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Best States to Retire

See the best states for retirement in 2020 and tips for building your retirement savings so you can afford the lifestyle you envision.
| MoneyRates.com Senior Financial Analyst, CFA

senior-couple-hikingThinking about how to engineer your best life in retirement?

Where you retire could affect your lifestyle and finances dramatically. So choosing which state you want to live in when you finally reach the happy state of retirement is an important decision.

MoneyRates conducts its Best States for Retirement study every year precisely because things change. Being aware of the issues that affect retirees and how well each state is addressing those concerns can help you in your decision.

Read on to see what brought each of the top ten states for retirement in 2021 to its position in the ranking.

Best States for Retirement - What We Considered

What determines a good place for retirement? The answer is different for everybody; but in most cases, you'll probably arrive at several factors that are important to you if you think about it.

To highlight the variety of ways location could affect your retirement lifestyle, MoneyRates.com evaluated all 50 states based on five categories:

  1. Healthcare conditions

    Using figures from the Centers for Disease Control on life expectancy at age 65 and available nursing-home capacity, as well as healthcare cost data from the Council for Community and Economic Research (C2ER), the study measured the effectiveness, availability and affordability of healthcare in each state.

  2. Personal security

    Based on statistics from the Federal Bureau of Investigation on incidents of violent and property crime in each state, this study measured the risk to your physical safety and your possessions due to crime.

  3. Local economy

    Figures on employment from the Bureau of Labor Statistics, on property taxes from the Tax Foundation and on cost of living from C2ER were used to measure the affordability and economic strength of each state.

  4. Weather conditions

    Figures on temperature averages and extremes from the National Oceanic and Atmospheric Administration (NOAA) were used to measure how comfortable and consistent each state's temperatures have been, while precipitation statistics from NOAA were used to measure whether states were particularly drought-prone or experienced heavy amounts of rain or snow. Data from the Universal Ecological Fund were measured relative to the size of each state to determine the frequency of severe weather events.

  5. Popularity with older residents

    Finally, to get a bottom-line measure of how popular each state is with older residents, the study considered U.S. Census data on the percentage of each state's population that is aged 65 or older.

In all, this study considered more than a dozen data series grouped into the five categories listed above. Which of these categories is the highest priority for you is a matter of personal taste; but by highlighting these issues, MoneyRates hopes to help people think through the full range of options involved in choosing a place to live in retirement.

Top 10 States for Retirement

Based on the average rankings across the five categories described above, the following are the ten best states for retirement in 2021:

1. Florida

South Dakota

Florida's high ranking as a state for retirement is no surprise. It also ranked number one in last year's survey and has long been a popular destination for retirees. In fact, Florida has a higher proportion of people aged 65 or older than any other state.

Even so, while Florida also ranked well for healthcare and weather conditions, it is not without its flaws as a retirement haven. The rate of violent crime in Florida is a little worse than in most states.

2. Iowa

South Dakota

This Midwestern state presents a clear contrast to Florida as a retirement option, but it has performed consistently well in this annual study. It placed third last year and was first the year before.

Iowa did particularly well in the healthcare category, ranking fifth this year. But be advised that the state's average annual temperature of 47 degrees might not be to everyone's taste.

3. Arkansas

South Dakota

This state has moved steadily up the rankings in recent years. Its strongest suit is affordability, due to a low cost of living and low property taxes.

The bad news is that crime is a concern - Arkansas is one of the ten worst states for violent crime and property crime rates.

4. Oklahoma

South Dakota

This ranking represents a huge leap from last year's 27th place. Oklahoma benefited from having available nursing-home capacity added to the healthcare criteria. Its percentage of available capacity is fourth highest in the nation.

5. Idaho

South Dakota

Returning to the top ten after narrowly missing last year and placing sixth the year before, Idaho had top-ten rankings in the healthcare, personal security and economic categories.

One negative note: Based on annual average temperature, Idaho is one of the ten coldest states.

6. Missouri

South Dakota

After being in the top 20 the past couple years, Missouri now graduates to the top ten. With fairly moderate temperatures and close-to-average precipitation, it ranked well on weather factors and also scored well for economic factors thanks primarily to a low cost of living.

Crime is a concern, however, as Missouri is one of the ten worst states for violent crime.

7. West Virginia

South Dakota

This state ranks behind only Florida and Maine for the proportion of its population aged 65 or older, so it has become an under-the-radar choice as a retirement destination for many people. As a result, it climbed from 15th last year to seventh this year. In doing so, West Virginia ranked better than average in every category except healthcare.

8. (tie) Arizona

South Dakota

Some of the top ten in this study may be non-traditional choices for places to live in retirement, but Arizona's warm climate has long been welcoming to retirees.

Besides a top-ten ranking for weather, it was rated number one in the healthcare category. Arizona has a relatively high level of available nursing-home capacity, relatively low healthcare costs - and life expectancy at age 65 is fourth highest in the nation. The big drawback is crime, with high rates of both violent and property crimes.

8. (tie) Indiana

South Dakota

Though not as well-known as a retirement destination, what Indiana shares with Arizona is a high rating on healthcare issues for seniors. While Indiana cannot boast Arizona's warm climate, it performed much better on crime safety and economic factors.

10. Hawaii

South Dakota

This state has been a consistent top-ten performer in this study over the years, though it is a place of sharp contrasts. It has comfortably warm temperatures, but it also has more rain and is more prone to violent weather events than most states.

Hawaii's low property taxes and low unemployment are economic pluses, though it does have the highest cost of living of any state. For those who can afford it, Hawaii seems to be a popular retirement destination as the state has one of the ten highest proportions of people aged 65 or older.

A full list of where all 50 states ranked follows at the end of this article.

How Much Should I Save for Retirement? Consult a Calculator

You shouldn't wait until the end of your career to think about where to live in retirement. This should be something you consider as you plan and save for retirement.

Retirement calculator can help you set retirement-savings targets based on how much you'll need to support your retirement lifestyle, but how do you know what that retirement lifestyle will cost?

Common rules of thumb about basing retirement savings on a certain percentage of income or your current expenses may fall short if you plan a lifestyle change in retirement. Thinking ahead about what kind of future lifestyle you want can help you calculate how much to save for retirement. Where you plan to live is a big part of that future lifestyle.

The nice thing is that envisioning the specifics of where you want to live in retirement doesn't just help you plan for retirement more accurately. The vision of where you hope to spend your retirement years should help motivate you to do the tough job of saving year-in and year-out to support your future lifestyle.

Saving for Retirement - 401(k) Plans, IRAs and HSAs

Saving for retirement takes more than planning. Ultimately, you have to use the right tools to turn those plans into reality.

It helps if you're aware of the different types of retirement savings tools at your disposal, such as:

  • 401(k) plans

    These are voluntary retirement programs commonly offered by corporate employers. How much you choose to contribute is up to you, and that goes a long way toward determining what kind of retirement you will be able to afford.
    In particular, if your employer offers matching contributions, you should make it a priority to contribute enough to take full advantage of the employer match.

  • Individual Retirement Arrangements (IRAs)

    Even if your employer doesn't offer a 401(k) plan, IRAs give you the opportunity to build tax-advantaged retirement savings. The tax treatment depends on whether you choose a Roth IRA or a traditional IRA, so learn the difference between these two options to choose the one that best fits your situation.

  • Health Savings Accounts (HSAs)

    Did you assume HSAs were just for paying near-term medical bills? Given that healthcare represents an even greater proportion of expenses in retirement, HSAs can also offer powerful tax advantages to enhance your retirement savings.

How do you make a retirement dream come true? Start by using a retirement calculator to see what it would take to afford that dream, factor in how location could help or hinder your plans, and then use appropriate retirement savings tools to meet your goals.

Best States for Retirement 2020 - Full List of States

Best States for Retirement 2020
Overall RankState
7West Virginia
18(tie)South Carolina
31New Jersey
32(tie)New Mexico
36South Dakota
37New Hampshire
38North Carolina
44Rhode Island
46North Dakota
47New York
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