3/7/2013 6:30 PM ET|
Where is your retirement mecca?
It's not just a matter of how much sunshine your dream destination gets. Dig into the numbers to find the place that best suits your needs.
Economic conditions have been so bad since the recession that people have pretty much stopped moving anywhere for retirement. Millions of older Americans have been among the victims -- financially trapped in their homes and unable to even think about a retirement move. But as real estate markets slowly improve, the pace of relocation has begun to pick up as well.
My ground rules for where I want to live in my later years probably differ from yours. (Unfortunately, they also differ from my wife's!) My list includes only places in the United States. Warm climates once played a strong role in my preferences, but not so much anymore. Today, I'm much more interested in the financial condition of state and local governments. I want to live somewhere that has well-funded public services and transit. And I don't want to face upward-spiraling state and local taxes from governments dealing with enormous unfunded pensions and infrastructure needs.
I'm not into small towns much more than 25 miles from a metropolitan area. I want the culture, entertainment, learning, health care and senior-service resources that larger metropolitan areas offer. I also want access to a decent airport and mass-transit resources that will reduce my dependence on a car. I'm hoping my days behind the wheel will end a long time before I do.
Many important yardsticks in evaluating metropolitan areas involve money: the economic health of an area's private and public sectors, plus the state and local taxes I would pay as a resident. Key private measures include growth in jobs and population, as well as local economic activity. State and local fiscal health can be measured by budget stresses and unfunded pension and benefit liabilities for public employees. Overall tax burdens are a key measure, as well as the composition of an area's taxes -- the percentages of revenues provided by property taxes, income taxes and other fees.
While overall rankings are certainly important, it also makes sense to look behind summary scores. You really should check the fine print and use it to develop personalized rankings that reflect your needs and priorities. The most detailed review of relevant state information I've seen is the AARP State Handbook of Economic, Demographic, and Fiscal Indicators 2008. Unfortunately, that's the most current version of the handbook, and AARP says it's not planning an update.
Still, I'd advise you to begin your comparative search there. Significant measures of state and local performance do not change quickly. And the 2008 handbook, while dated, measured conditions as they were before the recession, and thus the data are not distorted by the downturn's short-lived if severe distortions. What you liked about Florida in 2005 will still be what you like about Florida in 2015.
Here are leading sources of detailed intelligence about state and local performance dealing with their overall economies, fiscal health and taxes:
The Milken Institute has studied America's most successful cities. Spend some time with its recent report, "Best Cities for Successful Aging," available on the institute's website (.pdf file).
Its top 10 large metros are:
- Provo-Orem, Utah
- Madison, Wis.
- Omaha-Council Bluffs, Neb.-Iowa
- Boston-Cambridge-Quincy, Mass.-N.H.
- New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa. (this was before Superstorm Sandy, which may be a long-term game-changer for this area)
- Des Moines, Iowa
- Salt Lake City, Utah
- Toledo, Ohio
- Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.
Milken's top 10 smaller metros for successful aging are:
- Sioux Falls, S.D.
- Iowa City, Iowa
- Bismarck, N.D.
- Columbia, Mo.
- Rochester, Minn.
- Gainesville, Fla.
- Ann Arbor, Mich.
- Missoula, Mont.
- Durham-Chapel Hill, N.C.
- Rapid City, S.D.
The Brookings Institution issues a quarterly Metro Monitor that takes the economic pulse of the country's 100 largest areas. Brookings recently createed an interactive online version that ranks the areas by overall performance and also by four key subgroups: employment, unemployment, metro economic output and home prices. You can also download the data and build your own spreadsheets to track variables of special meaning to you.
The Kaiser Family Foundation maintains a terrific database of state economic information, including measures of what it calls "distress" -- home foreclosures, unemployment rates and food stamp recipients. It then provides a blended ranking of the states across all measures. Kaiser's least-distressed states these days are:
- New Jersey (again, a finding that may change due to Sandy)
- California (a bit of a surprise)
- New Hampshire
The Tax Foundation calculates state tax burdens, reflecting corporate taxes, individual income taxes, sales taxes and property taxes. Its most recent report was issued in fall, reflecting 2010 information. The 10 states with the lowest tax burdens, it says, are:
- South Dakota
- New Hampshire
- South Carolina
The 10 states with the heaviest tax burdens are:
- New York
- New Jersey
- Rhode Island
More from U.S. News & World Report:
VIDEO ON MSN MONEY
For me it will not matter which state I live in cause I plan on not being home much. I want to travel the world in the early years of my retirement and then in later years travel the US.
In between my travels I plan on visiting my sons and getting great enjoyment out of eating all their food. Leaving a few drops of milk in the jug and putting it in the refrig. Empty the toilet paper roll and not put out a new one or better yet not tell anyone that I used the last of the T-paper in the house. Walk in to each room and turn on the lights and then walk out. Lastly turn on the TV in the family room and then go back to my bedroom. Then come back into the family room every 45 minutes and make sure that others know I am watching that TV show.
Where did this mindset come from that you have to move when you retire? Am I insane because I chose to live right here where I have been happy for many years? What about the people in those so-called "mecca's"? Do they need to move when they retire?
Power to anyone that chooses to move to greener pastures, as for me, I will stay right here.
I am looking at taking my retirement wealth and moving out of the country. Don’t trade one over taxed area for another over taxed area. Look out of the states and see what they have to offer. Foreign countries also want your money but they are willing to court you with less taxes, lower living expenses, and retirement communities. The US politicians are only looking at how fast they can pick your pockets and strip you of your financial security before they put you in a hole.
The devil is in the details... i.e., TX property tax is high in the big cities, but low in small towns including those adjoining the big urban areas. And cities like Houston give residents a 20% tax reduction on homesteads - and seniors even more, in some cases, over $100,000 additional exemption. Seniors also get tax freezes, so the tax amounts never go up.
And remember that Texas property prices are low, so you still pay less tax than many states with lower tax rates.
Bottom-line: do the math, get down & dirty with the details.
Live where you will have fun and enjoy people - and stretching your money means you can afford more fun!
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.