Do (and Don’t) Retire in These States!

Of the many questions you should ask yourself when you’re planning for retirement, few may be more important than asking yourself where you’re going to live. Bankrate recently released its list of the five best and worst states to retire in in 2023, based on 5 weighted criteria:

1. Affordability (40%)
2. Well-being (25%)
3. Health-care quality and cost (20%)
4. Weather (10%)
5. Crime (5%)

In this episode of Capital Conversations, hosts John Biedenstein and Steve Paulus discuss what states they knew would be on Bankrate’s list and which ones they didn’t expect to see. The best place for you to retire is based on your specific retirement needs and goals.

For recent investment news and our take on the current market, retirement planning, and investment, listen to our podcast Capital Conversations or view our recent blog posts.

Below is the transcript of our most recent episode of Capital Conversations, "Do (and Don't) Retire in These States!"

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Steve Paulus: Hi, I'm Steve Paulus, and this is another episode of Capital Conversations. With me is John Biedenstein. We're going to talk today about an interesting article – well, I thought it was interesting, you'll determine that – of the five best and five worst locations to retire in. John, if I had to ask you a question, what would you say off the top of your head is the worst place to retire?

John Biedenstein: I don't want to pick on the Pacific coast, but I would have thought California would be on that list.

Steve Paulus: You would think, because you hear about high cost of living, you hear about high taxation, all of that.

John Biedenstein: The storms coming through, they happen to be doing it right now, unfortunately.

Steve Paulus: Yeah, their first tropical storm right now.

Well, actually it's a little bit further west. According to the survey – it was done through Bankrate – the number one worst state to retire in is Alaska. Now, that surprised me because I thought it would kind of be a nice place if you wanted to be out and about.

The next worst states were kind of more understandable. New York, California, Washington, and then Massachusetts. So most of these, with the exception of New York and Massachusetts, are all on the west coast. So, you're right. One of the things that I wondered is, you have to think about affordability, and that's something that folks don't always think about. You think, "Well, I have a house," but a lot of folks downsize when they get to retirement.

John Biedenstein: A lot of folks downsize and you’ve got to think about affordability in the home. Affordability for healthcare and all those other things are factored into this. They did a good job of [considering different things] when they made this determination.

Steve Paulus: They did.

John Biedenstein: So, a couple of factors were affordability, well-being, healthcare quality and cost.

Steve Paulus: One of the things that I thought was good is the way they weighted them too. Affordability, as you pointed out, is 40% of the weighting. And that's a big thing because it's not just, "Can you afford your house?" It's like, "How much are groceries? How much is it to repair your car?" How much is it to just live your daily life? And a lot of those factors are important.

Weather was also an important factor. One of the points in the article they made about Alaska was, "Yes, it can get down to 50 degrees below zero," which is not everywhere, but you kind of want to move as far away from that as possible, I think, when you retire.

The other thing is crime, and crime was not weighted very heavily, but it still is a factor.

Let me ask you another question. What do you think is the number one state to retire in?

John Biedenstein: Show me Missouri.

Steve Paulus: Homer. Actually, Missouri is in the top five.

John Biedenstein: How about that?

Steve Paulus: And our neighbor to the north, number one, Iowa. Iowa's number one. Number two is east coast, Delaware. Then West Virginia. Then the "Show-Me" State, Missouri. And then Mississippi. And again, you listen to these and you think, "Well, those wouldn't be some of my first choices." But you then go back to the question of affordability.

John Biedenstein: Correct.

Steve Paulus: My goodness. The things that you have to pay for are just tremendously much cheaper generally in this area than they are on the [west] coast. So that's a big issue.

John Biedenstein: Yeah. And it's very interesting. The states that are more central states, with the exception of West Virginia, are lower cost of living states, I think. With our clients and the retirement plan participants we work with, we're kind of in the Midwest, but we stretch to both coasts. So we do see it. I was surprised a little bit to see that our neighboring state of Illinois – which has a tax incentive where they do not tax retirement plan income – wasn't on the list. It's surprising, but –

Steve Paulus: It's good news, I guess.

John Biedenstein: It's good news.

Steve Paulus: One of the things that I was pleased about is, and you know about this as well, is the Senate Bill 488 that just went into law, I guess it was July 1st. Missouri doesn't tax Social Security anymore. So that's a real plus. We were one of only 12 or 13 states that taxed it. So now we're giving people who are retiring a great break on that one.

Disclaimer: The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always, please remember, investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Correct Capital Wealth Management is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Correct Capital Wealth Management and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Correct Capital Wealth Management unless a client service agreement is in place.

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As always, what your personal retirement plan looks like – including where you spend your golden years – is completely up to you and based on your needs and goals. If you are in retirement, approaching retirement, or reevaluating your retirement plans, reach out to Correct Capital Wealth Management for personalized advice and insights. Speak to a financial advisor today by calling 877-930-4015 or filling out our online contact form.