Deciding where to retire can be as difficult as deciding when to retire, thanks to the effect of the pandemic on retirement accounts and savings.
WalletHub compared the 50 states across 45 metrics, including affordability, health-related factors, and overall quality of life, to compile its 2021’s Best States to Retire report.
“Even in the most affordable areas of the United States, most retirees cannot rely on Social Security or pension checks alone to cover all of their living expenses,” the report authors said. Social Security benefits increase with local inflation, but only replace about 39% of the average worker’s earnings. “While affordability is one of the biggest concerns when deciding where to retire, there are plenty of other factors to consider, like how safe the state is and how good its healthcare is (especially during the COVID-19 pandemic), as well as what activities it offers to keep retirees busy.”
Florida, which came out on top as the best state to retire, was the state the highest share of the 65-and-older population (20.1%), which is 1.9 times higher than in Utah, where the share is the lowest, at 10.8%. South Dakota has the highest share of the population 65 and older still working (22.98%), which is 1.7 times higher than in West Virginia, which is lowest, at 13.27%.
Ron A. Rhoades, J.D., director of the personal financial planning program in the Gordon Ford College of Business at Western Kentucky University, said that states generally desire growth, but he questions the cost of having a large retiree population.
“Florida faces a huge burden in caring for its elderly population in need of long-term nursing care, much of which is paid for by Medicaid,” Rhoades said.
Colorado, Delaware, Virginia and North Dakota round out the top five best states to retire, according to the list. New Jersey, New York, Mississippi, New Mexico and Rhode Island are the five worst states to retire, according to WalletHub’s metrics.
Mississippi has the lowest adjusted cost-of-living index for retirees (84.26), which is almost two-and-a-half times lower than in Hawaii, which is the highest at 194.66.
Louisiana has the lowest median annual cost of in-home services ($38,896), which is almost twice lower than in Washington, which came in highest at $71,294.
When it comes to life expectancy, Hawaii, California and New York are the top three states, whereas West Virginia, Mississippi, Kentucky and Alabama have the lowest life expectancy.
A common mistake retirees make when choosing where to settle is not doing crisis planning. Jennifer Lehman, Ph.D., J.D., assistant professor of financial planning at George Fox University, said it’s good to have friends around.
“Once they are unable to live on their own, an adult son or daughter takes them in, often in another city where they do not know anyone outside of the immediate family members taking them in,” Lehman said. “If they had moved to, for instance, a continuing care facility or a 55+ community and built up a support network while in good health, they could stay nearby when in poor health and have that same support network.”
