2014′s Best & Worst States for Military Retirees

by John S Kiernan

Wallet Hub Best Worst States for Military RetireesRetirement is typically viewed as the end of the line – a time for rest, relaxation and the pursuit of interests long ago put on the back burner. But the narrative is far different for military retirees.

For starters, the average officer is only 45.2 years old upon retirement from service and enlisted personnel are even younger – 41.4 years of age, according to The Congressional Research Service. Most are therefore still in the job market. Military retirees – veterans in particular – must also deal with the trials of assimilation, which has proven especially difficult in the wake of the wars in Afghanistan and Iraq – with rising numbers of young vets encountering hardship and homelessness. Finally, military retirees are at the juncture of a few crucial public policy issues – namely our national security, aging population and prodigious national debt – which will be the subject of significant scrutiny, numerous reformatory efforts, and a great deal of turmoil in the months and years to come.

With that in mind, and in honor of Memorial Day, WalletHub sought to help ease the burden on our nation’s military community by identifying the Best & Worst States for Military Retirees. This is a far more complicated issue than one might initially assume, given the extent to which state tax policies differ when it comes to military benefits, the relative friendliness of different job markets to veterans, and a variety of other important socio-economic factors. As a result, WalletHub took 19 key metrics into account in devising its rankings. You can check them out in the Methodology section below.

Main Findings

 

Overall Rank

State Name

Economic Environment Rank

Quality of Life Rank

Health Care Rank

1 Wyoming 4 3 5
2 New Hampshire 29 4 1
3 Montana 17 5 4
4 South Dakota 10 10 6
5 Nebraska 14 12 2
6 Alaska 6 15 11
7 Delaware 32 1 14
8 Kansas 4 22 6
9 Oklahoma 2 14 18
10 Maine 44 2 13
11 North Dakota 9 25 12
12 Hawaii 21 21 6
13 Iowa 29 18 9
14 Colorado 13 11 29
15 Virginia 8 6 51
16 New Mexico 33 20 10
17 Idaho 24 9 28
18 Maryland 12 17 35
19 Mississippi 1 42 21
20 South Carolina 17 7 45
21 Vermont 49 8 15
22 Alabama 7 29 36
23 Wisconsin 17 27 27
24 West Virginia 38 31 16
25 District of Columbia 41 39 3
26 Washington 37 23 30
27 North Carolina 31 28 33
28 Missouri 25 32 36
29 Georgia 28 40 18
30 New Jersey 42 19 38
31 Massachusetts 26 43 20
32 Florida 27 23 48
33 Minnesota 46 25 21
34 Tennessee 16 37 41
35 Louisiana 20 49 25
36 Ohio 15 38 43
T-37 Connecticut 45 16 44
T-37 Texas 3 51 40
39 Kentucky 11 44 46
40 Utah 23 46 31
41 Nevada 22 30 50
42 Arkansas 36 36 38
43 Rhode Island 48 13 46
44 Oregon 43 41 23
45 Michigan 35 44 32
46 Pennsylvania 39 33 49
47 Illinois 34 50 24
48 Arizona 46 35 33
49 Indiana 40 48 41
50 New York 50 47 17
51 California 51 34 25

WalletHub's Best & Worst States For Military

Friendly Towards Military

Ask The Experts:  Military Benefits Policy

  • Should veterans have to pay taxes on retirement pay?
  • What are the most underutilized military retirement benefits?
  • What should veterans look for in a place to retire?
  • How should the government help the military community?
  • Back to All Experts

    Linda Bilmes

    Daniel Patrick Moynihan Senior Lecturer in Public Policy, John F. Kennedy School of Government, Harvard University

    What is the one key thing the federal government should change in order to better appreciate the military community?

    My main concern with military retirement is that it only kicks in after 20 years and more than 85% of the Iraq/afghan vets won't stay in that long. The whole system was designed prior to AVF and needs to be redesigned.
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    Gregory M. Huckabee

    Associate Professor, Management, Marketing & Business Law, University of South Dakota

    Should veterans have to pay taxes on retirement pay?

    Yes, all retirement pay is normally subject to state and federal income taxes. It should not be treated any different than other types of retired pay. Veterans with disabilities do receive tax-free retirement or disability pay, but that is based on injury or sickness, not primarily retirement pay for service performed.

    What are the most underutilized military retirement benefits?

    GI bill-education benefits.

    What should veterans look for in a place to retire?

    Medical care, VA hospitals, warm weather to reduce stress and transportation difficulties posed by weather.

    What is the one key thing the federal government should change in order to better appreciate the military community?

    Provide significantly reduced state tuition for vets and children.
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    Donald J. Guter

    President and Dean, South Texas College of Law

    Should veterans have to pay taxes on retirement pay?

    Yes. Every American should do his or her part in accordance with the federal tax code. However, Congress has made an appropriate exception for those that have incurred combat related disabilities. In addition some states have exempted military retired pay from state taxes, and that practice is something I encourage states to consider to encourage military retirees to reside in their state.

    What are the most underutilized military retirement benefits?

    The most underutilized military retirement and veterans benefits are ones that require an application, such as Combat-Related Special Compensation and VA compensation.

    Many veterans and retirees don’t realize their illnesses, injuries, or ailments could be service-connected and qualify for VA benefits. In addition, for those who do apply, the most common reason benefits are denied is failure to properly, completely, or accurately fill out the correct forms. Many law schools, like ours, now have legal clinics to assist veterans with this task.

    What should veterans look for in a place to retire?

    There are several factors that veterans should consider when looking for a place to retire. Below are a few (in no particular order):

    1. Where you would most like to live.

    2. Proximity to family or concentration of friends.

    3. Your favorite climate.

    4. Near health and support facilities.

    5. Places with greater tax benefits for military veterans/retirees.

    6. Places with activities you enjoy.

    7. Cost of living, population, traffic, and public transportation.

    8. Near bases or VA medical facilities.

    9. Near a major airport if you plan to travel extensively.

    What is the one key thing the federal government should change in order to better appreciate the military community?

    Congress has been very supportive of those in uniform and their families, especially since 9-11. This includes providing increased funding for the Veterans Administration. More must be done, however, to make sure that VA hospitals are the focus of improved service to all veterans. This is a huge endeavor, but one that deserves our full support. Our young men and women should be encouraged by every word from and act of the federal government to serve in the military as an honored and respected way to serve America.
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    Mary Jane Morrison

    Emeritus Professor of Law, Hamline University School of Law

    Should veterans have to pay taxes on retirement pay?

    Retired pay is income and, with a few exceptions, should be subject to federal income tax because we are all Americans and many of us have taxable retirement pay that results from service to our country, region, state, or locality. The federal interest in taxing all retirement pay lies in not inviting quarrels over "me too."

    At a state level, however, things are different. First, taxing military retired pay violates the Constitution if the state exempts retired pay of state employees. Second, some states do not have state income tax at all. A few states do not fall into either of the other categories but have decided that state interest in enhancing a high quality workforce and civic environment is best served by exempting military retirement pay because those veterans have retired in early middle age, have extraordinary work experience, and are team-building leaders.
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    Gregory M. Travalio

    Professor Emeritus of Law, Ohio State University, Michael E. Moritz College of Law

    Should veterans have to pay taxes on retirement pay?

    Yes. The military has a generous retirement system, for which one is eligible after 20 years of service. For me, given the generous retirement benefits, there is no compelling interest to treat a military pension differently from a civilian pension. I understand that military service is different than civilian occupations in many ways, but it also provides retirement benefits that are much more generous than most civilian pensions (to the extent they continue to exist at all). I have no problem with them being subject to taxation (state and federal).

    What are the most underutilized military retirement benefits?

    I would say that Space-A transportation is not very heavily utilized.

    What should veterans look for in a place to retire?

    Access to a military facility that has a commissary, PX, Pharmacy, and a Retirement Center. Of course, the primary factors will be the same as civilian retirees: weather, family, cost-of-living, access to recreation, etc.

    What is the one key thing the federal government should change in order to better appreciate the military community?

    Insure that we have sufficient forces available to prevent multiple frequent deployments. I am concerned that the imminent cuts in the active force will make us vulnerable to these kind of deployments, should we become engaged again in even a single regional conflict. We need to appreciate the military community by insuring that they deploy no more than once every 4 years unless there is a major conflict.
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    Lael Keiser

    Associate Professor of Political Science, University of Missouri, Truman School of Public Affairs

    What is the one key thing the federal government should change in order to better appreciate the military community?

    The federal government’s biggest challenge is to provide benefits to veterans in a timely manner. The number of veterans needing services has rapidly increased and many of the programs the VA is in charge of are very complicated and bureaucratic.

    While the VA has made efforts to reform and has had some success, there are still a lot of problems. The VA has had an increase in resources but the vast number of veterans waiting for services and the complexity of the programs make fixing all of the problems very difficult.
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    John P. Cole

    ‎Lawyer at The Law Office of John P. Cole, LLC

    Should veterans have to pay taxes on retirement pay?

    Yes, to the extent other retirement pay is taxed, including Social Security.

    What are the most underutilized military retirement benefits?

    My observation is that military retirees generally take advantage of their benefits package, but non-retired veterans do not. Thus my answer would be: VA benefits for veterans who do not qualify for military retirement status.

    What should veterans look for in a place to retire?

    Available healthcare, preferably with Tricare and/or VA affiliations; continuum-of-care opportunities (independent living, assisted living, skilled nursing care); and activities. For high-income veterans, state tax considerations should be considered, too.

    What is the one key thing the federal government should change in order to better appreciate the military community?

    Change the VA presumption against benefits eligibility to a presumption FOR eligibility. It is backwards to assume that a veteran applying for benefits is not eligible.
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    Elizabeth L. Hillman

    Provost & Academic Dean, Professor of Law, University of California Hastings College of the Law

    What is the one key thing the federal government should change in order to better appreciate the military community?

    Veterans need to be appreciated not just by the federal government, but by their employers, communities, and families. Retirement often comes early in the productive lives of veterans, who have the potential to return to civilian life with hard-won experience and insight. We need to appreciate what veterans can do after they retire from active service as well as the sacrifices they, and their families made, in the military.
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    Don Zillman

    Edward S. Godfrey Professor of Law, University of Maine School of Law

    What should veterans look for in a place to retire?

    I would hope that vets would get out amongst the non-veteran communities as much as possible rather than just staying within military circles. The civilians badly need this real world contact with the military and I think the vets would find this fun work to explain the armed forces to all variety of civilian organizations.
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    William W. Huling Jr. LTC USA (Retired)

    Associate Dean, Alumni Affairs, Development and Corporate Relations – S. C. Johnson Graduate School of Management – Cornell University

    Should veterans have to pay taxes on retirement pay?

    Yes. Retirement pay - pensions - should be taxed like any other income that has not already been taxed. Combat pay on the other hand should not be taxed. I remember paying that in Vietnam and thought it an insult.

    What should veterans look for in a place to retire?

    A place that provides health and job security/opportunity, and a community that respects and supports veterans.

    What is the one key thing the federal government should change in order to better appreciate the military community?

    Fix the active and veterans health system.
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    Craig J. Bryan

    Executive Director of the National Center for Veterans Studies, University of Utah

    Should veterans have to pay taxes on retirement pay?

    I think it is reasonable to ask that retirement pay for veterans be taxed. It is a way that is comparable to pension and/or retirement tax payments for other professions and workers.

    What are the most underutilized military retirement benefits?

    There are so many benefits available that many veterans may not actually be aware of what is available to them. Given I work at a university, I am perhaps most focused on educational benefits. In my opinion, many military personnel and veterans do not utilize educational benefits in ways that will be most helpful to them. For instance, many use their benefits to obtain degrees from for-profit or online programs that do not provide the type of educational experiences that can directly translate into value-added options. In many career fields and professions, an online degree does not provide sufficient opportunities for advancement and growth to justify their expense. Veterans often do not know this and do not have access to mentors or advisors who can talk about these issues and help point them in the right direction.

    What should veterans look for in a place to retire?

    Veterans should consider what their goals and objectives are for retirement, and then make their decisions about where to retire based on what will help them reach these goals in a way that fits within their budget. For instance, some want to retire on the coast and sail, whereas others want to retire in the mountains. No matter what their personal choice and preference might be, I think the most important aspect of this process is talking with a financial advisor who can help them walk through these decisions and make sure they are making good decisions that will ensure their financial security during their retirement.
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    Billy Clayton

    Military Outreach and Recruitment Coordinator, Center for Academic Success Programs, Western Michigan University

    What is the one key thing the federal government should change in order to better appreciate the military community?

    The government needs to educate employers on the type of training a military member receives and what they can bring to a company. I have over 20 years of IT experience. Everything from terminating an Ethernet cable to establishing satellite links and managing an entire signal company. Unfortunately the IT industry is so "certification driven" that my 20 years of practical experience equates to nothing because the employer's website asks if I am certified in X and with a no answer, my application along with my resume gets discarded for not meeting the minimum requirements of the job. This was a very frustrating realization and caused me to have to seek employment in a different career field.

    Methodology

    Military retirees are confronted with a number of unique benefits relative to the general consumer population, largely due to the fact that the average service member retires in his or her 40’s and will likely move on to find a civilian job.  Military retirees may also be eligible for a variety of unique benefits – from educational discounts and pensions to tax breaks in certain states.  WalletHub therefore sought to supplement standard retirement-attractiveness metrics – such as housing costs, sales taxes and access to leisure activities – with a variety of additional metrics that speak to the unique needs of former military personnel.

    We ultimately identified 19 key metrics, which collectively speak to the differences between each of the 50 states and the District of Columbia in terms of their overall attractiveness to military retirees.  You can find them below, along with the corresponding weights that we used to construct the rankings. The three overall categories in which the metrics were grouped – Economic Environment, Quality of Life and Health Care – were used for organizational purposes only and had no bearing on the overall rankings.

    Economic Environment

    • State Tax on Military Pension: 1
    • State and Local Sales Tax : 0.5
    • Veteran-Owned Businesses per 1,000 Inhabitants: 0.5
    • Volume of Defense Department Contracts: 0.25
    • Veterans Job Opportunities: 1
    • Number of Military Major Bases and Installations per 10,000 Veterans: 1
    • Housing Costs: 1
    • Cost of Living Index: 1

    Quality of Life

    • Veterans per 100 Inhabitants: 1
    • Number of VA Benefits Administration Facilities per Number of Veterans: 1
    • University System Rank: 0.5
    • Arts & Leisure/Recreation Establishments per 100,000 Inhabitants: 1
    • Percentage of Population Age 40+: 0.5
    • Number of Homeless Veterans per Number of Veterans: 1
    • Weather Conditions (based on sunshine and humidity): 1

    Health Care

    • Number of VA Health Facilities per Number of Veterans: 1
    • Number of Federal, State and Local Hospitals per 100,000 Inhabitants: 1
    • Number of Physicians per 1,000 Inhabitants: 1
    • Emotional Health: 1

    Source: Data used to create these rankings is courtesy of the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, the Tax Foundation, the U.S. Small Business Administration Office of Advocacy, Transparency.gov, Indeed.com, the Department of Veterans Affairs, U.S. News & World Report, Gallup Healthways, the Department of Defense, Missouri Economic Research & Information Center and the U.S. Department of Housing and Urban Development.

    Author
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    John Kiernan is Senior Writer & Editor at Evolution Finance. He graduated from the University of Maryland with a BA in Journalism, a minor in Sport Commerce & Culture,…
    1201 Wallet Points
    This article is seriously flawed. Example you list California as 51. California offers some excellent veterans benefits that drastically increase the veterans quality of life and income. Example 100% FREE tuition at any state school for all dependents of a service member with a 0% disability rating or higher saving veterans thousands upon thousands of dollars. They have special CalVet home loans for farms and rural purchases, property tax exemptions for qualifying vets, free vehicle registration, guaranteed a certain percentage
    of state contracts will go to veteran owned business, etc. You list NY as #50 well if you enter the military with NY as your home state of record and retire there your military retirement is not subject to state income taxes, they have veterans tuition awards and certain property tax exemptions, The value of many benefits offered by some states far outweigh the economic factors you list here. IF you are really interested in what states will be the best for you in retirement I suggest checking out a site like myarmybenefits and look under their state and territory benefits.
    Aug 26, 2014  •  Reply (2)  •  Flag
    @bobandcathy_villa: What do you get in the #1 state of Wyoming, hmmm a free fishing license.
    Aug 26, 2014  •  Reply  •  Flag
    @bobandcathy_villa: I'm a retired vet and I would never live in California. Between all the illegal aliens, gangs, sky-high taxes, debt, crime, DemProgs, leftwing contaminated "education", jackbooted anti-Second Amendment nuts, and to top it off, Governor Moonbeam, it's not a place I would ever visit let alone live. Business are leaving in droves and no one can blame them. It's a cesspool of socialist idiocy. I don't live in Wyoming, but I have been there and the state
    is a hell of a lot more friendly towards veterans and more appreciative of civil and individual liberties. You can have California all to yourselves.
    Sep 6, 2014  •  Reply  •  Flag
    This is a great analysis of some important factors for military retirees. However, each individual's needs are different and there are intangibles particular to each person that cannot be included in a summary analysis such as this. I am a military retiree and my girlfriend is about to retire, too. Would it be possible to get the data set so we can adjust to our particular situation?
    Aug 24, 2014  •  Reply  •  Flag