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Toughest States for Retirees

Poor fiscal health lands Illinois last on the list

by: Kelly Miller | from: AARP | Updated January 2011

En español | Choosing where to live after retirement is a huge decision — and a very personal one. A low cost of living is a priority for some, while being close to family takes precedence for others regardless of the cost. As you plan for retirement, one smart way to identify the best place to retire for you is to eliminate the places that don't meet your needs.

See also: Best places to retire abroad.

Places to retire

Your Turn: Which state would you least like to live in during retirement?

Toward that end, TopRetirements.com, a website that provides information on retirement communities, has issued its list of the 10 worst states for retirement. The list is subjective, of course, but it's a good starting point for research. Factor in your personal retirement preferences as your review the rationale for why each of these states landed in the bottom 10.

Illinois retirees face frigid winters.
— Nam Y. Huh/AP

In compiling its list, TopRetirements.com gave the most weight to three criteria: taxes, fiscal health and climate. Each of these factors is important, generally speaking, to retirees. On the financial front, high taxes can eat away at limited incomes, while poor fiscal health can force state governments to raise revenue or cut services. A warm climate is a natural draw for many retirees. If those three criteria aren't among your top priorities, then the low rankings might not influence your decision.

Here are the 10 worst states for retirement, with No. 1 being the lowest ranked, according to TopRetirements.com:

Worst States for Retirement	Why You Should Think Twice
1) Illinois	Poor fiscal health
2) California	Expensive, and its finances are in disarray
3) New York	Very high taxes, including property taxes
4) Rhode Island	Worst-off state in the Northeast from a financial viewpoint; high taxes
5) New Jersey	Highest property taxes in the United States; has pension funding issues
6) Ohio	High unemployment and cold winters
7) Wisconsin	High property taxes and frigid weather
8) Massachusetts	High cost of living and high property taxes
9) Connecticut	Taxes Social Security and has high property taxes
10) Nevada	Foreclosure capital of the world

Visit TopRetirements.com for more details on why it ranked each state as low as it did. The information can be illuminating. Illinois, for example, is under such dire financial stress that it was forced to borrow money to fund its pension obligations. The state, however, doesn't tax retirees' Social Security income, which is a plus. The cold winters are inescapable.

You can also compare TopRetirements.com's choices to a similar list of the 10 worst-rated states for retirement that was compiled by Money-Rates.com, a finance website. Illinois didn't even make Money-Rates.com's list, which was topped instead by Nevada. Money-Rates.com gave significant weight to crime and unemployment rates.

Money-Rates.com also issued a list of the 10 best states for retirement.

Use this checklist to factor in personal retirement preference.>>