5 Worst States for Retirement
5. New Jersey
Despite favorable scores for health care and crime metrics, Retirement Living says it seems residents are fleeing New Jersey in search of more affordable housing and smaller crowds. The Garden State ranks second worst for population density, suggesting that retirees may need to trade one of the state’s desirable beach communities for a rural one if space and traffic are a concern.
The average effective property tax rate is 2.47%, which is the highest in the nation. New Jersey taxpayers must make less than $150,000 per year to qualify for a tax exemption on some or all of their retirement income.
4. Louisiana
Louisiana ranks as one of the worst states in the country for crime, the report notes. And while home prices are lower here than in other states, a lower-than-average annual income and high local taxes make affording said homes tough.
“Relocation could earn seniors exemptions on Social Security and pension plans, but we urge retirees to choose their Louisiana retirement destination carefully. Local sales taxes in some cities can add as much as 7% to the state sales tax rate. With an average state and local tax rate of 9.55%, residents could end up paying some of the highest sales tax in the country,” Retirement Living says. “In fact, three in four Louisiana-based retirees cited costs and taxes as reasons for not recommending the state as a top retirement destination.”
3. Maryland
“Even though almost 17% of Maryland’s population is 65 and older, our data analysis indicates it’s not the most desirable retirement destination,” the report says.
Maryland scores well for access to physicians and a low crime rate, but it suffers in two other categories the elderly care about most: affordability and space to breathe. Housing data from the U.S. Census suggests home prices do not align with annual income. And Maryland has more people per square mile than almost any other state.
Maryland levies taxes on estates and inheritances, as well as a partial tax on pensions, 401(k)s, and IRAs.
2. New York
Median rent and home prices in New York are the main reasons the state falls so low on Retirement Living’s list of best retirement destinations. Seniors will get a tax break on their Social Security benefits, but the savings ends there. New York has a state income tax and also partially taxes retirement account withdrawals and private pensions.
The state has experienced a population decline since 2020. At -2.6%, more people have fled New York than any other state.
1. California
“No matter how you stretch it, living in California is expensive,” the report says. “Median home values are the second highest in the nation, as are gas and grocery taxes. Though Social Security is exempt, the Golden State fully taxes income from retirement accounts and pensions.”
When asked whether they’d be willing to move to another state, 57% of all California respondents said yes.
The state ranked 49th in affordability, and curiously, was 50th in quality of life.
View the full report here.
SEE ALSO:
• 2024’s 10 Best Places in the World to Retire
• Retiring on the Cheap: 5 Countries, 7 U.S. Cities Where You Can Retire on $2,000 a Month
• One State Sweeps Top 5 in U.S. News 2024 ‘Best Places to Retire’ Rankings
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.