Last Update: 12:01 AM ET Jun 7, 2012
Its not what you think. Yes, warm weather states are in general the best places to which to retire in the U.S. And Floridaas alwaysis on the list. But the Sunshine state is no longer the absolute best place for retirees, according to research just completed by TopRetirements.com. That title now belongs (Pull up a rocking chair and a glass of Jack and cola if you want) to Tennessee. (At left, Graceland in Memphis.) Thats right; retirees might consider waltzing first to the Volunteer state for their golden years, according to John Brady, the president of TopRetirements.com. Why so? Well, Tennessee ranked highest among all 50 states based on Bradys analysis of such factors as taxes on all types of income (Tennessee taxes only interest and dividends), property taxes, climate, cost of living and senior health-care costs. Whats more, the state really wants retirees to sit for a spell and then some. For instance, the state recently launched a campaign to attract retirees called Retire Tennessee. That campaign features a website chock full of reasons to move to Tennessee: one being that the state has the lowest cost of living in the U.S. Now it should come as no surprise that southern states, Tennessee being the most northern of them, dominated TopRetirements.coms 2012 list of best states to which to retire. But what might come as a surprise are the states that followed Tennessee. Robert Powell (Read TopRetirements.coms full report here.)
Texas, which tied with three other states as second best place to which retire in the U.S., is one of two western states on the list. According to Brady, Texas made the list by virtue of its virtues: Theres no income tax, the cost of living is low, and the climate is warm. Yes, property taxes are higher than others on TopRetirements.coms top 10 list, but there are some protections for seniors, according to Brady. Whats more, Texas has 40 certified retirement cities, including towns such as Nacogdoches. By way of background, Brady took a different approach to develop the 2012 version of his best states for retirement list. TopRetirements.com rated each state against the following factors: income tax, taxation of Social Security, taxation of pensions, property taxes, cost of living, health-care expenses, and climate. In most cases a full point was awarded for each applicable factor (for example, no tax on pensions), although a few states earned partial points. Warmer states received one point for more favorable climate. None of the top 10 states tax Social Security. And all but Florida and Nevada have a very low cost of living, Brady said.
Louisiana, home to the most famous Mardi Gras celebrations in the world, tied for second. Whats good about Pelican state? Well, retirees wont have to pay any taxes on their pension income, the cost of living is low, and the climate is, as it is in most southern states, warm. Brady said Louisiana had a program encouraging retirement districts but it appears to be inactive. He notes that the town of St. Francisville is a hot spot for retirees. Brady, for the record, cautioned against using TopRetirements.coms list to determine which state might be best for you. Your best state to retire might be completely different, he said. For example, this list might not work for you if: your children or grandchildren live in another state; your income isnt high enough to make taxes an important factor; you wont receive a pension; cold weather doesnt bother you; you have a strong preference for a geographic area such as the mountains or city living; or you have enough money to retire anywhere you want.
Mississippi, where baby boomer Jimmy Buffett was born in 1946, offers retirees the very same benefits as Louisiana: Seniors dont have to pay any taxes on their pension income, property taxes are the fourth lowest in the nation, the overall cost of living is low, and the climate is Sunbelt warm. According to Brady, there are 20 certified retirement cities, including towns such as Hattiesburg and the college town of Oxford. Of note, Brady said some of the states on the top 10 list do not have as many attractive places to retire compared with others, which might negatively affect their ranking for you. Every state has resort areas, places near the coast or a lake, or college towns. But states on the list such as Florida and Texas offer more choices on places to live than say Alabama, Louisiana, Oklahoma, or Mississippi. This might particularly apply to someone moving down south from the Northeast. At left, Biloxi, Miss.
Alabama, which is one of the most tax-friendly states in the U.S. according to the Tax Foundation, tied with Texas, Louisiana, and Mississippi as the second best place to retire. As with Louisiana and Mississippi, retirees who live in the Heart of Dixie dont have to pay any taxes on their pension income, the per capita property tax is the second lowest in the U.S., and the cost of living is low. Alabama is also home to two great retirement spots: Huntsville and the former utopian colony of Fairhope, the latter of which is one of the most interesting retirement communities in the U.S., according to Brady. Read TopRetirements.coms review of Fairhope. At left, Big Spring Park in Huntsville, Ala.
Arkansas, the land of opportunity may soon become the land of retirees, given that its the sixth best place for seniors in the U.S. Brady said Arkansas is mostly tax friendly: Federal, state and private pensions are not exempt, though there is a $6,000 exemption. Plus, Social Security benefits are exempt. And, the cost of living is the fourth lowest in the U.S. Hot Springs and Eureka Springs are two popular towns for retirement, according to Brady. At left, Clydesdales pull a wagon by the River Market in Little Rock.
Florida, which in 2009 was the ranked by TopRetirements.com as the best state to retire, now ranks as the seventh best state. The reasons it remains high on the list: Theres no income tax. Plus, theres good property tax protection for full-time residents against increases, Brady said. Florida also has dozens and dozens of nice towns and cities for retirement, Brady reported. In fact, Florida is home to many of the best cities and towns to which to retire according to this At left, a band plays in Seville Square in Pensacola.
Oklahoma, which some say could become the home of the 2011-12 NBA Western Conference championship basketball team (the Oklahoma City Thunder), is viewed as the eighth best place to retire. According to Brady, the state does tax pension income. However, the overall property tax rate is low and the cost of living is third lowest in country. People looking for a low-cost retirement by a lake might enjoy living in Lake Eufaula, Brady reported. At left, the Philbrook Museum of Art and formal gardens in Tulsa.
Property taxes in Georgia are higher than other states on the top 10 list, but the state is phasing out state income tax on retirement income by 2016 and that (along with a low cost of living and warm weather) are reasons enough to make the Peach state the ninth best place to retire. Lawmakers, according to published reports, approved in 2010 a bill eliminating income taxes on retirement income up to $35,000 per year per person, or $70,000 per couple. With Social Security, couples can earn up to about $100,000 without paying state income taxes, according to the Atlanta Journal-Constitution report. The new law also does away with retirement income taxes on all income above that level. Seniors would still be taxed on most income they receive from working, the report noted. At left, Ebenezer Creek in Savannah.
Nevada, the Silver state, has seen its image tarnished a bit because of the collapse in real estate prices since 2006. One in every 300 homes in the state is in foreclosure, according to RealtyTrac. But the more established 55+ communities have generally fared better than those for the general population, according to TopRetirements.com, which ranks Nevada as the ninth best place to retire. Among the reasons: Nevada is a low-tax paradise, according to Brady. It has a no income tax. State sales tax is 6.5%. Total tax burden in Nevada is 49th in the U.S. The state ranks 29th highest for property tax collections. Whats more, Nevada does not have an estate or an inheritance tax. At left, steer roping at the Reno Rodeo.
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