Top 10 States to Retire In

Considering Cost of Living, Taxes, and Lifestyle

Top 10 States to Retire In
April 4, 2014

As you close in on retirement age, you may be thinking of relocating to a different state. You could be doing this for many reasons, such as looking for lower taxes, warmer weather, access to activities you enjoy, a lower cost of living or something else. Everyone has his or her own priorities.

As a result, you see many different preferred retirement lists on the Internet, and often they don’t agree on which states are preferable. The only thing that is generally agreed on is where to avoid – the Northeast and the upper Midwest, due mostly to weather, taxes, higher cost of living, generally higher crime rates and less healthy lifestyles. There are exceptions within this broad area, but many of the preferred retirement areas are found in the “sunbelt” of the South, lower Midwest, and West.

With those caveats, here are our choices for the top ten states for retirement:

  1. Arizona – Arizona offers generally good weather, one of the most tax-friendly environments, and plenty of destinations and activities. Summer can be unbearable, but if you can afford the occasional snowbird lifestyle, Arizona is hard to beat.

  2. Colorado – One of the overall healthiest states, Colorado has relatively low taxes and costs of living, and beautiful scenery – although winter can be challenging.

  3. Florida – A surprisingly low cost of living and low taxes (no income tax), as well as beautiful weather and many activities, make Florida a top retirement choice. (Just make sure your hurricane insurance is paid up!)

  4. Texas – Texas provides plenty of activities, generally good weather, and is reasonably tax-friendly.

  5. Idaho – Idaho is tax-friendly with beautiful scenery, low costs of living, land a low crime rate.

  6. Mississippi – Mississippi offers a very low cost of living and low taxes.

  7. South Dakota – If you can stand the winters, South Dakota is tax-friendly, has a moderate cost of living, a low crime rate and high life expectancy.

  8. Virginia – Virginia offers a good blend of reasonable cost-of living, tax-friendliness, and interesting activities throughout the state. It's not the best at anything, but it's good at everything.

  9. Tennessee – Much the same as Virginia's attributes, with the added bonus of no state income tax and detriment of a high sales tax.

  10. Hawaii – Hawaii is arguable because it has the absolute highest cost of living, but it has so many other things going for it such as great weather, activity choices, and reported levels of happiness. Hawaii does have a high state income tax as well, but exempts Social Security benefits and most pension income.

If costs make you cross Hawaii off your list, substitute New Mexico, Wyoming, or South Dakota as good blends of low costs of living, decent tax-friendliness, and a range of lifestyle choices.

Where's California? California doesn't make the list because both the high costs of living and taxes are comparable to the Northeast, and to us that combination trumps the great weather and many lifestyle options.

Our best advice is not to rely on anybody's top ten lists (even ours) to decide where you want to retire. Find out what is important to you and research the area – not just on the state level but on the local level – then visit at least twice if you can, at different times of year. You can usually find honest locals at places like grocery stores and gas stations who will fill you in on both the pros and cons of the area.

Give your retirement some thought and planning during your working years. With a little groundwork, you will find the perfect retirement spot for you.

Let the free MoneyTips Retirement Planner help you calculate when you can retire without jeopardizing your lifestyle.

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