Thinking about retiring in 2011? Worst places to do it include California

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We've all heard the stories of famously rich people who claim to "live" in states with favorable income and retirement tax policies while "vacationing" in states that do not. California, of course, with no such policies, is one of the "do not retire" states. In fact, with growing unemployment, taxes edging up, and a gaping wound of a deficit that needs an industrial size bandage to stop the bleeding (repeal Prop 13, perhaps?), our golden state is not an easy place spend our golden years.

ElderlyHealthMatters.com

If that's a California beach, they may soon stop smiling...

With a new year on the way, TopRetirements.com has gone so far as to make a list of the nine other worst states for retiring.

The site's blog mentions that "Whether they know it or not, [each of our American states is] being judged by a tough jury of 76 million or so baby boomers looking for the best place to retire." According to John Brady, president of TopRetirements.com, the ten worst earned their titles mainly based on three factors: fiscal health, taxation, climate.

NOTE: The designation "(PR)" refers to the Pew Report which detailed U.S. states in "fiscal peril." The report, "Beyond California: States in Fiscal Peril," asserts that "some of the same pressures that have pushed California toward economic disaster are wreaking havoc in a number of other states, with potentially damaging consequences for the entire country." TopRetirements.com's Brady reasons that retirees should avoid such states as budget crises may mean shrinking social services coupled with increasing taxes.

1. Illinois (PR). Here, fiscal health could be the worst of any state, which is what tipped the scales. It has even borrowed money to fund its pension obligations. To be fair, however, we need to mention that IL does not tax pension or social security income, a definite plus for the retirees.

2. California (PR). The Golden State is expensive and its finances are in serious disarray and like IL, has paid bills with vouchers in the past. On the plus side, CA does have a warm climate in parts, which helped keep it out of 1st place. And to illustrate that fiscal health and taxes are by no means the only things to rank a state on, California is the 5th most popular retirement state, based on number of page views of the site's California retirement guide.

3. New York. With very high taxes, including property taxes, NY offers the 2nd highest tax burden and 5th highest per-capita property taxes. Also, we note that it would be very expensive to live in this climate with cold winters and hot summers.

Most pensions are tax exempt, however.

4. Rhode Island (PR). This tiny place is probably the worst off state in the Northeast from a financial viewpoint and also has high taxes. On the plus side, RI is a beautiful state with much coastal land.

5. New Jersey(PR). The Garden State has the highest property taxes in the U.S. as well as the highest tax burden (as reported by the Tax Foundation); currently also as serious pension funding issues.

6. Ohio. Also has very high taxes (7th highest tax burden) and unemployment. Couple these issues with cold winters and retirement looks bleak.

7. Wisconsin (PR). Another high tax state (9th highest tax burden) with cold weather and high property taxes. But, of note to Veterans, it does not tax military pensions.

8. Massachusetts. High taxes including high property taxes make this state expensive to live in. On the plus side, gorgeous locations and large university culture add intellectual, aesthetic, and cultural interest.

9. Connecticut. CT has the 3rd highest tax burden of any state, taxes social security, and has very high property taxes. Though often charming and culturally vibrant, the cost of living is very high.

10. Nevada (PR). Home to casinos and canyons of note, NV is also the foreclosure capital of the world as well as home to myriad additional financial woes. However, it does not have an income tax, which is why some of the aforementioned famously rich may have addresses here as primary residences. But with the state in such dire straits, we all have to wonder how much longer it can go without income taxes being introduced...

San Franciscans may, in some percentage, be able to ignore this list, at least those for whom the current economy is not presenting frightening challenges. Brady puts the logic of his list thus:

Our list might be totally irrelevant to many people. Folks for whom money or taxes are not important will find our worst 10 list of little value, because they have other considerations that are far more important. For example, those who want to retire near their family members have such an important driver that the "worst" state on this list could be their "best."

Of course, if Prop. 13 is ever to roll back, this "best/worst" feeling may change-- drastically.

As to how the USA compares to other countries, it may interest readers to know that the legal retirement age, as in the age at which a citizen can retire to pensions and benefits, varies wildly around the world. Money Watch reports, for instance, that the legal age in France just went from 60 to 62. For both women and men in Norway, the age is now 67. Meanwhile, in Turkey, it's 45 for men and 41 for women! Of course, with economies shrinking globally, those ages are expected to creep up... much in the way that aging in general seems to.

Posted By: Anna Marie Hibble (Email) | Dec 21 at 09:30 AM

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