Many people look forward to retirement throughout their careers, but the vision of what makes a perfect retirement is much different from person to person. What might seem like an idyllic paradise to one person might be unbearable for another. That makes it challenging to come up with a one-size-fits-all list of best states to retire in, because there are so many factors to take into account.
Indeed, when you look at various surveys talking about ideal retirement spots, you'll find considerable variation among their results. In an effort to come up with a consensus, I looked at three different surveys and then consolidated their findings into a single list. Below, you'll learn about those five states and what makes them smart retirement destinations for so many people.
Only two of these states offer oceanfront beaches. Image source: Getty Images.
5. Idaho
For those who focus on warm weather in a retirement destination, Idaho might seem like an odd choice to start the top five. However, many of those who choose to retire in the state famous for its potatoes cited factors like low crime rates, good access to healthcare, and relatively low costs of living. From a tax standpoint, Idaho has pros and cons, with no state income tax on Social Security income but rates ranging from 1.6% to 7.4% on other types of retirement income, including distributions from tax-favored retirement plans.
4. Utah
The Beehive State also doesn't leap to mind for many people considering a place to retire, but its desert climate shares many of the qualities that have attracted so many retirees to the Mountain West. Relatively low taxes play a key role in Utah's appeal, with a flat 5% income tax rate that allows seniors to claim a modest credit against any tax liability. However, retirees should be aware that Utah is one of the few states that imposes state income taxes on Social Security benefits as well as other forms of retirement income. Nevertheless, those who love the outdoors will be attracted to the many national parks within Utah's borders, and access to healthcare is also a plus for retirees looking for a place to call home.
3. New Hampshire
Most people think of the Granite State as one of the few states in the U.S. that doesn't impose an income tax on most forms of income. For retirees, that includes not only Social Security but also distributions from IRAs, 401(k)s, and other tax-favored retirement accounts. However, New Hampshire does have an income tax on dividend and interest income, which can hit retirees who have built up a retirement nest egg outside of a tax-favored account. Nevertheless, for many retirees, low crime, a favorable culture, and good healthcare options make New Hampshire worth putting up with New England winters.
2. Florida
Florida is a popular choice for retirees from states across the eastern part of the U.S., topping one survey's list of best states to retire in. Most people cite the Sunshine State's weather as a key reason for their decision. Despite higher costs of living and higher crime rates than many of the other states on the list, Florida gets votes for its tax structure, which includes no state income tax. Sales and property taxes aren't unreasonably high in light of the income tax savings Florida provides. Moreover, although cities are expensive, you can find more reasonably priced areas of the state that can match your budget.
1. South Dakota
Two of the three surveys named South Dakota as their top pick, with the state's primary appeal being its affordability. South Dakota doesn't have an income tax, and other taxes tend to be modest. Costs of living are relatively low, and even though many outside the state know it only for Mount Rushmore, Wall Drug, and the annual Sturgis motorcycle rally, South Dakota tops the list in its residents having positive feelings about the social, community, financial, and health aspects of living there, as well as feeling a sense of purpose.
Make your best choice
Retirement is a very personal decision, and it's important to put this and any other list of top states in which to retire in perspective. Any survey is only as good as the assumptions it makes in assessing a retirement location, and your values might be completely different. Nevertheless, these five states all have something to offer retirees, and their combination of financial and lifestyle attractiveness makes them worth a closer look if you're nearing the end of your career.
