Retirement

by Ryan W. Smith

A successful retirement has many variables to consider before the equation comes into clear view. Retirees must save enough money to help with living expenses during their golden years, they will need to purchase the correct Medicare Part C & Part D plans and also allocate enough additional resources to make sure that healthcare expenses do not eat away at those living expenses. Living arrangements need to be somewhat stable, any part-time or consulting work will help but availability to work must be considered as well. A good financial planner can help with all of these things, using programs like AdvisoryWorld’s SCANalytics’ Monte Carlo feature to help determine proper future cash flows.

One variable that isn’t talked about much is location. While many will retire in the city and state where they spent their working years, have family or raised their children, there are some who will try to juggle a summer home in their primary location and a winter home to avoid harsh winters in the northern states. Others will relocate upon retirement to the best spot they can find, where winters are relatively mild and their retirement savings will last the longest. This balance is often quite difficult to traverse, according to WalletHub’s annual ranking of best and worst states to retire.

Many of the best places to retire, in fact, are not sunny and warm. Factors like health care, cost of living, tax regimes, and home care services heavily influence retirement decisions regardless of location. For these rankings, WealthHub used a rating system and weighted these variables.

WealthHub used 40% of an overall state’s ranking to factor in a state’s overall Affordability. Quality of Life is another 30% of a state’s score while Health Care comprises the remaining 30%. The data WealthHub used in its rankings came from a wide variety of both government and private sources like the U.S. Census Bureau, the FBI, U.S. Bureau of Labor Statistics, CDC, Retirement Living Information Center and GolfLink. Yes, GolfLink.

The fifth best place to retire in the U.S., according to WealthHub’s calculations, is Colorado. While its Affordability ranking is middling at #27, Quality of Life at #17 and Health Care at #7 propel the state to an excellent ranking overall.

Middle America has long been seen by those who live there as a great place to retire and WealthHub’s rankings back this idea up, with eight of the top 15 states to retire in the Plains or Rust Belt areas of the country. The fourth best state to retire in is Iowa, which like Colorado boasts an average Affordability ranking, for Iowa its #26, but for Quality of Life, #6, and Health Care, #5, the Hawkeye State is well ahead of fifth place Colorado in total retirement quality.

In third place is Iowa’s neighbor to the north and west, South Dakota. The Black Hills are high on this list because its Affordability ranking of #15 outweighs the #33 Quality of Life ranking the state receives. However, as the #2 state for Health Care in WealthHub’s rankings, South Dakota edges out Iowa to get the bronze.

The second place state is a bit of a surprise, South Dakota’s neighbor further west and a tad south, Wyoming. The Cowboy State is #4 in Affordability, which easily counterbalance average rankings for Quality of Life, #25, and Health Care, #19.

The best state to retire in is, of course, the state synonymous with retirees: Florida. The Gator State ranked #1 in Affordability and #11 in Quality of Life, easily balancing out the very average ranking for Health Care, #24.
Other states in the top 10 were Idaho at number six, South Carolina at #7, Nevada in eighth place, Delaware in ninth and Wisconsin at number 10. Each of these five states were very tightly grouped together and about one-half point in cumulative rankings below fifth place Colorado.

At the opposite end of these rankings are some states which are a bit surprising. One might expect to see an expensive place like California on this end of the ranking but the state’s #2 Quality of Life ranking, New York is #1, evened out its poor Affordability and average Health Care to put the Golden State in the middle of the pack.
At #46, or sixth worst, in these rankings in New Jersey. With an Affordability ranking of #41, a Quality of Life of twenty-seven and Health Care at number 35, the state was just barely edged out by New Mexico for the cellar dwellers.

The fifth-worst state to retire, or #47 overall, is Hawaii. Its Affordability ranking of #50, and Quality of Life ranking at number 34 more than outweighed the state’s #3 Health Care ranking. Sand and surf and health care are great if you can afford the rent.

The fourth-worst state, #48 overall, is a surprise: Connecticut. The state where so many go to escape the high-rents of Boston and New York in their working years was #49 in Affordability for retirees, shockingly. While Quality of Life for retirees in Connecticut ranked at #13 and Health Care ranked as #15, both good scores, the cost of living is just too high to balance the equation for the Constitution State.

The third-worst state to retire in, #49, is not a state: Washington, D.C. Its Affordability rank of 44, and Quality of Life ranking at #51 easily downgrade its ninth place finish in Health Care. The Nation’s Capital is abuzz nearly 24/7, but those early-bird dinners are pricey for retirees. Because D.C was at the bottom of these state rankings, we chose to include the 6th worst state, New Jersey, in our description.

At #50, out of the 51 places examined, is Alaska. An Affordability ranking of #38, a Quality of Life ranking of #50 and a Health Care ranking of #34 means that even though you get a beautiful view during both winter and summer, the costs of retiring in such a harsh climate might be too much without a strong health care system in place.
Finally, the worst place in the U.S. is also a bit of a surprise: Rhode Island. The smallest state is, ironically, #51 in Affordability. Its forty-sixth place in Quality of Life and #29 ranking for Health Care left the Ocean State wanting in these rankings.

The broad and diverse American landscape is a place that many people around the world aspire to live in, even in retirement. With such great range of outcomes, with such great differences in costs, health care and overall quality of life, there is a place in the U.S. for everyone.

It’s just a matter of confronting the most important factor in a successful retirement: spousal agreement. Both parties need to agree on important retirement factors like location to be successful. Rankings like WealthHub’s, conversations between partners and a diligent financial advisor are all variables in that great and complicated equation.

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