Where to retire is one of the most important aspects of retirement planning. It’s not just a lifestyle decision. Where you live is every bit as important a financial decision as how you save and invest.
When you’re in the prime of your working years, it may make good financial sense to live in an “expensive” city. In cities where costs of living are high, salaries are usually commensurately high as well. If you’re a young professional, then the city that offers you the best career and social networking opportunities may be the best place (financially speaking) for you to call home.
But in retirement your concern isn’t with where the highest-paying jobs are. Your concern is where the money you’ve saved up will go the furthest (and be taxed the least). Expensive, high-tax cities such as San Francisco and New York will deplete your retirement savings a lot faster than low-cost cities located in states where retiree assets are taxed minimally.
Financial periodicals regularly put out “best places to retire” lists. Of course, the rankings are in large part subjective. But to the extent that they are based in part on actual data about quality-of-life issues that affect seniors, they can be useful in your research.
Top Cities for Retirees…In Their Opinion
Bankrate recently produced a list of “America’s 10 best cities for retirement.” The cities were selected based on cost of living, taxes, crime rates, healthcare facilities, weather (you presumably already know what you’re willing to put up with), walkability (which may or may not matter to you), and well-being (the most subjective metric of all).
Bankrate’s top 10 cities for retirees are:
- Mesa, Arizona
- Arlington, Virginia
- Prescott, Arizona
- Tucson, Arizona
- Des Moines, Iowa
- Denver, Colorado
- Austin, Texas
- Cape Coral, Florida
- Colorado Springs, Colorado
- Franklin, Tennessee
The list includes some obvious retirement havens (Arizona, Florida). And some curious selections. Arlington, Virginia (near Washington, D.C.)? It’s expensive, congested, and not exactly crime-free outside of its high-end subdivisions. If you enjoy mingling with former federal bureaucrats who are retiring on public pensions, then Arlington may be just the place for you!
Low-Tax States for Retirees
On the other hand, if minimizing retirement taxes is a top priority, then Virginia probably isn’t for you. There are currently 12 states that impose no taxes on retirement income (Social Security, public pension benefits, and private pension benefits/withdrawals). They are:
- New Hampshire
- South Dakota*
*These states have no income tax at all.