The Costliest States for Retirement

SmartMoney

Planning to retire in 2012? You could be starting off at a disadvantage – financially, at least – if you live in one of these 10 states.

TopRetirements.com, a guide to retirement destinations and communities, recently published its list of the 10 worst states for retirement, looking primarily at financial considerations. In specific, the site evaluated each state in terms of its fiscal health, property taxes, state income taxes and cost of living.  (The survey also included climate as a yardstick, under the assumption that most retirees “have a bias toward places with warmer winters.”)

The results: Retirees in the Northeast and Midwest will likely feel a greater pinch than their counterparts elsewhere in the country. Here are the states where your retirement dollars might not go as far as you wish:

1. Connecticut. Finished first (or last, depending on your perspective). The survey noted that Connecticut has some great towns for retirees and “considerable charm” – but those charms come at a price: steep property and incomes taxes, and a high cost of living.

2. Illinois. Actually, most pensions and Social Security payments aren’t taxed, but Illinois’s economic troubles – including deficit spending, unemployment and foreclosure rates – are “among the worst of any states,” according to the report.

3. Rhode Island.  Again, high property taxes, coupled with underfunded pension and health liabilities and budget deficits.

4. Vermont. Residents face “very high” median property and incomes taxes, according to the study, as well as a top 10 cost of living.

5. Massachusetts. The good news: Social Security income and most government pensions are exempt from taxation. The not-so-good news: property taxes that are among the highest in the country.

[Also see: 5 American Cities Nearly Destroyed by the Recession]

Rounding out the bottom 10: New Jersey, Minnesota, New York, Maine and Wisconsin.

This is the second year that TopRetirements.com has ranked states as retirement destinations according to financial factors. The goal, according to the study: “to try to help baby boomers understand where, all other things being equal, they can enjoy their hard-earned retirement without taking on more problems.”

View Comments