The Best Places to Retire in 2012

Forbes
Austin, Texas
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Austin, Texas

It’s time for our annual list of the Best Places to Retire.

Reflecting what retirees say they want, there’s a slightly bigger bias toward warmer climates in states like Florida, New Mexico and Arizona. Only about a half-dozen Best Places are located in what could be called chilly parts of the country.This group includes Bloomington, Ind., Fargo, N.D. and Pittsburgh.

[More from Forbes: 25 Best Places For A Working Retirement]

But the bigger bias is the importance we place on day-to-day economic issues: the average price of a home, the cost of living and the tax burden on retirees. So there are no entries here from states where it costs a lot to get by, such as California, Connecticut, New Jersey and New York.

We reviewed data for hundreds of cities in all 50 states, plus the District of Columbia. Besides the usual financial factors, we looked at weather, availability of doctors, serious crime rates and encouragement for an active retirement. To do this, we considered evaluations by Bicycling Magazine and volunteeringinamerica.org.

More and more retirees are working, at least initially. So we also took into account both unemployment rates and rankings of job and economic growth compiled by the Milken Institute.

Nationwide, the average price of an existing single-family house is $163,500, according to the National Association of Realtors. Only four cities on our list have median prices above that, and none really by all that much. The priciest, at $198,000, is Asheville, N.C. At the other end, the average price of a home in Atlanta is only $91,000, followed by Cape Coral, Fla. at $116,000 and Boise, Idaho, at $118,000.

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In some ways the tax issue is the trickiest to evaluate. A low tax burden might mean a lower level of services for retirees to tap. Nine states do not have a state income tax, which is generally the biggest levy of them all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming. But before you race to any of them, remember that such states tend to have other taxes that are higher. For example, in Seattle, the largest city in income-tax-free Washington State, the sales tax is a whopping 9.5%. That’s the highest among major U.S. cities (and tied with Chicago). Also in these jurisdictions property taxes often are on the high aside as a percent of fair market value. The bills of government have to be paid somehow.

However, many states afford tax breaks to retirees, such as light or no taxation on Social Security and pension benefits. In our view, the best states for retirees from a tax perspective are Alabama, Alaska, Arizona, Georgia, Idaho, Kentucky, Louisiana, Mississippi, Montana, New Hampshire, New Mexico, Nevada, Oklahoma, South Carolina, South Dakota, Utah and West Virginia. The map in the June 25 issue of Forbes is color-coded for tax burden.

We haven’t tried to take into account intangible factors like scenic beauty (although there are a number of very agreeable settings on the list, including Salt Lake City, Asheville, N.C. and Lynchburg, Va.). And it’s impossible to factor in individual family issues. The appeal of staying near children, other relatives and friends easily could easily outweigh the many factors we used to pick our best places.

[Related: Picking a Place to Retire]

We canvassed data to come up with a list of top U.S. cities for seniors. Factors included living and housing costs (both very important!), taxes, weather, doctor availability, serious crime rates and stay-active opportunities via paid or volunteer work and outdoor facilities.

Albuquerque, New Mexico
Fast Fact: World's largest hot-air balloon event staged each October
Pros: Terrific weather, good air quality, low taxes, lot of doctors, below average cost of living, average home price $163,000, active-lifestyle encouragements
Cons: Crime, high unemployment

Austin, Texas
Fast fact: Hosts annual music, film and tech happening, South by Southwest
Pros: Growing economy, no state income tax, below average cost of living, average home price $188,000, good weather, outdoor exercise culture
Cons: Average air quality

[Related: Dreams of the Ideal Retirement Home]

Boise, Idaho
Fast Fact: Home of Boise State University’s famous blue football field
Pros: Low crime, low cost of living, average home price $118,000, above-average air quality, attractive semi-arid climate
Cons: Poor economy

Columbia, South Carolina
Fast fact: State capital
Pros: Below average cost of living, typical home price $141,000, favorable state tax climate, good weather
Cons: Poor economy, high crime rate

Corpus Christi, Texas
Fast fact: Home town of actress Farrah Fawcett
Pros: Growing economy, low cost of living, average home price $136,000, good weather
Cons: Crime rate

Fargo, North Dakota

Fast Fact: Named for a Wells Fargo cofounder
Pros: Solid economy, low cost of living, average home price $154,000, active-lifestyle encouragements, low crime rate
Cons: Cold winters

Knoxville, Tennessee
Fast fact: Site of 1982 world’s fair
Pros: Good economy, low living costs, average home price $137,000, good medical staffing
Cons: High crime

Lynchburg, Virginia
Fast fact: Self-styled “City of Seven Hills”   
Pros: Good economy, cost of living 6% below nation, average home price $134,000, good air quality, low crime
Cons: So-so tax climate

Pittsburgh, Pennsylvania
Fast Fact: George Washington was city’s co-founder
Pros: Decent economy, below average cost of living, average cost of home $121,000, tax breaks for retirees
Cons: Cold winters   

Salt Lake City, Utah
Fast Fact: Most residents aren't Mormons
Pros: Good economy, cheap living costs, average home price $183,000, Low living costs, low taxes, great mountain scenery, bracing but appealing climate, incentives for active retirement
Cons: Crime rate

Savannah, Georgia
Fast fact: Girl Scouts founded here 1912
Pros: Low cost of living and favorable tax climate, average home price $137,000, good weather, high number of physicians per capita
Cons: Sluggish economy

Tulsa, Oklahoma
Fast fact: Most inland river port in the U.S
Pros: Decent economy and tax climate, low cost of living, average home price $129,000, good metrics for active retirement
Cons: Crime

Click here to see the full list of The 25 Best Places To Retire In 2012.