Everyone wants to get the most for their money. For baby boomers moving into retirement, however, squeezing the most value out of every dollar is especially important, since they will be living on a fixed income for the remainder of their lives.
Often, this reality necessitates a change in venue, whereby boomers leave areas of the U.S. where they lived during their working lives and pursue retirement in a less-costly part of the country. Wouldn't it be great to know just where those pockets of affordability are located, without expending hours of tedious research?
Well, boomers considering such a change in domicile can rejoice. The Tax Foundation, an independent tax policy research group, has done most of the hard work for us, mapping out the U.S. states that deliver on giving residents more than their money's worth. Here is their map of the U.S., which identifies the affordability of states based upon purchasing power.
The top five dollar-stretching states
As you can see, the best states provide an extra $13.38 to $15.74 for every $100 spent -- or, put another way, your $100 will buy $13.38 to $15.74 more in these states than on average in the U.S. Mississippi leads with the greatest added value per $100, followed by Arkansas, Missouri, and Alabama. South Dakota delivers the least, but still hefty, added "bang for the buck" of the top 5.
How do these particular states manage to give their citizenry such an incredible deal, day in and day out? There are several variables at work here, as you might imagine. The Tax Foundation explains that, in many cases, a lower income can actually make a person richer, if local prices are below average.
A big issue is taxation, as well: high-tax states, like New York, require extremely high incomes to produce the same standard of living that exists in low-tax states, such as Kansas.
Urban versus rural
Similarly, there are also variations within each of these states regarding the value of a dollar, which the Foundation points out in this map. This difference is worth knowing, especially for boomers – some of whom may want to escape their currently hectic cityscape, while others might prefer being in an urban setting, where travel is easier and amenities are nearby.
In Mississippi, for example, the value added to each $100 is only $9.29 in metropolitan Jackson, but an incredible $20.63 in many areas outside of the city. In South Dakota, the Rapid City area yields only an extra $8.23 in value for each $100 spent, but more rural areas will give you an extra $19.90 of purchasing power for the same shopping spree.
There are other considerations, too. Mississippi, Arkansas, and Alabama are among the poorest states in the U.S., with median 2012 incomes below $42,000. The type and variety of goods and services offered in such states may very well differ from the type of economy that exists in wealthier states, something that retirees should consider.
Doubtless, there are areas of affluence in each state, just as even wealthy states have pockets of poverty. In addition, there are other U.S. states that offer a slightly lower cost-of-living value, but may be more to your liking.
Although the Tax Foundation has done much of the heavy lifting when it comes to parsing the data concerning purchasing power across the U.S., only you can decide which state offers the best overall value for your retirement dollars.