Advisors Weigh In on the Best States to Retire

Retirement is arguably a worker’s most important milestone, but it may be easier in some states than others.

With the cost of retirement expected to increase substantially in coming years, combined with a growing shift away from pension plans and toward individual 401(k) plans, the choice of where to spend the golden years is becoming as crucial as ever. According to a recent report from Bankrate, which took into account factors like affordability, weather and violent crime, some of the lowest-ranking states were Louisiana, Texas and Oklahoma. The big winners included New Hampshire, Maine and Wyoming. 

“This is meant not to disparage any given state,” said Stephen Kates, a financial analyst at Bankrate who helped author the study, adding that Louisiana has higher crime rates and worse healthcare outcomes. “For retirees, that matters.”

Taking (Tax) Advantage

New Hampshire topped the list and was dubbed the best state to retire by Bankrate because of its neighborhood safety and good healthcare outcomes. Its high ranking could also be due to the state’s lack of income tax and sales tax — combined with its repeal, earlier this year, of a state interest and dividends tax — according to Colin Walker, a co-founder of CoFi Advisors based in New Hampshire. These factors, as well as good weather, hiking trails and beaches, have made the state a hotspot for high-net-worth retirees fleeing New York and Massachusetts, he added. “It’s becoming more expensive because there’s such a demand here now,” Walker said. “I’m not surprised that it ranked high.” Other outperforming states included:

• Maine, which ranked second overall because of its high numbers of senior residents, low levels of violent crime and good healthcare outcomes.
• Wyoming, which was third overall and scored first in the tax category because it doesn’t have an individual income tax; it ranked fourth overall in terms of affordability.
• Vermont, which scored poorly on weather, but highly in terms of the number of arts venues and of senior residents.

The report’s bottom-ranking states, however, still benefit from low taxes and high affordability, said Mark Green, president of GFG Wealth Advisors, a firm based in College Station, Texas. Texas ranked last in healthcare in part because it has the highest ratio of people who defer care due to the cost, but its lack of a state income tax and more affordable housing make it an attractive option for many looking to escape northern snows, according to Green. “Here in Texas, in certain places, housing is definitely affordable,” Green said. “We’ve got major healthcare facilities throughout the state, especially in the metropolitan areas… I think that’s a big deal.”

To Go, or Not to Go. More than any metric, what ends up pushing retirees toward certain states is personal relationships, said Judson Meinhart, a principal at Modera Wealth Management based in North Carolina, which had a middle-of-the-road ranking of 26th. “They want to be close to family, they want to be close to friends, to their social networks,” Meinhart said. “I don’t see many folks picking up and going to West Virginia just because it’s more walkable.”