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Ranking states for retirement: An inside look

Chris Kahn

Retirement How Bankrate Ranked States For Retirees

South Dakota or bust!

The Mount Rushmore State might not be a top retirement destination for most Americans. Yet, statistically, there's a lot to like.

As one of the lowest-taxing states, South Dakota could do wonders for your budget. Its health care system receives high marks for quality from the government. The crime rate also is relatively low, and national surveys find that residents seem to be happier than most.

Bankrate's lists of best and worst states for retirement were built with these statistics in mind. We weren't looking for the most popular places in the country. Instead, we asked: If you could pick any state to retire in, which would best suit your primary needs? We rooted around for the most relevant statistics to find an answer, and we consulted a number of economists and retirement experts.

What the experts say

"I think cost of living is critical" when picking a place to retire, says retirement expert Olivia Mitchell. Mitchell, the director of the Boettner Center on Pensions and Retirement Research at the University of Pennsylvania, added that retirees should consider the quality of health care as well as their adopted community's social and cultural strengths.

"If you are someone who likes music, is there an orchestra? Or if you are someone who likes to be outdoors, what are the amenities in that regard?" she says.

That last point is critical, says Kathleen Andereck, a tourism expert and associate dean of the College of Public Programs at Arizona State University. Retirees shouldn't just focus on where they're financially stable. If possible, they should try to find a place that's going to make them happy.

"Weather and safety and health care are certainly important," Andereck says. But retirement wouldn't be complete unless people "move somewhere where they can participate in different kinds of activities that they really like."

What Bankrate looked at

Bankrate took those criteria under consideration as well as many others. We looked at crime rates from the FBI and weather statistics (rates of sunshine, humidity and temperature) from the National Oceanic and Atmospheric Administration. We included a government health care quality measurement and a calculation of the state and local tax burden from the Tax Foundation.

Finally, we factored in the latest results of the Gallup-Healthways Well-Being Index. The index, based on an extensive year-round survey, considers residents' general happiness with their surroundings. It asks a variety of questions such as whether people think their community is "getting better or getting worse," and, "Did you smile or laugh a lot yesterday?"

The categories in Bankrate's survey were equally weighted, and the scores for each category were normalized before they were combined into a single ranking.

Drum roll, please

The results were surprising. For the second year in a row, neither Florida nor Arizona made our top 10. Both states are, of course, wonderful places for anyone who likes to golf in January. But relatively high costs of living, high crime rates and average-to-poor health care quality sank their overall standings.

Meanwhile, some of the least likely places rated especially well. The Dakotas, for example, landed in our top 10 for the second year in a row. A number of their next-door neighbors did well, too.

"You know, we tend to put a lot of emphasis on weather, but that is just one part of the equation," Andereck says. Retirement "is not necessarily all about weather."

Many of the states that ranked well in Bankrate's list "have industries that are strong," Andereck says. "They have the oil industry (especially in North Dakota) and so taxes are likely to remain low. In a lot of states like Montana, even though it is cold in the winter, it is quite beautiful."

Different strokes

Our ranking won't satisfy everyone. For some, the best place to retire is simply anywhere there's year-round sunshine. For others, it's where family and friends live. Or it's where they've found a comfortable, supportive community -- regardless of the cost of living.

It's also worth noting that our ranking is based on state averages and doesn't account for the tremendous variety within every state. New York, for example, was ranked with statewide social and economic data that includes both the urban centers of the Big Apple and the apple-producing Finger Lakes region in west central New York. That's an incredible amount of diversity!

Bankrate's lists of best and worst states for retirement are best used as a conversation starter for those considering a move. If you look at the statistics, you may find that some of the dreamiest retirement spots are not so nice after all. You also may find some hidden gems far from the retirement hot spots along the Sun Belt.

Bottom line: Before you pack those bags, decide what matters to you and check the relevant statistics.

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