, it’s also home to freezing winter temperatures that many retirees seek to escape.
Mississippi
Mississippi is among the most affordable places in the US to retire, with no taxes on withdrawals from retirement accounts and low housing costs, pension income, or Social Security. So what’s the problem? Well, its healthcare quality for seniors makes it one of the worst states for seniors.
MedicareGuide.com ranks Mississippi 48th out of the 50 states and the District of Columbia for elderly healthcare. This retirement location was the worst state for stroke, cancer, and Alzheimer’s mortality. It also ranked last for doctors per capita.
Alaska
Alaska doesn’t have a state income tax, which is fantastic. Sadly, though, that’s really the only thing it has going for as a retirement location. According to the Missouri Economic Research and Information Center, it ranks 47th out of the 50 states for overall affordability.
The Last Frontier also has the highest violent crime rate, the coldest average temperatures out of any other state, and the second-worst broadband access.
For seniors considering a move from the lower 48 states, life in Alaska could be extremely rough because you’d probably be relocating far from all your friends and family.
Bonus: Best retirement locations for seniors
Florida
If warmer weather is what you’re looking for, the Sunshine State has it! With over 20% of citizens age 65 and over, this retirement location has lots to entice a population living out their golden years, with miles upon miles of golf courses, beautiful beaches, and excellent tax benefits.
Here’s what you’re looking at: there are no state taxes and no estate or inheritance tax. One red flag, though, is that the state is prone to hurricanes, and hurricane season lasts from June-November, which means half of the year.
Besides that, deductibles for hurricane insurance usually range from 2% to 5% of the policy coverage, and some companies won’t even offer hurricane insurance at all.
Georgia
Residents of Georgia benefit from pleasant weather because the average temperature throughout the year is around 65 degrees, and a low cost of living.
Average home prices in Atlanta are around $457,178 right now, which is roughly the average cost for the entire country, and there are deals to be discovered in the outer suburbs of the city as well as in smaller cities.
Other than that, the state income tax is fairly low, and Social Security and pension benefits are exempt. Culture, unfortunately, could be an area where the Peach State is a bit lacking, with some of the fewest arts institutions compared to any other state.
Tennessee
There’s one big reason to even suggest Tennessee that we’ll just get out of the way: The state has no income tax! That’s right, folks! All forms of retirement income are tax-exempt at the state level, which can bring you significant savings in the long run. Property taxes are also relatively low.
The state has multiple unique cities and boasts stunning natural wonders such as the Great Smoky Mountains. One negative aspect to note is that healthcare access isn’t always easily accomplished, especially in the state’s more rural areas.
The bottom line regarding retirement locations
We’re obviously not saying that everyone should rule out living in the 5 states we chose as the worst states to live out your golden years. If you’ve built a large retirement nest egg, you may have the freedom to choose a retirement location that would be unaffordable for most.
Other things you’ll need to consider are whether you prefer urban, rural, or suburban living, along with the amenities you’re looking for and how close you want to be to other family and friends.
You might also want to consider looking beyond our nation and explore options for retiring overseas. Ultimately, you have to choose the factors that matter to you the most.
So what are your thoughts about these retirement locations? Let us know in the comments section. Meanwhile, if you enjoyed this article, we also recommend reading: The Ultimate Retirement Checklist for Seniors Over 50, 60, and Beyond
