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Economics Drive Best, Worst Retirement States

Hawaii and Iowa rank first and second respectively as the best two states for retirement in 2014, according to MoneyRates.com recent study, which also landed Alaska in last place.

Economic factors, the size and growth of the senior population, crime, weather and life expectancy were the key five categories used to examine the worst and best states for retirement. 

Economics took into account taxes, cost of living and unemployment, to measure whether a state was affordable and had a thriving economy.

Best Retirement States

Following Hawaii and Iowa as the top five states to retire in are Iowa, Idaho, Florida and Vermont, respectively. 

“Idaho ranked best of any state in the crime category, and with its low cost of living and thriving job market, the state also did well in the economic category,” writes Richard Barrington, senior financial analyst for MoneyRates.com. 

While Hawaii scored well for its climate, the category in which Hawaii ranked No. 1 out of all 50 states was life expectancy for people at age 65 today.

“There is just something about the place that agrees with people,” Barrington says. “One caution is that Hawaii has the highest cost of living of all 50 states, but it does somewhat offset that by having the lowest property taxes as a percentage of property value.”

Worst Retirement States

While some might assume Alaska’s ranking as the worst state to retire is attributed to its cold climate, it’s actually the state’s economy and low population of those 65 and older that catapults the state to last place.

“Alaska has a high cost of living and a weak job market — a bad combination,” Barrington says. “But those are just some of the problems, as Alaska ranked below average in every category in this study.”

Alaska is preceded by Louisiana, Tennessee, Illinois and Nevada, respectively, as the worst five states to retire.

And, the combination of a weak job market and high property taxes put Illinois in the bottom 10 for economic factors.

“If you are wondering how the job market affects people who are retired, keep in mind that more and more older Americans are taking part-time jobs these days, plus living in an economically disadvantaged area is unpleasant whether you are looking for work or not,” Barrington says.

Overall, Barrington says, retirees live in states that both rate as the best and worst for seniors.

“And no doubt many of them enjoy life there,” he says. “However, if you are considering relocating, the above may just give you a timely warning about what to look out for before you settle on one of these states.”

Access the 50-state list here

Written by Cassandra Dowell