Have a nest egg? 10 states you should consider for retirement
By Elyssa Kirkham/GOBankingRates
If you're in your 50s and have at least something saved for retirement, congratulations: You're in better shape than almost a third of older Americans.
Now stop celebrating. Even if you have a substantial nest egg, your savings could be quickly whittled down by a number of factors -- and one of the biggest can be geography.
Deciding where to retire shouldn't be something you do based on weather or even proximity to kids -- let them do the driving. If you want to retire and maintain your nest egg, you should be looking at important regional factors, such as taxes, local living expenses, and the affordability and accessibility of health care.
To make the search easier, GOBankingRates investigated all 50 states on those three components. We surveyed:
- Taxes: Local rates of Social Security income, estate, inheritance, property and sales taxes
- Living expenses: Home values, listing prices, local deposit rates and a cost-of-living index
- Health care: Average individual insurance premiums, average Medicare payment and the health of seniors who take advantage of regional health care
Read on for the 10 best states to consider for retirement.
10. Arkansas
Retiring in Arkansas will allow you to take advantage of fairly low living expenses and tax rates, but you will have to pay a bit more for your health care.
Arkansas seniors are among the least healthy in the nation, prone to smoking, obesity and cardiovascular disease. There are also fewer dentists per capita. The good news is premiums are pretty inexpensive -- $184 on average -- and residents get decent coverage from Medicare.
The state ranks well for cost of living and has one of the lowest average home listing prices -- $211,000. Residents don't pay Social Security, estate or inheritance taxes but do have to reckon with the second-highest combined sales tax rate in the nation, which can be upwards of 9 percent.
9. Utah
Coming in at No. 9 is Utah, which had the best health care score in our top 10 (second overall). One of the biggest reasons the state ranked so highly is its residents pay the lowest premiums in the country -- $158, on average. Utah seniors are also uncommonly healthy -- they ranked 12th in the nation -- and they enjoy better-than-average Medicare payouts.
On the flip side, Utah's hefty housing expenses hit it hard in our ranking -- the state has one of the highest average listing prices.
The good news for retirees is Utah has below-average property taxes and doesn't charge estate or inheritance taxes. It does, however, enforce a 5 percent Social Security income tax and average local sales tax rates of around 6.7 percent.
8. Michigan
Retirees who want to live on less will like Michigan: It's the cheapest state in our top 10, with extremely low home costs and living expenses. Also cheap in Michigan are insurance premiums: The average is just $204, ninth-most-affordable on our list.
Several factors knocked the state down in the rankings, though, including a high median property tax rate and low average Medicare payouts. That's OK though -- Michigan seniors are still ranked relatively high for good health.
7. South Dakota
Like many of the states toward the top of this study, one of South Dakota's biggest draws for retirees are its low tax rates. Unfortunately, these savings are slightly offset by a higher-than-average cost of living and abysmal deposit account rates -- South Dakota is in the bottom 20th percentile for interest.
On the other hand, residents enjoy much higher-than-average Medicare payouts -- in this regard, the state reaches the top 20th percentile. South Dakota seniors also made it (though barely) into the top 50th percentile for their health. The state was hampered by fewer dentists and primary care physicians.
6. Alaska
The Last Frontier is where new retirees can go to escape taxes -- almost all of them. Alaska had the best tax score in our study: No Social Security, estate, or inheritance taxes, and the lowest average sales tax rate of any state that charges one (1.76 percent).
On the other hand, Alaska's health care dragged the state down in our rankings, even with one of the highest Medicare payouts. On average, residents pay a lot in premiums -- the average, $345, is fifth-highest in the nation. Meanwhile, senior health in the state is in the bottom 40th percentile.
The state is also surprisingly expensive; Alaska ranked fourth-worst on the cost-of-living index, and its home values are higher than average. But deposit rates in the state are among the highest in the nation.
5. Wyoming
The biggest draw for retirees in Wyoming? No taxes -- almost. The state made it to the fifth spot on our list thanks to its favorable tax rates, including no taxes on Social Security, estate and inheritance, and low property and sales taxes. Those perks were tempered by some pretty expensive home prices, however, with the average listing price this month reported by Trulia at $415,000.
Though senior health in Wyoming is middling, the amount of Medicare paid out to retirees is far above average, which is good because the average insurance premium is high -- nearly $300.
4. Wisconsin
Retirees in Wisconsin have access to some of the best health care in the country, with the state ranking second in senior health thanks in part to low crime and widespread health care insurance coverage. That, combined with relatively low living expenses, helped it snag fourth place.
Other plusses: Wisconsin has no Social Security, estate, or inheritance taxes, and its sales tax rate is also one of the lowest. The caveat for home-buying retirees: Wisconsin's median property tax is fourth-worst in the nation, though home listing prices in the bottom third will help offset that cost.
3. Idaho
Idaho's extremely low living expenses catapulted it to third in our study, with one of the lowest cost-of-living scores in the nation -- only Mississippi and Tennessee are cheaper. Retirees also have access to higher-than-average local deposit rates to grow their savings and low local tax rates; residents pay no Social Security, estate, or inheritance taxes and fairly low sales and property taxes.
Idaho was bumped out of the top two spots due to less-stellar health care scores: The state is middle of the line (24th place) when it comes to its seniors' health, and its Medicare payouts are only average. Still, the state's average individual insurance premiums are low -- among the 10 cheapest in the nation.
2. Delaware
Delaware is another state with low tax rates for retirees, which pushed it to second place on our list. Residents enjoy no sales tax, no Social Security tax and no inheritance tax, though Delaware does have an estate tax -- 16 percent. However, property taxes in Delaware remain low: At just 0.43 percent of a home's value, the state has the fourth-lowest median property tax in the nation.
In terms of health care, the average amount of Medicare paid out to Delaware residents is among the highest, though the average premium is on the pricier end. Delaware seniors are on the whole healthy -- the state is ranked 15th in the country for that.
The only category for which Delaware took a hit in our study was living expenses, with higher-than-average home prices and cost-of-living scores.
1. New Hampshire
New retirees will have a hard time finding as good a tax haven as New Hampshire, and that's largely why it topped our list of the best states to retire if you have a nest egg and want to preserve it. The Granite State boasts no sales tax, no Social Security income tax, no estate tax and no inheritance tax.
What doesn't play in the state's favor is its high cost of living, bolstered by higher-than-average home prices and middling deposit account rates -- and the second-highest median property tax in the country.
Still, New Hampshire has one other thing going for it, and it's a big one: Excellent health care. Though residents have to face higher-than-average monthly premiums, Medicare payouts are better than average, and seniors in the state are among the healthiest in the country, according to the United Health Foundation.