Retirement is a time to enjoy the fruits of one's lifelong labor. Many retirees look forward to being able to travel freely and moving to a new state they've always dreamed about. Some seek a better climate, especially if one originates from the north, while others relocate to be near their family or better healthcare. (If you have just retired, read Top 5 Ways To Spend Your Retirement Dollars.)
TUTORIAL: Retirement Basics
The biggest issues for retirees revolve around taxes, crime, cost of living, climate and house prices. The following is a list of bad states to retire in based on that criteria:
Maryland is less than ideal to retire in. According to the 2007 U.S. Census numbers, there are 642 violent crimes committed per 100,000 population, making it No.9 in the country. According to the ACCRA Cost of Living Index for the second quarter of 2011, Baltimore was at 119, and the Bethesda area sat at 129. So costs to live in the major metropolitan areas would be about 25% higher than the average because the cost of living for the United States is 100. According to the Maryland Association of Realtors, the median price of all sales in Maryland was $255,100 in 2010. During the same period, according to the National Association of Realtors, the median price of existing single family homes in metropolitan areas in the U.S. was $173,100. Taxes aren't as bad as some of its neighbors with the highest personal income tax bracket topping out at 6.25% and starting at 2% for low earners and 4.75% for income between $3,001 and $150,000. The annual average temperature is 54.2 degrees Fahrenheit, and it is ranked the 20th hottest state, according to data collected between 1971 and 2000 by the NOAA National Climatic Data Center.
Nevada may be a surprise entry for worst states to retire in. It has generally mild weather, although summer temperatures can top 100 degrees, and it is ranked 28th hottest with an average temperature of 49.9 F. Nevada's crime rate, however, is devastating, and is what brings this state onto the list. It was ranked No. 3 with 751 violent crimes per 100,000 residents in 2007. If you can look past the crime rate there are several attractive characteristics about this state. The housing crash has devastated the state's economy, and the median asking price of a home in Las Vegas-Paradise region was $138,000 and the Reno-Sparks region was $180,000. In the second quarter of 2011, the cost of living in those two cities was 101 and 98 respectively,, about the same as the national average. The taxes are a plus, as Nevada has no individual income tax provision.
New Jersey is plagued with cold winters with temperatures in the 10s to 20s, but it can hit as low at 0 F, and warm humid summers with temperatures averaging 82-88 F; it is ranked the 22nd hottest state, with an average annual temperature of 52.7 F. The state tax is also considered to be high with high earners taxed at a rate of 8.97% in 2010. The median sales price for a home in New Jersey was $304,000 in 2010, and the U.S. sat at $173,100, according to the New Jersey Association of Realtors. The bright spot is that New Jersey possesses easy access to quality healthcare facilities, while the crime rate is on par with national averages at 329 crimes per 100,000 people, and was ranked 29 in 2007. Being a coastal state on the Atlantic ocean weather conditions are unpredictable with additional concerns of hurricanes to the region. The cost of living in the major metropolitan areas is about 30% higher than the national average.(If you have chosen a retirement location that has cold winters, check out In Retirement, Snowbirds Leave Cold Weather Behind.)
Home to majestic mountain ranges and spectacular natural beauty, Alaska is a state that will take your breath away to visit. Those seeking a place for retirement though, should continue their search elsewhere. Despite Alaska being one of the states that has no income tax, access to healthcare is harder to get if you are not located in larger cities like Anchorage. The temperatures in winter can hit - 60 F while summer can be in the 90s depending on your location. It's not surprisingly ranked the 50th warmest state with an average annual temperature of 26.6 F according to the NOAA National Climatic Data Center. All that snow doesn't seem to deter crime with a reported 661 violent occurrences per 100,000 residents; the state was ranked eight in 2007. Being secluded also makes the cost of living high around 130 in Anchorage to 137 in Juneau. The median cost of a home in Anchorage is $255,900 according to the U.S. Census Bureau using a 2005 to 2009 average.
California dreaming turns into a nightmare very quickly for those looking to settle down in retirement. The weather in the southern part of the state is warm year-round, with the occasional rumble and shifting of the earth below your feet. On the coast, temperatures range from 40s in the winters to 70s and 80s in the summer. With California being on the coast, temperatures and climate can be different depending on your location in the state. Consistently ranked high for state taxes in the country, the top bracket ($1 million or more) is required to pay 10.55% in income taxes. Being home to Hollywood and fashion does wonders for California's reputation, but doesn't help the cost of living in Los Angeles was at 136 in 2010, 36 points above the U.S. average and San Francisco was way up at 164 according to the ACCRA Cost of Living Index for the second quarter of 2011. The median price of a house in California was $294,000 according to the California Association Of Realtors release in May of 2011. This is for single family detached homes, and is significantly higher than the U.S. median. The crime rate is higher than average as well with 523 cases per 100,000 people; California was ranked 13 in crime in 2007.
The Bottom Line
When considering where to move in retirement, it's important to note that not all criteria plays out evenly for every retiree. There are those that have dreamed of living in a place because of the beauty or local flavor, and would never even consider other factors. Relocating to be near family is one of the biggest reasons people move, and no matter what the tax rate or cost of living, it doesn't outweigh the ability to see your loved ones as much as you want. We have examined the cost of living, crime, median home price, tax rate and climate for each location, but remember the decisions shouldn't be made on statistics alone. (For more on retiring, read 9 Things To Know About Retiring In 2011.)