2014′s Best and Worst Places to Retire

by Richie Bernardo

2014-Best-and-Worst-Places-to-Retire-BadgesAfter decades in the workforce, it seems only natural for retirees to expect financial security in their Golden Years. But gone are the days when Americans looked forward to a worry-free retirement. Many are working longer years with an increasingly unreachable goal of securing financial freedom for the rest of their lives. In 1991, only 8 percent of Americans delayed retirement to age 65. Today, that figure has doubled, according to the Employee Benefit Research Institute’s annual “Retirement Confidence Survey.”

And the reasons for extending their working lives are somewhat obvious: With a number of local economies still struggling to rebound from the Great Recession, a quarter of respondents to the EBRI’s survey said they can’t afford to retire when they want or plan to. Eighteen percent cited “inadequate finances” as the other primary hurdle to retiring on schedule. Fifty-eight percent of workers and 44 percent of retirees also disclosed having problematic debt levels, which some claim are higher than they were five years ago.

It’s no wonder a fifth of American workers approaching retirement age haven’t saved for it, the Federal Reserve reported this past August. More than half of workers surveyed by the EBRI cited cost of living and daily expenses as impediments to saving — or saving more — for retirement. So if simply making ends meet prevents workers from growing a nest egg for the future, what options are left for investing in retirement? One solution is to relocate to an area where retirees can stretch their dollars and live out their lives as comfortably as possible.

To help Americans find the best places to retire, WalletHub analyzed the 150 largest cities in the United States across 25 key metrics. They range from cost of living to job prospects for workers aged 65 and older to the availability of recreational activities. The study also includes an examination of each city’s quality of life and health care conditions. By highlighting the most retirement- and wallet-friendly cities, WalletHub aims to ease the process of finding a new place to call home.

Main Findings

 

Overall Rank

City

Affordability Rank

Jobs Rank

Activities Rank

Quality of Life Rank

Health Care Rank

1 Tampa, FL 9 92 3 19 46
2 Grand Prairie, TX 26 58 70 30 2
3 Orlando, FL 7 98 2 93 30
4 St. Petersburg, FL 9 45 31 48 49
5 Scottsdale, AZ 100 54 14 3 21
6 Overland Park, KS 77 5 91 10 8
7 Port St. Lucie, FL 5 62 56 17 51
8 Cape Coral, FL 54 86 84 4 38
9 Plano, TX 40 54 109 29 1
10 Peoria, AZ 89 67 43 5 10
11 Colorado Springs, CO 35 12 25 49 67
12 Irving, TX 26 40 59 97 3
13 Pembroke Pines, FL 55 117 115 6 20
14 Garland, TX 26 92 107 45 4
15 Aurora, CO 82 9 41 81 11
16 Fort Lauderdale, FL 57 50 18 97 24
17 Cincinnati, OH 60 21 1 120 70
18 Tempe, AZ 89 21 44 69 15
19 Salt Lake City, UT 61 14 4 139 43
20 Boise City, ID 33 32 52 11 140
21 Mesa, AZ 89 86 60 15 44
22 Vancouver, WA 103 72 16 61 11
23 Brownsville, TX 2 129 140 62 54
24 Tucson, AZ 58 92 34 14 105
25 Lincoln, NE 42 3 58 56 108
26 Gilbert Town, AZ 89 21 114 21 23
27 Lubbock, TX 3 12 125 108 64
28 Augusta, GA 12 74 122 26 90
29 Austin, TX 24 35 49 118 57
30 Denver, CO 82 60 11 89 54
31 Chandler, AZ 89 8 129 28 27
32 Corpus Christi, TX 6 101 73 80 94
33 Omaha, NE 44 7 38 107 74
34 Hialeah, FL 48 150 113 13 17
35 Irvine, CA 138 62 27 22 16
36 Glendale, AZ 89 46 62 73 25
37 Henderson, NV 79 54 92 1 124
38 Atlanta, GA 56 139 7 123 42
39 Sioux Falls, SD 63 2 66 68 84
40 Tulsa, OK 14 85 50 55 137
41 Madison, WI 118 1 7 106 47
42 El Paso, TX 4 144 125 25 85
43 Fort Worth, TX 34 89 108 57 59
44 St. Paul, MN 108 40 10 121 14
45 Arlington, TX 26 80 144 59 36
46 Miami, FL 48 149 23 100 33
47 Raleigh, NC 72 31 40 104 56
48 Phoenix, AZ 68 19 87 60 71
49 Glendale, CA 132 147 76 2 5
50 Dallas, TX 16 69 83 114 58
51 Grand Rapids, MI 51 51 13 129 63
52 Winston-Salem, NC 53 20 82 50 99
53 Huntington Beach, CA 138 24 116 9 9
54 Reno, NV 37 24 45 33 150
55 Chesapeake, VA 63 37 94 47 65
56 Birmingham, AL 15 134 6 109 107
57 Newport News, VA 63 42 79 52 80
58 Springfield, MO 19 38 36 101 130
59 Richmond, VA 68 35 21 117 88
60 Minneapolis, MN 110 4 27 140 19
61 Seattle, WA 105 54 24 90 48
62 Huntsville, AL 36 98 96 41 110
63 Albuquerque, NM 48 33 95 64 91
64 Fort Wayne, IN 25 38 75 95 113
65 Oklahoma City, OK 20 30 81 67 147
66 Pittsburgh, PA 86 88 12 92 100
67 Virginia Beach, VA 63 65 64 82 78
68 Santa Clarita, CA 125 29 121 31 7
69 Durham, NC 71 10 65 125 68
70 Jackson, MS 32 69 74 105 87
71 Amarillo, TX 11 92 134 65 125
72 Oceanside, CA 135 110 56 23 22
73 Norfolk, VA 63 65 34 102 105
74 Jacksonville, FL 20 117 47 96 138
75 Lexington-Fayette, KY 42 11 105 76 129
76 Mobile, AL 20 46 142 63 141
77 Long Beach, CA 132 123 68 37 13
78 Laredo, TX 1 80 148 79 53
79 Spokane, WA 74 59 80 87 77
80 Chattanooga, TN 47 124 22 72 132
81 Garden Grove, CA 138 148 78 8 6
82 Sacramento, CA 125 104 17 39 76
83 Riverside, CA 114 126 93 34 37
84 Santa Rosa, CA 146 46 66 7 86
85 Shreveport, LA 51 51 111 54 135
86 San Antonio, TX 7 109 128 110 95
87 Baton Rouge, LA 62 92 48 112 103
88 Nashville-Davidson, TN 23 49 39 134 145
89 Tallahassee, FL 30 33 104 128 103
90 Greensboro, NC 96 18 100 58 109
91 Louisville, KY 39 83 45 111 133
92 New Orleans, LA 82 125 42 91 81
93 Wichita, KS 17 69 103 127 111
94 Knoxville, TN 18 143 29 124 121
95 Columbus, OH 37 27 120 103 120
96 Des Moines, IA 58 17 127 133 62
97 Tacoma, WA 96 107 9 136 52
98 Charlotte, NC 75 15 101 116 79
99 Anaheim, CA 138 107 110 24 29
100 Akron, OH 70 112 69 99 91
101 Oxnard, CA 138 43 99 18 61
102 St. Louis, MO 73 122 20 145 82
103 Montgomery, AL 31 113 86 71 146
104 Honolulu, HI 145 102 15 16 93
105 Santa Ana, CA 138 113 87 46 28
106 Las Vegas, NV 79 105 53 74 139
107 Kansas City, MO 85 43 60 115 128
108 San Diego, CA 135 116 33 38 97
109 Oakland, CA 147 51 26 121 40
110 Aurora, IL 119 72 146 66 17
111 Little Rock, AR 88 16 32 137 118
112 Chula Vista, CA 135 130 118 27 35
113 North Las Vegas, NV 79 119 137 40 102
114 Indianapolis, IN 46 27 72 149 114
115 Fremont, CA 148 120 132 12 26
116 Houston, TX 45 82 124 144 65
117 Los Angeles, CA 130 100 98 20 98
118 Portland, OR 121 26 19 119 118
119 Ontario, CA 114 145 143 43 31
120 Cleveland, OH 78 133 54 135 73
121 Columbus, GA 40 77 112 78 144
122 Memphis, TN 13 67 85 147 149
123 Toledo, OH 89 89 102 85 116
124 San Jose, CA 149 103 77 35 69
125 Rancho Cucamonga, CA 125 134 147 32 32
126 Anchorage, AK 106 5 89 132 101
127 San Francisco, CA 150 75 37 70 83
128 Washington, DC 138 75 30 143 60
129 Bakersfield, CA 98 110 119 53 131
130 Yonkers, NY 131 121 131 75 39
131 San Bernardino, CA 114 128 137 86 41
132 Moreno Valley, CA 125 142 149 42 34
133 Detroit, MI 76 126 106 129 112
134 Rochester, NY 107 60 5 150 122
135 Milwaukee, WI 112 62 51 148 75
136 Boston, MA 122 115 63 126 72
137 Fayetteville, NC 87 89 145 94 115
138 Buffalo, NY 101 78 55 141 135
139 Modesto, CA 102 138 134 51 123
140 Fontana, CA 125 137 150 44 45
141 Jersey City, NJ 124 132 133 88 50
142 Baltimore, MD 103 106 71 131 142
143 Fresno, CA 109 78 139 77 134
144 Worcester, MA 99 83 136 113 127
145 Stockton, CA 111 97 141 83 126
146 Chicago, IL 119 131 90 146 96
147 New York, NY 134 141 130 36 143
148 Philadelphia, PA 123 136 97 84 148
149 Newark, NJ 112 146 122 142 89
150 Providence, RI 117 139 116 138 117

Best_Worst_Places_to_Retire_090214

Ask the Experts

People plan for retirement at different stages in their lives. But regardless of one’s age, general wisdom has it that planning ahead and as early as possible can help secure a financially cozy retirement. To expand the discussion, we’ve asked a panel of experts to share their advice on various factors that prospective retirees should consider and retirement-friendly measures that city authorities can implement. Click on the experts’ profiles to read their bios and responses to the following key questions:

  1. What financial factors should retirees take into consideration when deciding where to retire?
  2. What should local governments do to attract retirees?
  3. What financial arrangements should people make in order to prepare for retirement?
  4. What is the biggest mistake that people make when planning their retirements?
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John Bowblis

Associate Professor of Economics, Miami University

What financial factors should retirees take into account when considering where to live?

There’s always taxes. So, of course, how much of your income from Social Security, pension payments, 401(k)s, IRAs and things like are actually going to be kept after paying taxesis important. Each state tax things differently. For example, some states don’t tax pensions. I personally live in a city that doesn’t tax retirement income for the city tax, but you do have to pay a school income tax on retirement income. So, one of the things you have to consider is how much money you’re going to have left over after taxes from your retirement savings.

Additionally, there’s the cost of living. How much is food going to cost? How much will you have to pay for entertainment and housing? Things of that nature. And then you have medical expenses. For example, what is the cost of health care? If you’re elderly and you’re going to buy a Medicare Advantage plan, prices are different depending on where you live. You want to think about not only what the cost of those premiums is going to be, but also the cost of a typical doctor’s visit (i.e., copayments). And if you get to the point where you’re going to need help getting to the doctor and vice versa, is there some sort of transportation there and how much does it cost to get to the doctor?

It’s also important to look past the financial aspects and consider access to health care and your support network in case something does happen. For example, if you’re moving far away from family members and you fall down and fracture a hip, now you have to pay someone to come and help you. So that’s something to keep in mind as well, beyond just the financial situation. I think that’s something that is often forgotten when discussing the best places to retire.

What can local governments do to make areas attractive to potential retirees?

There is a potential conflict between making an area attractive to retirees and making it attractive to young people. I used to live in an area in New Jersey where they built a big senior development, and the seniors wanted to pay a lower tax rate for the school system becausethey didn’t have children in school. However, senior citizens tend to need more services than mid-aged adults. There is more demand for emergency services: police, fire, and ambulance. Depending on how taxes are collected and distributed in a local area, promoting a retirement community may actually increase the burden of taxes on people. There is some potential conflict between paying for services that are needed by everybody of every age.

How do you decide when to retire?

I think what we’re moving away from ‘this is my retirement date’ in the sense that you’re going to completely exit the workforce. What we see people doing now working part-time employmentfor a while. And then, once youdon’t get the satisfaction or what you need out of that part-time employment, then you decide to retire fully. Some of this is driven by taste and some out of necessity. You need to be comfortable with the amount of money that you’re making and saved so that you can at least sustain what quality of life that you want over the rest of your life.

What are the biggest mistakes people make?

I think the biggest thing is not really having a plan and actually sitting down and thinking about what they really need and what they want their life to be. So if you’re somebody who says, ‘I want to retire and I want to go on all these great vacations,’ the amount of money that you’re going to need is significantly higher than if you say, ‘I’m going to stay at home and take care of my grandkids.’

What you need to do is you have to look at the lifestyle you want, you have to look at what you have saved, and actually sit down and figure out: do you have enough money saved and can you get enough money per month in order to pay for the things that you want on a monthly basis. You just don’t want to be in the situation where you turn 85 or 90 years old and you find out you don’t have enough money left. There isn’t really much you can do then, other than hopefully rely on family members. You’re going to be left with just Social Security.

Are people making mistakes in how they fund their retirement accounts these days?

What you really need to think about is what your risk profile is and what, specifically, your objectives are. If you’re somebody who cannot stand the ups and downs of a turbulent market, you’re going to want to put less money into stocks and more money into bonds. But the thing is, if you put more money into bonds, there’s the chance that you’re not going to have enough money for the long run. You’re not going to have enough income to offset inflation. Therefore, in those types of situations, you might even need to save more. So, I think the biggest mistake is, again, not having a plan and then based on what you think you need, adjusting your portfolio to meet those objectives.
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Mario D. Garrett

Professor, School of Social Work, San Diego State University

What financial factors should retirees take into consideration when deciding where to retire?

Where to retire can either be a personal preference or determined by where your family (children) reside. But if you have an open choice on the best place to retire, then there are a number of factors to consider. AARP conducts annual surveys on some of the best places to retire. In their survey they look at size of a city (not too small, not too big) the median home prices, state taxes, restaurants and other attractions. You can see their results here: http://www.aarp.org/home-family/your-home/info-09-2013/best-places-to-retire-social-security.html

This is very much tailored to affluent, healthy and relatively “young” older adults. However, there are multiple evolving needs as you age.

Just after retirement, you might want to live it up. Travel and explore. But at some stage, if you are lucky and live long, you will get frailer. More practical advice is to plan for this beforehand. Downsize, choose a place where you have access to services without using a car, or where alternate transportation is available. Explore where there are Naturally Occurring Retirement Communities (NORCs) that help you with aging-in-place. These “villages” are run by the community and are growing in numbers. Housing is the main expense throughout life.

What should local governments do to attract retirees?

Since 2007 the World Health Organization (WHO) has been promoting “age-friendly” cities. WHO has been doing this by identifying policies, services, and structures in the physical and social environment that support and promote active aging. Specifically these include outdoor spaces and buildings; transportation; housing; respect and social inclusion; social participation; civic participation and employment; communication and information; and community supports and health services.

In addition local governments should be promoting active community engagement. There are a number of Naturally Occurring Retirement Communities (NORCs) that local governments can promote by facilitating enhanced services to them. Local governments can kick start these organizations by channeling federal funds to develop NORCs. Once NORCs are established, local governments can work with these communities to provide enhanced services.

These can include free or reduced transportation (volunteer service, taxi coupons, and shuttle services to hospital/clinics/religious events); doctor/nurse visits at home; gardening landscaping services; cultural and religious events. By local government encouraging aging-in-place residents will be able to delay or evade nursing home placement.

What financial arrangements should people make in order to prepare for retirement?

There is more diversity and variance among older adults than within any other age group. The older the cohort the more variety there is--we call this heteroscedasticity. In terms of financial planning therefore there are two broad types. One group that made no financial planning, and the other group that made inadequate plans. The third group that had planned for every financial eventuality do not need any advice.

Poorer people are less likely to have done any financial planning and are more likely to be of ethnic background and to be female. They are more likely to rely solely on Social Security and on housing subsidies and programs. Cities vary in terms of whether they tax social security benefits and in terms of available HUD housing and other programs such as food banks. So some planning might identify where the best place to stretch your income and live in better conditions.

For the more affluent, and those that can make financial arrangements, older adults have three main costs in order of importance: housing, medical bills and transportation. Both housing and transportation can be addressed beforehand as older adults have already paid off their mortgage at this stage in their life. For transportation, especially in some cities where car ownership is a must, explore alternate ways to get to where you need to go. In terms of financial arrangement the most significant concern is medical costs. Explore all your options and determine your need. There are long-term care insurance that most people shy away from, but can protect you and your loved ones. Read the small print beforehand since most insurance do not cover all long-term care services.

What is the biggest mistake that people make when planning their retirements?

Most financial rebuke can be summarized in a few words “you did not save enough”. But “enough” is determined by your needs. And your needs (other than medical) are determined by planning. So if you plan to travel, then your income must cover that cost. If you plan on staying at home gardening, then your costs are much reduced. Overall, not planning for your retirement is the biggest mistake. And not just financially, but in terms of work, family, housing, legal and social.

The biggest mistake is assuming that fishing and golfing or some other hobby will be enough to keep you engaged. Everyone, including young adults, need to plan for their retirement activity. Developing a structured and engaging activity is necessary in keeping body and mind active and functioning. Volunteering is one option, but don’t assume it, you have to plan in advance and try it out. Retirement should not be a complete upheaval, but a change in pace.

Planning is the secret not just for financial security, but also for increased longevity and health.
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Marc A. LeFebvre

Heider College of Business, Creighton University

What financial factors should retirees take into consideration when deciding where to retire?

The most significant factors retirees should consider when to retire is obviously wealth, can they support themselves in retirement without the compensation they have earned while working. Health considerations are also a significant factor, if you’re in poor health the insurance coverage you receive from your employer might entice you to hold off retiring.

What should local governments do to attract retirees?

Local governments could do a few things to attract retirees: lower taxes on the individual such as "homestead exemptions" for real estate taxes on retirees, on the business side local governments could encourage healthcare providers to expand or relocate to their cities.

What financial arrangements should people make in order to prepare for retirement?

Financial arrangements should include estate planning (wills, trusts, medical and healthcare directives), portfolio repositioning (change in asset allocation) to fund spending needs in retirement while maintaining the retirees’ goals and objectives.

What is the biggest mistake that people make when planning their retirements?

The biggest mistake… hmmm, moving to far from family. As the retiree ages, the ability to travel due to health concerns becomes more difficult, when routine healthcare visits become more challenging or emergencies arise having family nearby is a significant consideration. Also just as important underestimating expenses in retirement can be a mistake as well for the portfolio.
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John Grable

Professor, College of Family and Consumer Sciences, University of Georgia

What financial factors should retirees take into consideration when deciding where to retire?

Of course, cost of living factors are going to drive the decision for many retirees; however, I think the most important factor is related to socialization and comfort level. You can think of this as "shared values." It is more important to find a community in which one shares values, cultural identity, and social networks than it is to find the least expensive place to live. For some people, this may mean living in a large city where costs are high. For others this may mean moving to a small southern town where costs are low. Retirees should never undervalue the importance of family and social relationships. Churches, social groups, and friends add to the value of retirement. It is hard to place a dollar value on, say, a deep friendship, but this factor is still very important.

What should local governments do to attract retirees?

What I have been hearing from retirees relates to the issue of safety. A town may not have all the attractions of a larger city, but if the community is perceived as safe this can be a big factor in a retiree's decision to stay or relocate.

What is the biggest mistake that people make when planning their retirements?

Going back to the first question, many retirees fail to quantify the value of their social networks before moving. While a community may have great resources and attractions, without a network of friends, family, and people who share values and cultural expectations, retirement can quickly become a drag.
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David Haber

Assistant Professor, Western Oregon University

What financial factors should retirees take into consideration when deciding where to retire?

Ask yourself: What can I do to earn a little money doing something I enjoy? "Where," to me, is only relevant if it affects this question. Otherwise, choose "where" based on other factors. (See answer # 3 as well).

What should local governments do to attract retirees?

Be kind to people on Social Security. Other than that, make downtown living affordable, attractive, and accessible; partner with a university to create university-affiliated retirement housing; create or expand parks for walking/hiking; think creatively to improve quality of life for all age groups.

What financial arrangements should people make in order to prepare for retirement?

See # 1. (I have no idea what to invest in anymore. Stock market appears to be in a bubble; housing is still unpredictable; gold or bitcoins-forget it. Always earn a little money doing the most enjoyable activity possible).

What is the biggest mistake that people make when planning their retirements?

Few make mistakes. Poor people have a tough life, period, whatever the age. If I had to come up with one idea: don't ever stop exercising. It becomes increasingly more important. And while you can start exercising in old age and gain benefits, it's best to cultivate a lifetime habit beginning when young. The three priorities in old age: health, enjoyably engaged, and finances.
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Sherman D. Hanna

Professor, Human Sciences Department, Chair, Consumer Sciences Graduate, Ohio State University

What financial factors should retirees take into consideration when deciding where to retire?

Taxes – for higher income retirees, obviously the impact of state income taxes, both rates and the tax treatment of Social Security and pension benefits, plus perhaps real estate taxes.

For moderate income retirees, the tax treatment of Social Security and pensions, plus sales taxes and perhaps real estate taxes e.g., for SS, see http://taxfoundation.org/blog/monday-map-state-income-taxes-social-security-benefits

For very high net worth households, state estate and inheritance taxes might be important.

What should local governments do to attract retirees?

For local governments, the state typically sets the tax environment, other than real estate taxes (e.g., reductions for the elderly), so it might be more amenities and accommodations for health issues (e.g., font sizes on street signs)

What financial arrangements should people make in order to prepare for retirement?

Aim for accumulating enough funds by 5 years before your real target retirement age – that way, market crashes and unexpected job losses might have less of an impact. If everything goes well by 5 years before retirement, then a worker would have the choice to reallocate retirement funds to stable investments, etc.

What is the biggest mistake that people make when planning their retirements?

Being overoptimistic on investment returns and job prospects.
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Deborah B. Smith

Associate Professor & Chair, Department of Sociology, University of Missouri-Kansas City

What is the biggest mistake that people make when planning their retirements?

The biggest mistake is not thinking about how they want to spend their time for the long-term. Once people today enter retirement they may have 20 to 30 more years to live. Americans should give some thought to how they ideally want to spend their time after they leave their career job. Leisure and volunteering activities are considered the two main pursuits for retirement. There is a wide variety of options for both. A conscious decision should be made to pursue activities that bring joy.
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Barbara C. Crosby

Associate Professor, Humphrey School of Public Affairs, University of Minnesota

What should local governments do to attract retirees?

As one who is nearing retirement, I would say that local governments that want to attract retirees should concentrate on having accessible transportation options, fairly stable tax rates, strong cultural life, and a variety of housing options.
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Andrew Whitman

Professor, Carlson School of Management, University of Minnesota

What financial factors should retirees take into consideration when deciding where to retire?

Where the grandchildren and other relatives you like live.

What should local governments do to attract retirees?

Have easy local and out of state transportation. Have active civic groups of civic centers. Have a university providing programs.

What financial arrangements should people make in order to prepare for retirement?

Save a lot; plan on not retiring and just changing your occupation to something productive that you enjoy.

What is the biggest mistake that people make when planning their retirements?

Assuming it will cost less than they are now spending. Planning on retiring before age 70.

Funding kids, & their education, before funding their own retirement. Not planning on how and who will take care of you when you cannot!
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Sarah Asebedo

Assistant Professor of Practice, Department of Agricultural and Applied Economics, Virginia Tech

What financial factors should retirees take into consideration when deciding where to retire?

1. State income and estate taxes

a. States differ in their income and estate tax levels, which could present significant savings for retirees if retiring to a state with lower (or no) income and/or estate tax.

b. If you expect lower income and/or estate taxes in the future, you may wish to factor this significant cost savings into your retirement savings plan and legacy goals at death. You may be able to save less today, spend more in retirement, or retire earlier than you previously thought; however, it is also wise to be conservative in your planning in the event your retirement state changes their laws or you change your mind.

2. Consider residency requirements of your “home” state and if your “home” state will continue to tax income sourced from that state.

a. If you choose to retire to another state for the tax benefits and also plan to maintain property and spend significant time in your “home” state, conduct your due diligence to ensure compliance with your “home” state’s rules so that you are not deemed a resident for income tax purposes.

b. States do conduct residency audits and evaluate several facts to determine if you are deemed a resident for tax purposes after relocation to another state. For example, the state of Minnesota evaluates several factors to consider whether or not you are considered a MN resident for tax purposes, such as: location of property, time spent in Minnesota, location of your bank accounts, community involvement, and place of worship. There are several other factors for MN that can be found here: http://www.revenue.state.mn.us/individuals/individ_income/factsheets/fact_sheets_fs1.pdf. It is important to review your specific state’s rules regarding residency. Think carefully if it fits your desired retirement life to conform to these rules.

If you earned your future retirement income in a higher tax state and will be receiving it in a lower (or no) tax state, consult with your accountant to determine which state will tax this income (e.g. pension, deferred compensation, future earnings from continued work, etc.).

3. Relocating and changing your residency can be complicated. Consult with your financial, tax, and legal advisors to ensure you have addressed all necessary areas.

a. For example, you will also want to review and update your estate plan based upon your new retirement state’s estate tax law.

4. Cost of living

a. Understand how your cost of living may change in your new retirement state. Consider housing, healthcare, and food, for example.

What should local governments do to attract retirees?

Local governments may be able to benefit and attract retirees by offering community resources and tax benefits, such as:

1. Income tax benefits and community resources for retirees seeking financial advice and coaching or therapy to help with the retirement transition.

2. Estate and gift tax benefits may attract retirees who have built substantial nest eggs.

3. Tax benefits for businesses providing services to retirees, including long-term care and other health care providers.

Local governments may also want to consider retirees’ access to quality health care and if there are ways to improve the access and/or quality in the community.

What financial arrangements should people make in order to prepare for retirement?

1. In addition to having adequate financial resources (e.g., personal savings, pensions, Social Security benefits, etc.), consider how to facilitate the transition to using those resources. Shefrin and Thaler (1988) suggested that through a process of mental accounting, it is easier to spend current income than current assets, therefore, it may be challenging to transition from a regular paycheck to spending one’s hard earned nest egg. Potential solutions to this dilemma are:

a. Consider establishing automatic monthly or bi-monthly “paychecks” from your retirement portfolio to replicate what it felt like when you were earning a regular paycheck.

b. Have an appropriate amount of liquidity (e.g. cash, cd’s) in your portfolio to sustain these “paychecks” so that you can continue to live your life and not have to sell investments in a down market.

c. Establish a plan for a sustainable portfolio withdrawal rate that allows you to live your life today while accomplishing your financial legacy goals in the future. A common approach to a sustainable portfolio withdrawal rate is to take 4% from your portfolio per year (Dalton & Dalton, 2014). Keep in mind that the 4% approach is a general approach and does not factor in individual goals and circumstances, such as: portfolio allocation (ratio of equity to fixed income), income taxes, lifestyle, changing expenses, family giving goals, health, and desired financial legacy for heirs.

2. Other financial arrangements include:

a. Chart out your current expenses and how those expenses may change in retirement. Will expenses be higher or lower? Will expenses be higher for a period of time and then reduce at a certain age (e.g. travel may increase for 15 years and then reduce based upon health constraints or other factors)?

b. Considering employee benefits opportunities to defer income until retirement when living in a lower income state or when overall income may generally be lower.

c. Meet with your employer’s human resources department to understand your benefits options. For example, if you have the option to enroll in a group long-term care insurance policy, it may be beneficial to do so. Understand if you are able to continue your health insurance plan into retirement or if you can maintain your group life insurance coverage after retirement (if it makes financial sense for you to do so).

d. Planning for health care (if retiring prior to age 65 when Medicare kicks in).

e. Deciding when to take Social Security benefits while factoring in potential benefits for your spouse and children.

f. Planning for future long-term care costs and evaluating the pros/cons of purchasing insurance. Incorporate the expense of a long-term care insurance policy into your retirement budget if you plan to purchase this coverage and have not yet done so.

g. If you plan to work or consult in retirement, start building the network you need to facilitate this work now so that you can hit the ground running.

h. Include financial arrangements in your retirement plan for any dependent children and/or dependent elderly parents.

i. Understand if there is a potential inheritance from family and decide if you want to include this future inflow into your retirement plan.

j. Evaluate the impact of funding your children’s education to your retirement plan. Education funding can be financed, but retirement cannot!

k. Decide how you want to facilitate charitable and family giving in retirement and in your estate plan. Include lifetime charitable and family gifts as an “expense” in your budget.

l. Ensure adequate liability insurance coverage (“umbrella policy”) to protect your hard earned assets.

m. Ensure appropriate financial and medical directives (powers of attorney) are in place.

What is the biggest mistake that people make when planning their retirements?

People devote a tremendous amount of time and energy planning financially for retirement. Having sufficient financial resources to support your goals is a must. However, beyond ensuring a sound financial strategy, the biggest mistake people make is failing to plan for life in retirement and the potential for a forced retirement. Consider the following qualitative aspects of retirement planning:

1. Involuntary vs. voluntary retirement.

a. Involuntary retirement (e.g. due to health or employer driven) has been linked to reduced retirement satisfaction (Bender, 2012) and must be a consideration when planning for retirement. The psychological transition to retirement can be hard enough as it is, yet may be even more difficult if retirement occurs earlier than desired - even if you have sufficient financial resources in place.

2. Positive psychological attributes, such as optimism, supportive family relationships, purpose in life, and perceived mastery have been linked to increased levels of retirement satisfaction (Asebedo&Seay, In Press).

a. It may be difficult to maintain these positive psychological attributes when transitioning away from the work environment. Therefore, it is beneficial to consider activities in retirement that can maintain and renew these important aspects of your life.

3. Compare the psychological costs against the financial benefits of relocation.

a. Be wary of retirement relocation decisions based upon financial factors only. Think beyond the financial implications and consider if the new state supports your desired lifestyle. Do you have or do you have the potential for a supportive community? How close are you to family and is that important to you? Financial benefits may change or be reduced over time (e.g. tax law changes) and decisions should not exclude the qualitative aspects of life.

4. Mitigate the potential for money arguments in retirement by discussing your retirement plans before the big day.

a. If you have a spouse or partner, chances are you will spend more time with them in retirement than you are today. Having conversations about retirement and beginning to experience certain aspects of retirement (see Practicing Retirement under #5 below) can go a long way in preempting money and life arguments when in retirement.

5. Identify your passions and pursuits for retirement and consider how you might practice them now.

a. The notion of practicing retirement and associated benefits of this strategy are highlighted in an article by Alan Spector and Keith Lawrence (2014) through the BAM Alliance called Practicing Retirement.

b. Spector and Lawrence suggest you create a written bucket list of retirement goals, experiences, and adventures and consider how to incorporate them into your life today. Benefits include:

i. Enjoying your life more today.

ii. Determining if your choices are good ones (e.g. does increased volunteer work bring you as much enjoyment and meaning as you thought?).

iii. Bringing clarity to your goals, which can lead to a better financial plan for them.

iv. Can be a catalyst for important conversations about retirement with your loved ones.

References Asebedo, S. D., Seay, M.C., (In Press) Positive psychological attributes and retirement satisfaction. Journal of Financial Counseling and Planning. Bender, K. A. (2012). An analysis of well-being in retirement: The role of pensions, health, and ‘voluntariness’ of retirement. The Journal of Socio-Economics, 41(4), 424-433. Dalton, M.A., & Dalton, J. F. (2014). Retirement Planning and Employee Benefits, 10th edition. St. Rose, LA: Money Education. Shefrin, H. M., &Thaler, R. H. (1988). The behavioral life cycle hypothesis. Economic Inquiry, 26(4), 609-643. Spector, A., & Lawrence, K. (2014). Practicing retirement. The BAM Alliance. Retrieved from http://thebamalliance.com/blog/practicing-retirement-alan-spector-and-keith-lawrence/
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Jude Boudreaux

Founder of Upperline Financial Planning

What financial factors should retirees take into consideration when deciding where to retire?

What is the climate like? Is it something that you can enjoy year-round, or do you have another place that you can get to escape either summer or winter? What is the cost of living like, compared to where you are currently? Retiring to Hawaii is great, but everyday items can cost substantially more, so make sure you've taken that into account.

What should local governments do to attract retirees?

One thing that Louisiana does is that they will freeze property taxes for people over age 65 in certain income brackets, so that's a great help in planning for your future. If other municipalities would do that, I think it would be quite attractive.

What financial arrangements should people make in order to prepare for retirement?

Estate documents - Wills, Living Wills, and Powers of Attorney. Share this information with your adult children so they can have access to it in the event of a tragedy.

What is the biggest mistake that people make when planning their retirements?

Not having a cash buffer in place for emergencies. Emergency funds are important while clients are accumulating assets, but even more important in retirement. I'm also concerned right now about holding long-term bonds in this low interest rate environment, I think there's more risk there than investors are considering.
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Harold Evensky

Professor of Practice, Department of Personal Financial Planning, Texas Tech University

What financial factors should retirees take into consideration when deciding where to retire?

Obviously, quality of life comes first; i.e., family (want to be nearby or far away); weather (some like it hot and some like it cold), size (large city vs. small community); social network (e.g., symphony, college, religious or ethnic concentration, etc).

Next would be cost of living. Can be checked at sites such as Money’s Cost of Living.

Then, depending on personal circumstances – opportunity for part time work; transportation (e.g., near regional airport).

What should local governments do to attract retirees?

In the short term, not much. Longer term keep down cost of living; provide significant social services.

What financial arrangements should people make in order to prepare for retirement?

SAVE! The three leg stool (pension, SS and personal savings) is quickly moving to 1 ½ (SS – ½ and personal savings).

PLAN and be realistic – future market returns are likely to be modest. As a rough guide the “4% ‘Rule’” is a good start, i.e., don’t expect annually to live off of much more than about 4% of your nest egg. After factoring in taxes and current markets it’s likely to be even lower.

Remember, the biggest risk in retirement is not dying, it’s living.

What is the biggest mistake that people make when planning their retirements?

Not planning.

Unrealistic expectations resulting in far tool little savings.

Confusing certainty and safety. For example, the return on CDs may be certain but when you factor in taxes and inflation they're very likely not “safe” if the goal is to maintain your standard of living.
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Onur Arugaslan

Professor of Finance, Haworth College of Business, Western Michigan University

What financial factors should retirees take into consideration when deciding where to retire?

Cost of living, reasonably-priced activities for seniors, healthcare costs, heating / cooling costs.

What should local governments do to attract retirees?

Maintain parks, support museums and local art scene in general, identify target markets and advertise heavily, inspect senior living facilities thoroughly, have information centers for the elderly and provide advice and referrals.

What financial arrangements should people make in order to prepare for retirement?

Prepare budgets and stick with them, start saving and investing as early as possible, change their portfolio allocation as they age, utilize IRAs/ Roth IRAs and other tax savings tools to the maximum limits given their income; spouses should act as a team.

What is the biggest mistake that people make when planning their retirements?

Not starting their planning early enough.
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Michael Guillemette

Assistant Professor of Personal Financial Planning, University of Missouri

What financial arrangements should people make in order to prepare for retirement?

Individuals should make sure that they have clear retirement goals and that a monetary value has been placed on those goals. They should also make sure their retirement savings is adequate for meeting their retirement goals. Hiring an expert like a certified financial planner can help people accomplish this task as retirement planning is a very complex process.

What is the biggest mistake that people make when planning their retirements?

Many people do not realize how much money they will need once they retire. Longevity risk (the risk of living too long) is often overlooked but can be insured by purchasing a deferred pure life annuity at retirement that pays out at age 80 or 85. If longevity insurance is in place individuals reduce the risk of running out of money before they die.
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Patrick Brennan

Professor of Professional Practice, Binghamton University

What financial factors should retirees take into consideration when deciding where to retire?

Cost of living expenses: food, clothing, housing, utilities, taxes, and transportation.

Quality of life: public transportation, health care, entertainment.

What should local governments do to attract retirees?

Provide Office for the Aging Services: reduced property taxes, discount utilities, subsidize housing, discount public transportation fares.

What financial arrangements should people make in order to prepare for retirement?

Take full advantage of tax deferred savings while working. Work for an entity that provides a pension and retiree health benefits.

What is the biggest mistake that people make when planning their retirements?

Go into retirement with debt not paid off (mortgage and credit cards).
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Tomas Dvorak

Associate Professor of Economics, Union College

What financial factors should retirees take into consideration when deciding where to retire?

When it comes to retirement, the most important thing people need to do is save. The percentage of income one needs to save depends on when you start saving, and on your income (because social security benefits replace greater percentage of low income than high income.)

What financial arrangements should people make in order to prepare for retirement?

When saving for retirement, people should know about their 401k plan. My own article shows that people are woefully uninformed about their 401k plans.

Methodology

To help American retirees find the best places to call home for their Golden Years, WalletHub analyzed the retirement-friendliness of the 150 largest cities in the United States. We examined each city across five key dimensions, namely affordability, jobs, activities, quality of life and health care. All dimensions were weighted equally with the exception of “Jobs,” which received a smaller weight. We then identified 25 metrics that were relevant to those dimensions. They range from cost of living to job prospects for workers aged 65 and older to the availability of recreational activities.

For this study, we assessed the costs that retirees would face under the assumption that many of them will have fixed incomes. The lower their expenses, the better retirees will fare in a particular city. In addition, we chose each city based on the size of its population. Surrounding metro areas were excluded.

Affordability – Weight: 5

  • Adjusted Cost of Living: Full Weight
  • States with the Best & Worst Taxpayer ROI Ranking: Half Weight
  • Annual Cost of In-home Services: Half Weight

Jobs – Weight: 2

  • % of People Aged 65 and Older Working: Full Weight
  • Number of Part Time Employees for Every Full Time Employee for People Aged 65 and Older: Full Weight

Activities – Weight: 5

  • Recreation and Senior Centers per Capita: Full Weight
  • Fishing Facilities per Capita: Full Weight
  • Hiking Facilities per Capita: Half Weight
  • Public Golf Courses per Capita: Full Weight
  • Adult Volunteer Activities: Full Weight
  • Best & Worst Cities for Recreation Ranking: Half Weight

Quality of Life – Weight: 5

  • Percent of Population Aged 65 and Older: Full Weight
  • Weather Ranking (Mild Weather) – WalletHub Research: Double Weight
  • Violent Crime Rate: Full Weight
  • Property Crime Rate: Full Weight
  • Air Quality: Half Weight
  • Water Quality: Half Weight

Health Care – Weight: 5

  • Number of Physicians per Capita: Half Weight
  • Number of Dentists per Capita: Half Weight
  • Number of Nurses per Capita: Half Weight
  • Number of Health Care Facilities per Capita: Half Weight
  • Public Hospital Rankings: Full Weight
  • Emotional Health: Half Weight
  • Home Care Facilities per Capita: Half Weight
  • Death Rate for People Aged 65 and Older: Full Weight

 

Sources: Data used to create these rankings is courtesy of the U.S. Census Bureau, the Federal Bureau of Investigation, the Council for Community and Economic Research, the U.S. Bureau of Labor Statistics, the Centers for Disease Control and Prevention, Genworth Financial, the American Lung Association - State of the Air, the Environmental Working Group, the Trust For Public Land, Medicare.gov, Charity Navigator, Gallup Healthways, Yelp.com, Golf.com and WalletHub Research.

Author
User
Richie Bernardo is a financial writer at WalletHub. He graduated with a Bachelor of Journalism and a minor in business from the University of Missouri-Columbia. Previously, Richie was a journalism…
391 Wallet Points
There is something very wrong with your study. You gave NYC very poor ratings in the Activities and Health Care categories. ARE YOU MAD? NYC is world renowned in these areas! On another issue, Texas has exorbitant property taxes which eradicates the high ratings for Affordability. Florida's rising property taxes and home insurance rates affect affordability as well....How many restaurants and stores are in each of these cities? What is the average cost of utilities? Auto insurance? These things matter
more to retirees than the presence of hiking opportunities. Please do it over and this time do it right.
Sep 13, 2014  •  Reply  •  Flag
This is completely skewed. Philadelphia is where I'll be from now on. I'm 78, have lived in 15 states plus DC, & about 30 cities, towns and rural areas. My father was an industrial engineer, transferred by his company--IA, IL (including Chicago), TN, MN, WI. In my early teens we came to Miami, FL, where Dad got skin cancers including a dangerous one he was lucky to survive. (I used to be a redhead and can't
stand the sun either.) My mother tanned, but she hated the humid heat, the ugly scenery & the stench of rotting fish, garbage & seaweed near the ocean. When Dad retired they sold, moved back to Iowa. I wouldn't go there to live, but they are still less creepy than the bigoted gun nuts in Texas, Kansas and Arizona--or most places in the South or West, perhaps excepting the West Coast & Hawaii--which are too expensive, with bad storms, quakes, volcanoes, wildfires & mud slides. I was a career Naval officer, the Navy moved me every 2 to 3 years to CA, HI, RI, NY (NY City), I resigned to protest the Vietnam War, married a consulting engineer, so we kept moving--NJ, NY, PA, VA, DC, TX, MI. We broke up, I moved where technical editing & project coordination were needed. My final job was in Philadelphia. Came in 1996, stayed after I quit work at 67, because I love these terrific Philadelphians, plus our rarely extreme climate--which of course is suffering global scorching along with the rest of the world, but remains milder. Unless they start fracking us, we'll have no significant earthquakes. City rents have gone up but are still low & so is general cost of living for seniors, with many local senior freebies and discounts. Sold my old car to a scrap dealer 2 years ago since elders get free bus rides (I can walk 1 or 2 blocks to 7 bus lines) and it’s easy to get to commuter train stations for 80-cent trips. At low cost I can travel 3 commuter rail lines & visit friends in the Catskills of NY state, where I used to live. But I prefer being home in Philadelphia. (Chicago would be my 2nd choice.) It's energizing to live in this age-spread, racially, religiously diverse Northwest Philly neighborhood. Every city has slums--but good people live there and good people are forced to be homeless everywhere nowadays. Philadelphia also boasts many shady parks, river walks, delicious tap water, many senior centers, community gardens, a great neighborhood food co-op with its own farm, museums for just about every interest, libraries (which we had to fight City Hall to keep!), terrific jazz, folk music, stage, opera, choirs & a topnotch symphony, a bridge named for my favorite poet (Walt Whitman), a terrific hospital complex with world class doctors, and many wonderful houses of worship of all faiths, including my own. The citizens here--white, black, Asian, whatever--are more civilized, courteous, caring & aware of issues than elsewhere, perhaps because the Quakers insisted on a high moral standard 300 years ago, putting love ahead of anything else, and our city is still a center of friendly interfaith activity that includes social justice activism. Every spring I walk with people from every religious faith during our annual Peace Walk. There's almost too much to do here on behalf of other people because our city has been abandoned by outsourcing industries. So I speak out with neighbors, fellow veterans & church members against injustice and war, march & petition to save our world from the greedy. This city is part of my family history, too. Dad's ancestors, a widow and her sons, landed here from Belfast 215 years ago, labored at menial jobs, earned enough to join the first pioneers in west PA, where they farmed and became Abolitionists, conductors on the Underground Railroad, and, some of them, coal miners and Union men. They set a high standard as Americans, and inspire me. Good Americans speak out for good works, so please don't move here unless you agree that caring for others is far more important than caring about money, and that you, also, deplore the pitiful ones who stamp on the faces of those who look different or speak with an accent. If you want to join us in our struggles to make a better world & a better Philadelphia—WELCOME!
Sep 6, 2014  •  Reply  •  Flag
I respectfully disagree with regards to your Philadelphia findings. We retired to Philadelphia from NY eight years ago and could not be happier. We have a wonderful park system, possibly the largest in the country, and our medical system can't be beat! How did it get rated as 148. We have world class facilities here. Plus free SR citizen access to mass transit, great senior organizations, wonderful museums and theatre,,I just don't know where you are coming
from...and Florida with its heat and crime, and poor health care, come on people wake up or at least be thorough
Sep 4, 2014  •  Reply  •  Flag
I noticed many of the cities you picked as best retirement cities are located in areas of the country with long, very cold winters or long, very hot summers.

Anywhere south of the states of Utah, Colorado, Kansas, Missouri, Kentucky and Virginia will generally have a short, mild winter and long summers which are very hot or very hot and humid, this would be south of about 37 degrees North Latitude. In fact, areas of the country south of these states will generally have uncomfortably hot summers which is a huge minus if one likes to spent time outdoors in the summer. About the only way to escape the intense heat in these areas is to stay in the air conditioned indoors or head for the mountains if you live in a state which has mountains. New Mexico or Arizona are the only two states which have mountains with enough altitude to offer some relief from the heat across the southern United States.
Anywhere north of about 42 degrees North Latitude, which would roughly be north of Utah, north of southern Wyoming, north of central Nebraska, north of central Iowa, north of Chicago, north of Ohio and north of Pennsylvania will generally have a short summer and a cold, long winter season.

In my travels I have found that if one enjoys a four season climate, with the seasons occurring in approximately four equal periods of time then in the central U.S. one will want to stay at the vicinity of 39.5 degrees North Latitude. I would say in the area between 40.5 North Latitude to 38.5 North Latitude for about the most moderate four season climate in the central United States. For the most part, no brutal heat nor brutal cold in these latitudes. If one wants a milder summer/colder winter go north from these latitudes, if one wants a hotter summer/milder winter go south from these latitudes.
Sep 3, 2014  •  Reply (1)  •  Flag
I somewhat agree - because Weather is the only factor Double Weighted, it probably is over factored in calculations. However, when I look at top ratings, they seem to include some southern cities that are intolerable in summer, while not including northern cities. Does "mild weather" only eliminate too cold cities, but not too hot cities?
Sep 4, 2014  •  Reply  •  Flag
As a resident of a Rochester, NY suburb, I respectfully disagree with your ratings criteria. Our overall cost of living is average for the contiguous USA, we have an excellent quality of life and enjoy the cultural life of the city of Rochester, we love the variety of our weather and our absence (so far) of severe drought, strong earthquakes, strong tornados, and area wide floods. Our temperature rarely goes above 90 F or below 0 F.
Come visit any time - you will be pleasantly surprised.
Sep 3, 2014  •  Reply (1)  •  Flag
I have to respectively disagree on a couple of points. My family and I live there for 25 years...we love the schools, the area is nice, but the weather...terrible..6 months of winter sometimes; usually short Spring; short summers, beautiful Fall, and HIGH TAXES. I moved to Florida, where my taxes are $2200 vs $10,500 in Pittsford...and the weather yes, it is hot, but I have a pool and live 30 minutes from the beach, and I have air
condition. Would I ever move back to Rochester, NEVER!
Sep 4, 2014  •  Reply  •  Flag
Your thoughts?
Sep 3, 2014  •  Reply  •  Flag