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The Costliest States for Retirement


Planning to retire in 2012? You could be starting off at a disadvantage – financially, at least – if you live in one of these 10 states.

TopRetirements.com, a guide to retirement destinations and communities, recently published its list of the 10 worst states for retirement, looking primarily at financial considerations. In specific, the site evaluated each state in terms of its fiscal health, property taxes, state income taxes and cost of living.  (The survey also included climate as a yardstick, under the assumption that most retirees “have a bias toward places with warmer winters.”)

The results: Retirees in the Northeast and Midwest will likely feel a greater pinch than their counterparts elsewhere in the country. Here are the states where your retirement dollars might not go as far as you wish:

1. Connecticut. Finished first (or last, depending on your perspective). The survey noted that Connecticut has some great towns for retirees and “considerable charm” – but those charms come at a price: steep property and incomes taxes, and a high cost of living.

2. Illinois. Actually, most pensions and Social Security payments aren’t taxed, but Illinois’s economic troubles – including deficit spending, unemployment and foreclosure rates – are “among the worst of any states,” according to the report.

3. Rhode Island.  Again, high property taxes, coupled with underfunded pension and health liabilities and budget deficits.

4. Vermont. Residents face “very high” median property and incomes taxes, according to the study, as well as a top 10 cost of living.

5. Massachusetts. The good news: Social Security income and most government pensions are exempt from taxation. The not-so-good news: property taxes that are among the highest in the country.

Rounding out the bottom 10: New Jersey, Minnesota, New York, Maine and Wisconsin.

This is the second year that TopRetirements.com has ranked states as retirement destinations according to financial factors. The goal, according to the study: “to try to help baby boomers understand where, all other things being equal, they can enjoy their hard-earned retirement without taking on more problems.”


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    • We are retired and live in WI. We are planning to move since WI is extremely expensive for retirees. Our house goes on the market next month. Everything is taxed and at a high rate. We plan to move as soon as the house sells. We are moving to PA and will save #9K a year. PA doesn’t tax pensions, or IRA distributions.

    • OK , maybe Illinois does have high taxes and its finances are not in great shape and there could be even higher taxes coming to head off our budget deficits and long term debts. However , I don’t want to leave. It is great fun watching the politicians and the news media contort themselves and the english language in their efforts to avoid dealing with our debt and deficit problems. I really want to see how this disaster in the making is going to play out. why would I give up my front row seat to this comedy/horror show? To paraphrase Flounder’s quote as the Homecoming Disaster Parade is about to start: “Oh boy. this is gonna be Great” Strap yourselves in and hunker down.

    • they have the mid-west states inaccurate here. Iowa has among the highest taxes on retirees in the mid-west. It taxes everything…SS, pensions, and investments. It may be a bit cheaper economy-wise but you have less to start with. Illinois has higher gas prices, but we buy most of our food in Illinois and many other goods as well. They are usually cheaper in Illinois, or sometimes not available in my part of Iowa. The comments about Illinois economic problems has nothing to do with retirees, it’s about those still trying to get there.

    • Illinois will have a $35 billion dollar deficit by 2015. Do you want to stay there after graduation, raise a family or retire there when you know most of your taxes and fees will go to pay off the indebted legacy of the Democrat/public union machine?

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.