After considering cost of living, property taxes, income taxes, climate, and fiscal health, TopRetirements.com released its list outlining the 10 worst states for retirees to live in 2012.
As a follow up with the article outlining the 10 best places to live in 2012, here are the highlights from TopRetirements.com’s yearly list outlining the 10 worst states for retirees to live.
TopRetirements.com ranked the states based on evaluating five criteria: fiscal health; property taxes; income taxes; cost of living; and climate. In 2012, three new states made the list, three surprising states were removed from the list (Ohio, Nevada and California) and a new state took over as the number one worst state to retire.
TopRetirements.com found there to be a virtual tie between Connecticut and Illinois (ranked number one in 2011), but as Connecticut has higher property and income taxes and cost of living, it won in a tie-breaker. In fact, residents paid the third highest amount in taxes nationwide in 2009. Of course the price of gas also plays a factor in the cost of living, even though the “Nutmeg State does have considerable charm and some terrific places to live…if you can afford to live there,” said John Brady, president of TopRetirements.com.
2. Illinois Thanks to its economic troubles due to poor pension funding, deficit spending, unemployment and foreclosure rates, Illinois is not fairing too well, yet it relinquished the number one ranking as the worst state to retire; income taxes were raised in 2011 to begin addressing the economic issues. Although the state “does not tax most pension or social security, other earnings and investment income are taxed at a fairly high rate” with its 5% flat tax rate.
With its underfunded pension and health liabilities, budget deficits, and fifth highest median property taxes nationwide, retirees “would face much higher income taxes here than they would in most other states.” Although Rhode Island an expensive place to live, many people enjoy living along the coastline.
4. Vermont Typically known for its excellent skiing opportunities, Vermont actually has “very high median property and income taxes,” including a top 10 cost of living.” Retirees who intend to spend the day playing golf or being in a warm climate all year round might not find Vermont to be an ideal location.
5. Massachusetts — When considering whether Massachusetts is the right place to retire, it is important to consider the high cost of living and property taxes. Yes, social security is tax exempt, but should a retired person decide to go back to work, income taxes are high thanks to “the flat rate applied to other earnings.”
6. New Jersey
The median property tax in New Jersey is $6,579 — the highest in the country. Add on having the highest tax burden according to the Tax Foundation, its budget deficit issues, and cost of living, N.J. might not seem as an appealing location. The benefit of living in N.J. is that couples making less than $100,000 do not have to worry about taxes on pension and social security income; not to mention there are some really nice beaches in the state.
It is just flat out cold. Why would anyone want to retiree to Minnesota when there is Florida or Arizona? Not to mention, Minnesota has the fourth highest income tax rate in the US and has a budget deficit issue.
8. New York
Having the fourth highest median property taxes in the country, plus a high tax burden, New York made this year’s list (again). However, thanks to its social security and pension exemptions and high standard deduction, New Yorkers “do not earn any negative points for income taxes.”
9. Maine Although Maine has a low cost of living, compared to New York, Maine’s income tax is $1,000 higher. In order to help decrease the income tax Gov. Paul LePage “has vowed to try to exempt retirement income from taxation.”
With a high foreclosure rate and very high property taxes, TopRetirement concluded that Wisconsin belonged on this list. Not all hope is lost as social security is exempt from income tax and there is a high standard deduction.
Go to TopRetirement.com to read the full report.
What states are you surprised to see on this list? What states do you think belong on this list? More reading: