These Popular Retirement States Are Overrated
Many of the biggest retirement destinations feature high prices and low quality of life, a recent GoBankingRates study found.
July 03, 2019 at 01:14 PM
6 minute read
Retirement InvestingThe original version of this story was published on Law.com
Many Americans nearing retirement and thinking about where they want to live focus on such things as cost of living, health care services and weather. A new study suggests they would be wise to look at other factors as well, as the most popular states for retirement may not be the best ones to meet their needs.
GOBankingRates analyzed the top 10 states where retirees relocate, according to a UnitedVanLines survey, and compared them with the other 40 states based on 11 factors to see how they stacked up.
These are the most popular states to retire: Arizona, Florida, Idaho, Maine, Montana, Nevada, New Mexico, South Carolina, Vermont and Wyoming.
It may come as a surprise that some of these states — Florida and South Carolina, for example — are not that affordable for retirees seeking a cheaper cost of living. Only Wyoming can count itself among the 10 least expensive states in the U.S.
"There are two distinct concepts related to the cost of living in retirement: How much money can you generate to fund your retirement, and how much money will you need to fund your retirement?" Greg Klingler, a certified financial planner and chartered federal benefits consultant at GEBA Wealth Management, said in a statement.
"Because the latter is directly attributed to the cost of living in your chosen retirement destination, where you plan to retire is one of the first and most important questions we, from a financial planning perspective, ask to get an accurate representation of your future budget."
Costs and amenities can vary greatly between states, and a comfortable retirement involves more than just adding up the cost of housing and food.
Only four of the top 10 retiree destinations — Arizona, Idaho, New Mexico and Wyoming — rose above the median on GOBankingRates' list in terms of costs for a comfortable retirement.
The best bargains were to be found in Wyoming and New Mexico, which ranked in the top 15 for lowest cost of living among U.S. states. No-go states were Vermont, Maine and Nevada, which fell in the bottom 15.
Health Care
Retirees require more health care, and may eventually need to decide whether to age in place, move to an assisted living facility or enter a nursing home.
The analysis showed that those who will want quality care at home should avoid relocating to Vermont — which, at $5,148 a month, ranks No. 46 out of the 50 states for the cost of a home health aide — and Maine, which ranks in the bottom 10 with a monthly cost of $4,957.
Instead, they should look to New Mexico and South Carolina, which are the most affordable states in the top 10 when it comes to home health care, at an average monthly cost of $3,813 in each state.
Nursing home care costs in retirement can add up quickly. The average monthly cost of a semiprivate room in a nursing home is $7,441, according to Genworth's 2018 cost-of-care survey.
Of the 10 states retirees flock to the most, half have steeper costs than the national median for a semiprivate room in a nursing home:
- Idaho, No. 26 nationwide with an average monthly cost of $7,574
- Florida, No. 28 at $8,152 per month
- Nevada, No. 29 at $8,228 per month
- Maine, No. 38 at $9,429 per month
- Vermont, No. 39 at $9,475 per month
The least expensive state for a semiprivate room on GOBankingRates' list is South Carolina, which ranks No. 13 in the country with a monthly cost of $6,418. Arizona follows at No. 14, with a cost of $6,494 per month; Montana at No. 21, costing $7,006 per month; Wyoming at No. 23, with a monthly average cost of $7,178; and New Mexico at No. 24 nationwide at $7,285 per month.
Quality of Life
Quality of life can be hard to measure, as the term often means different things to different people. "It's worth noting that not everything has a price tag, and though you can't assign a financial value to things like living near your grandkids or a body of water, they may carry a great deal of weight, making it clear that all retirement decisions are extremely contextual," Klingler said.
For GOBankingRates' list, quality-of-life factors included the percentage of the population 65 and older, the average temperature, and violent and property crime rates in the top 10 states for retirees.
Florida has the highest percentage of residents 65 and older at 19.36%, as well as the warmest average temperature at 71.8 degrees Fahrenheit. However, the state ranks in the bottom half of the country for safety, with its property and violent and crime rates falling in the No. 28 and No. 31 spots.
Maine and Vermont have the second- and third-highest percentages of residents ages 65 and older, at 18.80% and 17.54%. They are also very safe in general, with Vermont ranking second best in terms of violent and property crime rates, and Maine ranking No. 1 for low violent crime rates and No. 4 for low property crime rates.
In contrast, choose to retire at your own risk in Arizona, South Carolina or New Mexico, all of which rank among the 10 worst states for safety. New Mexico is dead last for property crime and second worst for violent crime.
In reality, GOBankingRates found that the 10 most popular states for retirement may not be the best choices. Besides Wyoming, just three states fall in the top 25 in terms of cheaper costs for a comfortable retirement.
So, where are the actual 10 best places to retire? GoBankingRates' analysis showed that these states were most retirement friendly by cost: Alabama, Arkansas, Indiana, Kansas, Michigan, Mississippi, Missouri, Oklahoma, Tennessee and Wyoming.
In these states, the cost for a comfortable retirement ranged between $53,000 and $56,000 a year, and the monthly cost of a semiprivate room in a nursing home ranged from a high of $8,562 to a low of $4,639.
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