There's no better time to retire than 2022 when life expectancy is at its all-time high of 79.05 years. However, choosing the best states to retire from a list of 50 is no easy feat. You have to consider the cost of living, healthcare, crime rates, social amenities, taxes, etc.
A financial advisor can always help you to navigate retirement planning in Portland, or any other place. But, in the meantime, let's look at the list of the best and worst states for retirement you should know.
10 Best States for Retirees
What are the best states to retire in, you ask? We’ve hand-selected these best states for retirees to live in after retirement.
Iowa makes it to our top states for retirees for its low cost of living which happens to be 10-15% lower than other states. Although the state charges an income tax, Iowa’s income tax rate still belongs to the states to retire to with low taxes, making the state tax-friendly for retirees on traditional 401k, 403(b), and IRA plans.
Even better, all that’s about to change in the new tax reforms that will take effect in the tax year 2023 to make Iowa the best state to retire with a pension. The new tax reforms will mean that people aged 55 and older will be exempt from the state tax on retirement income, particularly income raised from IRA distributions, taxable pensions, and annuities.
Missouri Economic Research and Information Center ranks Minnesota the 26th least expensive state to live in. While this may still sound high, it’s important to point out that Minnesota has a moderate cost of living compared to other states like Hawaii.
On top of that, Minnesota offers a high quality of life with top-quality healthcare, moderate living costs, and recreational amenities (Minnesota is ranked as the 9th most fun state).
Other than its sports culture, Indiana is one of the best states to live in for taxes. For starters, income from social security is exempted from the state income tax. However, you still have to pay taxes for withdrawals from retirement accounts.
Additionally, the state has a low cost of living index of 89.2 based on the information from the Missouri Economic Research and Information Center (MERIC).
The best state for retirees has moderately low crime rates, an excellent healthcare system, and a moderate cost of living, all of which happen to be in Utah.
In addition, the state has a lot to offer in terms of outdoor activity and warm temperatures. However, it is important to point out that Utah taxes social security income at 4.95% flat income tax.
Wyoming is home to seven national parks. With majestic mountain views, an abundance of fresh air, and low housing costs, Wyoming is fast becoming one of America's hottest retirement destinations. In fact, the number of people 65 or older in Wyoming has grown by 48.2% over the last decade.
Even better, the state has no income tax - which means no taxes on payments from your retirement income.
6. New Hampshire
New Hampshire is a great place to retire. From the beautiful scenery, excellent recreational opportunities, safe roads, clean air, and an affordable cost of living.
More importantly, New Hampshire does not tax retirement income at the state level. This means no tax on social security, pension, or 401(k) distributions. Additionally, the state’s healthcare is one of the best in the country.
There are many aspects of the state that make it a great place to retire, including the affordable cost of living, mild summers, great quality of life, and some of the country’s most friendly taxes.
As you may have guessed, Virginia doesn’t tax Social Security benefits. However, retirement account withdrawals and pension income are tax deductible.
Delaware is one of the few sales tax-free states alongside Alaska, Montana, and Oregon, among others. Social security benefits are also not subject to taxation. Average property taxes in Delaware are significantly low, at only 0.55%. But there’s more.
The low cost of living and a variety of affordable housing options make Delaware an attractive state to retire in. For instance, the average resident in Delaware spends roughly $1259, which is lower than the average monthly rent nationwide.
Despite being recognized as a tax-friendly state, Colorado’s cost of living is a little bit higher than the national average.
Florida has the second largest population of people aged above 65 years. Boasting warm weather, gorgeous beaches, and a wide variety of entertainment options, it’s no wonder so many people want to call it home once they reach their golden years.
Even better, the state has no tax on pensions, 401(k) income, IRA incomes, and social security benefits.
That concludes our top ten states to retire to.
The Worst States For Retirement 2022
Not every place is up for grabs. Some states are far less favorable than others for high costs of living, high crime rates, bad weather, and poor healthcare among other factors. A knowledgeable financial advisor for business owners and sudden wealth management will inform you that the following are the worst states for retirees in the U.S. in 2022.
Hawaii has some of the highest costs of living in the country - especially in places where retirees are most likely to live, like Honolulu.
Retirees who move to Hawaii have to accept the burden of retirement income tax from private pensions and retirement savings accounts. On the bright side, social security benefits and public pensions are not taxed in Hawaii.
New York has high taxes and high living costs. The income tax rate ranges between 4%-8.82%. Plus, property taxes often exceed 2.5%.
Retirees who move to New York will see their budgets squeezed to afford to live in the state.
Rhode Island has some of the highest property taxes in the country at an average of 1.53%.
Over the years, the state has been ranked one of the highest-cost places to live in the country where housing costs reach as high as 21% above the national average.
New Jersey rivals New York in high living costs. A one-bedroom apartment in Jersey City goes for $1421 a month. New Jersey also has high taxes where the income tax rate ranges between 1.4% - 8.97%.
Retirement account withdrawals are partially taxed. Plus, property taxes average 2.42%, which is 1.35% higher than the national average.
Retirees in Vermont will be happy to know that the state’s average monthly housing costs are only slightly above the national average, with a 1 bedroom house going for $979 per month.
However, Vermont also has long and cold winters and the infrastructure still remains below standard. The state has high taxes, particularly, property taxes, income tax, and a retirement income tax ranging between 3.35% to 8.75%.
The Natural State has many attractions for seniors and retirees, including a low cost of living and a beautiful environment.
However, high crime rates in the state make it less than ideal for retirees. Arkansas ranks among the top 5 most dangerous states. Retirees who want to feel safe in their retirement may consider moving to the safest states instead.
The Old Line State has a lot to offer retirees, but it also has several shortcomings that they should be aware of.
For starters, Maryland has a high cost of living; higher than the national average. This means that goods and services in the state cost 8.4% more than the average cost in the country.
Alaska has some of the most remote places in the country, making it an undesirable place to retire for people who want to keep in touch with family and friends, and those who are not in good health.
Alaska is also one of the most expensive states to live in. The state’s cost of living is 24.09% higher than the national average.
The Golden State has a reputation for being the most desirable place to live in the USA - or in the world, even. So why is it on this list? As one of the most populous states in the country (with a population of 39,538,223 people) California also has one of the most expensive housing markets in the U.S.
Despite its low costs of living, Alabama has one of the poorest healthcare systems in the country. The average life expectancy for retirees is low. Additionally, the state is ranked the 7th most dangerous state in the country.
Financial challenges have a significant impact on where you end up in your golden years. At Interactive Wealth Advisors, we offer Portland investment management advice to help you manage your assets wisely and achieve your financial goals for retirement.
Expert Tips from Interactive Wealth Advisors on How to Pick Your Best State to Retire
Thinking about which state is the best to retire in? When looking for what state is best for retirees, you'll want to find affordable retirement states with plenty of activities and amenities, good quality of life, and good weather. But with so many different factors to consider, it can be difficult to choose the perfect place to retire.
- Think about your health and well-being - Health-wise, are you in good shape to make a big move? Not every state ranks high in terms of healthcare. Even the most retiree-friendly states may have less-than-ideal healthcare. If you have any serious medical conditions or special needs, you’ll want to take this into consideration when choosing where to retire.
- Get a sense of the community and culture - It’s important to get a sense of the community and culture of the area you’re considering moving to. You’ll want to read up on the state to find out what the local economy is like, politics, financial issues, and other aspects that relate to the community at large.
- Think about the cost of living - Weighing the cost of living is incredibly important when choosing the best states to retire financially. Look at the monthly rent, food, transportation, and other regular costs of living in each area you’re considering moving to. Coastal areas often have higher costs. You can find the cheapest state to retire inland and outside of a major city.
- Taxes and other financial factors - Tax estate and financial planning for retirees are important financial factors to consider when choosing the best state for retirement living. You’ll want to check out the taxes for both your current state and the state you’re considering moving to. You’ll want to look at state and local taxes, as well as other financial factors like the cost of living and average homeowner’s insurance rates.
Our fee-only financial advisor in Portland can help you navigate the complex world of taxes for retirement, develop a strategy for your business exit, and provide estate planning to ensure that your hard-earned wealth is in good hands.
Best States for Retirement 2022: Methodology
We analyzed data for all 50 states in these categories:
- Quality of life
- Sports and Culture
- Quality of healthcare
- Affordable housing
- Insecurity and crime
- Third-party data retirement rankings by state
The data was pulled from multiple sources such as the U.S. Census Bureau, Bureau of Labor Statistics, Department of Housing and Urban Development, Medicare.gov, National Council on Aging, and other ranks by state websites.
Iowa and Florida win the race thanks to their lower tax rates. Florida has a great environment for retirement, great weather, and communities of fellow retirees living out their days. Florida also has a fairly low cost of living, excellent health care, and great quality of life.