Best and Worst States to Retire in 2021

A Credit Karma Study

Updated

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You’ve worked hard, and you’re starting to think about retirement. But where do you want to settle?

Credit Karma pooled and studied data from a number of published reports, then created a methodology and weighted scoring system to rank the best and worst states for retirement in 2021. We evaluated each state considering 20 factors, including financial concerns like cost of living and annual healthcare costs as well as living conditions such as weather, access to care and risk of isolation. (Click here for the full methodology.)

So let’s cut to the chase. What are the best and worst states for retirement in 2021? According to our rankings, the top five states for retirement (No. 1 being best) are …

  1. Delaware
  2. Florida
  3. New Hampshire
  4. Wisconsin
  5. Hawaii

And the bottom five states in our rankings for retirement (No. 1 being worst) are …

  1. New Mexico
  2. Mississippi
  3. Alaska
  4. Louisiana
  5. New York

Keep in mind that folks value different things. One person’s Floridian paradise might be another person’s nightmare. That’s why we provided some additional context in the sections below.

Overall best and worst states for retirement in 2021

In our weighted scoring system, the lower the score, the better the state is for retirement. Here’s the full list of how we’ve ranked states for retirement.

Although Hawaii is top-ranked for weather, it has the highest cost of living out of all states, according to data in America’s Health Rankings® 2021 Senior Report from United Health Foundation — pulling it down a bit to No. 5 overall in our assessment. Meanwhile, No. 2 Florida, which has the highest population of people 65 and up, excels in terms of weather and social support — with a high percentage of older adults connected to the internet and one of the highest levels of community support expenditures per person ages 60 and above.

Delaware and New Hampshire both stand out for offering solid access to healthcare, some of the lowest risk for social isolation, and — like Hawaii and Florida — widespread internet connectivity among older adults, the Senior Report data shows.

Among the worst states, Alaska is notable for having the least-desirable weather. It’s also a state where costs are among the highest for in-home assistance and care, community and assisted living facilities, and nursing homes.

Relative to other states, the cost of living in Mississippi and New Mexico is pretty low, but other factors — such as high risk of social isolation, prevalence of food insecurity and higher poverty rates — make them the two worst-scoring states, according to our ranking.

New Mexico, which we ranked last overall, also taxes Social Security benefits, though it does provide a deduction that can reduce the tax obligation for such income.

Best and worst states for cost of living for retirees in 2021

Credit Karma used the Missouri Economic Research and Information Center’s cost of living data series to determine cost of living for each state. MERIC’s index considers the cost of things like groceries, housing, utilities, transportation and healthcare.

The states with the lowest cost of living tend to cluster in the South, the Midwest and the Great Plains. The coasts generally have a higher cost of living.

Lowest cost of living Highest cost of living
Mississippi Hawaii
Kansas New York
Oklahoma California
Alabama Massachusetts
Arkansas Oregon

Mississippi had the lowest cost of living of all 50 states, while Hawaii had the highest.

Cheapest states to live in

Best and worst socio-economic conditions for older adults

To understand which states might offer some of the best socio-economic and other living conditions for people 60 and over to thrive, Credit Karma turned again to data from America’s Health Rankings® 2021 Senior Report, given its focus on social-, economic- and healthcare-related factors.

This study focused mainly on …

  • Percentage of adults 60 and older dealing with food insecurity
  • Percentage of adults 65 and older living in poverty
  • Percentage of adults 60 and above living in poverty with access to Supplemental Nutrition Assistance Program benefits
  • Dollars per adult 60 and older spent on community support
  • Percentage of households with adults 65 and above with high-speed internet
  • Percentage of adults 65 and above at risk of social isolation
  • Percentage of adults 65 and older who reported volunteering in the last 12 months
  • Percentage of adults 65 and older who needed to visit a doctor in the last 12 months but could not because of cost
  • Nursing home quality

Below are the states with best and worst scores.

Best socio-economic conditions for older adults Worst socio-economic conditions for older adults
Vermont Mississippi
New Hampshire Louisiana
Delaware New Mexico
Utah Texas
Minnesota Kentucky

According to the results, states in the South and Southwest typically scored worse in terms of senior living while states in the Northeast had higher scores.

Best and worst states for older adults’ annual healthcare costs

To determine the best and worst states for annual healthcare costs for older adults, Credit Karma used the 2020 Cost of Care Survey from Genworth, a company that provides healthcare funding and mortgage insurance services. The survey factors in the costs of homemaker services, home health aides, adult day healthcare, rooms in care facilities and the anticipated growth in cost over a few years.

Below are the states with the highest and lowest senior healthcare costs.

Lowest annual healthcare costs for older adults Highest annual healthcare costs for older adults
Alabama Alaska
Louisiana Maine
Mississippi Washington
Texas New Hampshire
Arkansas Vermont

Tips for choosing a place to retire

When you’re thinking about where to retire, there are a ton of factors to consider. Even if you’re located in a state with objectively lousy weather or a high cost of living, maybe other things like having family nearby outweigh the cons of climate and cost.

So when you’re considering where to settle down, here are a few things to think about.

  • Is it important for you to be near family and friends?
  • What kind of weather do you prefer? Do you have any hobbies that are dependent on a particular kind of geography or access to certain facilities?
  • How is your health? Do you expect to need a lot of care? If so — or even if not — it might be good to look for places where you’ll have access to highly rated healthcare facilities, ideally with lower costs.
  • How much money do you have saved up — and how long will it last?
  • Do you already own a home? Are you planning to downsize?

One other thing to think about with retirement approaching: Estate planning. If you care about who gets what when you’re gone, it’s never too early to think about making sure all the legalities are taken care of. And in certain places, you may need to consider inheritance taxes.

Wherever you decide to go (or stay!), retirement planning can be a joyful and challenging experience. If you feel overwhelmed, consider contacting a financial adviser for help.

Compare the cost of living in two cities

Our cost-of-living calculator can help you see how much it’ll cost to live somewhere new compared to your current city so you can make an informed decision about your finances.

Methodology

To identify the best and worst states to retire, we analyzed all U.S. states, then scored and ranked them based on the following criteria in a weighted scoring system.

  1. Overall cost of living in the state, based on data from the Missouri Economic Research and Information Center for Q2 2021
  2. States’ estate and/or inheritance tax, sourced from Tax Policy Center’s 2020 report
  3. States’ taxes on Social Security income, sourced from the AARP’s Social Security Resource Center
  4. Food insecurity as percentage of adults ages 60 and older, sourced from America’s Health Rankings 2021 Senior Report
  5. Poverty, as percentage of adults ages 65 and older, sourced from America’s Health Rankings 2021 Senior Report
  6. SNAP reach measured by participants per 100 adults ages 60 and older in poverty, sourced from America’s Health Rankings 2021 Senior Report
  7. Community support expenditures measured in dollars per adult ages 60 and older, sourced from America’s Health Rankings 2021 Senior Report
  8. High-speed internet access as percentage of households with adults ages 65 and above, sourced from America’s Health Rankings 2021 Senior Report
  9. Risk of social isolation measured as percentile of adults ages 65 and older, sourced from America’s Health Rankings 2021 Senior Report
  10. Volunteerism as percentage of adults 65 and above, sourced from America’s Health Rankings 2021 Senior Report
  11. Avoided care because of cost as percentage of adults ages 65 and older, sourced from America’s Health Rankings 2021 Senior Report
  12. Dedicated healthcare provider as percentage of adults ages 65 and older, sourced from America’s Health Rankings 2021 Senior Report
  13. Nursing home quality as percentage of beds rated four or five stars, sourced from America’s Health Rankings 2021 Senior Report
  14. Annual median cost of homemaker services, sourced from the Genworth Financial 2020 Cost of Care Survey
  15. Annual median cost of home health aide, sourced from the Genworth Financial 2020 Cost of Care Survey
  16. Annual median cost of adult day healthcare, sourced from the Genworth Financial 2020 Cost of Care Survey
  17. Annual median cost of a private, one-bedroom unit at community and assisted living, sourced from the Genworth Financial 2020 Cost of Care Survey
  18. Annual median cost of semi-private room and private room at nursing home facility, sourced from the Genworth Financial 2020 Cost of Care Survey
  19. Percentage of total state population that is 65 and older, sourced from the U.S. Census Bureau’s 2019 American Community Survey 5-year estimates
  20. Weather score, based on average annual temperature, sourced from USA.com local weather guide

Sources


About the author: Gaby Lapera is a researcher and writer at Credit Karma and a personal finance expert. She also spends time working on investing and science communication. Gaby graduated with a master's degree in biological anthropolo… Read more.