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What are the Best States to Retire In?

Congrats! Your kids are out of the house, your mortgage is paid off, and you’re ready to retire. So now the question is: where should you retire?

Does it Make Financial Sense to Relocate in Retirement?

For those of us who want to retire in the US, there are seven states that have no state income taxes: Washington, Texas, Nevada, North Dakota, Alaska, Wyoming, and Florida. For many retirees with the means to move, it makes financial sense to relocate – especially if their home state has high taxes like California or New York.

What About Retirement Lifestyle?

But money isn’t everything in retirement — there’s no point in having money if you can’t spend it on a lifestyle that makes you happy, whether it be going to shows, eating at nice restaurants, or participating in local social events. San Francisco would rank right up there as an ideal place to retire if it wasn’t so darn expensive. Many of us won’t have unlimited funds when we reach retirement age, so we might need to make sacrifices and relocate.

It’s impossible to say with any real conviction which states offer the best lifestyle for retirees since it’s such a subjective decision. Are you a big city person? Or do you prefer the quiet of a small town? Or maybe you’d prefer a secluded country retreat? Which states offer the best lifestyle is really going to depend on you.

How to Determine the Best State to Retire In

To find an objective answer to the question of what states are the best to retire in, we came up with a relatively simple formula: follow the money!

Millionaires tend to be able to live in places that offer the best lifestyles – of course, anyone can run out of money if they overspend, but the more money you have, the more options you have as to where to live.

So, to come up with the best states for retirees, let’s look at the states with the highest percentage of millionaires and compare that list with the states that have the lowest taxes. That way, we can account for both lifestyle considerations and which states make the most sense from a financial perspective. Obviously, this is really for fun, but it should give you a pretty good idea of some states that make sense for retirees.

Take a look at the charts and see if you can come up with the list without reading ahead.

Which States Have the Lowest Tax Burden?

First, let’s look at the states with the lowest tax burden. Instead of looking at tax rates, which can vary depending on your specific circumstances, the “tax burden” number measures the proportion of total personal income that you’d pay towards state and local taxes. To determine tax burden, we referenced Wallethub’s list that compares the 50 states across three types of state tax: property taxes, individual income taxes, and sales & excise taxes.

Rank State Total Tax Burden Property Tax Burden Individual Income Tax Burden Total Sales & Excise Tax Burden
1 Alaska 5.10% 3.66% 0.00% 1.44%
2 Delaware 5.55% 1.79% 2.55% 1.21%
3 Tennessee 6.28% 1.90% 0.11% 4.27%
4 Florida 6.56% 2.74% 0.00% 3.82%
5 New Hampshire 6.86% 5.45% 0.12% 1.29%
6 Oklahoma 7.12% 1.66% 1.82% 3.64%
7 Montana 7.27% 3.44% 2.58% 1.25%
8 South Dakota 7.28% 2.87% 0.00% 4.41%
9 Alabama 7.28% 1.39% 1.89% 4.00%
10 Wyoming 7.51% 4.32% 0.00 3.19%

Which States Have the Most Millionaires?

Next, to get a read on lifestyle in various states, let’s take a look at the 10 states that have the highest percentage of millionaire households per total households.

Rank State % of millionaire households
1 New Jersey 8.95%
2 Washington, DC 8.94%
3 Connecticut 8.89%
4 Maryland 8.85%
5 Massachusetts 8.60%
6 Hawaii 8.48%
7 New Hampshire 7.98%
8 California 7.78%
9 Alaska 7.71%
10 Virginia 7.66%

The Best States to Retire in 2019

So, what are the best states for retirees? The answer lies in the states that fall onto both the lowest tax burden list and the highest percentage of millionaires list.

The top two states to retire in according to our formula are…drumroll please…Alaska and New Hampshire! Special mentions go to Virginia, Washington, and Delaware which were all in the top 20 on both lists.

It’s interesting to see that low-tax states like Wyoming, South Dakota, and Texas don’t make the top 10, or even the top 20 states with the most millionaires. It’ll be interesting to see if they make the list in future years, since these states offer such good tax benefits.

Delaware is probably the biggest surprise on the shortlist (not a state you typically think of when it comes to concentration of millionaires) followed by Wyoming and Florida not making the list given they are such low-tax states, and both offer great lifestyles. Florida is well-known for beachfront living, and if you’ve ever been to Jackson Hole, you’ll agree Wyoming is a lovely place.

Our Take

There’s no definitive answer to the question of what states are the best ones to retire in. Everyone is a little biased, anyways. Personally, my home State of Hawaii would be wonderful based on lifestyle, but from an affordability standpoint, Colorado, where I’ve been for nearly 2 decades, has many of the same lifestyle perks (believe it or not!) with lower overall costs. Decisions!

So, this list is really for fun, but it also can be a good place to start if you’re thinking of re-locating to a lower-tax state. To see if it would make financial sense for you to re-locate, check out our free Retirement Planner tool, which allows you to do scenario planning to see how it impacts your chances of a successful retirement.

Read More: Can I Retire Yet? How to Know When It’s the Right Time

Disclaimer: The information on this website is for informational purposes only and does not constitute a complete description of our investment services or performance. No part of this site nor the links contained therein is a solicitation or offer to sell securities or investment advisory services, except where applicable in states where we are registered, or where an exemption or exclusion from such registration exists. Third party data is obtained from sources believed to be reliable. However, Personal Capital Advisors Corporation cannot guarantee that data’s currency, accuracy, timeliness, completeness or fitness for any particular purpose. Certain sections of this commentary may contain forward-looking statements that are based on our reasonable expectations, estimate, projections and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

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43 Comments

  1. David R

    The analysis is very interesting. I left the SF Bay Area for the Central Valley when I retired and bought twice the house for 1/4 the cost; but, this state still has little respect for individuals and that’s why most of my friends left the state of California. Quality of Life is just as important an issue as taxes. California is on a down hill slide. Sadly most major urban areas make residents deal with horrible traffic, panhandlers, homeless addicts and people not right in the head because our leaders don’t care enough for the average taxpayer‘ quality of life. Ultimately, small business suffer and those are the ones leaving places like California. Millionaires can live in their gated communities and compounds.

    Reply
  2. Kyle Rolek

    A good post about retirement plans for small business owners hope to get good help from your post.

    Kyle Rolek

    Reply
  3. Syl McNinch, Jr.

    Why didn’t you check for trillionaires? We have at least one in Thayne, Wyoming. He was and is the creator and owner of Bass Masters International. We also have quite a few millionaires. I doubt seriously that you have done a thorough job in getting your data on rich folks in Wyoming. Most are tight lipped and suspicious of flat landers. Anyway, I know we have a number of multi-millionaires who live right here in Star Valley, Wy. which includes the towns of Afton, Alpine, Etna, and Star Valley Ranch. Every Wyoming resident who is a U.S. citizen has the right to carry a concealed weapon. Most do, and we have an extremely low murder rate. The good guys carry guns and it works. We dress warmly in the winter and light in the summer. We look forward to “global warming ” and other climate changes. We are not scared by the words of cowards and scare mongers who peddle that nonsense. We have heard it all before. We will deal with what comes. Nobody here hides under their beds or their desks because they are afraid of climate change. We are worried about the idiots in the District of Columbia, but we will deal with them too when they come.

    Reply
  4. John

    To me and a very large chunk of retirees this analysis is by and large irrelevant. A huge amount of us are renters and still working (I am almost 69). I am thinking about moving out of the area because of the exorbitant cost of living, where more that 55% of my income is eaten up by renting a studio. So for me the principal issue remains the cost of housing. For what is such an issue with taxes? I earn a few thousand dollars per year, pay about 8% social security taxes, income taxes (well, I get those back, but not the SS tax) and pay almost $1000 rent. So, OK, what’s saving a few hundred dollars in taxes versus the thousands in difference that one has to dish out for the exorbitant rent? Add food and medicine and you’ll learn how to live frugally. Try it for awhile. J.

    Reply
    • Jeff

      Central Arizona. Things ain’t what they used to be. Though that’s true so many places, isn’t it?

      What state/region of state do you live John? Your situation sounds like mine here in Central Arizona. THis area has really changed the past few years. Rents and home prices here have really taken off. Many moving here past couple years bring income/retirement funds unlike anything many have seen here in quite some time. Plenty of locals now have to save longer to finance a home, and it will be less home for more money. Perfect storm here is few and low pay jobs, high rents, very low inventory of rentals and homes. An average “nothing special” one bedroom apartment here costs $950-$1000. It’s feast ot famine in Central Arizona. Unless one is a solid middle-class person with pension and decent retirement account, I’d advise them not to consider retiring or moving to Central Arizona. This includes the following Central Arizona areas: Prescott, Prescott Valley, Dewey-Humboldt, Cottonwood and Cornville. People I know in other parts of the country in small towns are experiencing similar situations and many recently small towns are growing fast with towns not able to keep up with the issues it brings. We have what seems like double the number of people on the roads (many texting, talking away on smartphones most of the time) since I moved here. People love visiting Sedona. What they may not know is how degraded Sedona has become in just ten years. Much more traffic. Gone is the small town atmosphere. Sedona has become “it’s all about making a fast buck” kind of place. The only thing that remains the same of the Sedona of even ten years ago is the red rocks. Some are delusional, but most are disillusioned with what has happened to Sedona. I’ve been looking at where I can move to live out the years I have left, but for senior below middle-class it’s getting tougher all the time in an era where wealth, status and celebrity are what is most valued in life.

      Reply
  5. Jeff

    While we certainly have some economic problems in Illinois, it should be noted that the Illinois income tax code exempts retirement income such as defined pensions, 401ks, IRAs, and SSI. For a more detailed list go to the link (http://www.retirementliving.com/taxes-alabama-iowa) For many non working retirees, that should cover the bulk of their income. Earned income and investment income earned outside a retirement account are taxed.

    Reply
  6. Robert

    To me the analysis is more about transitioning from a concern about income tax, to an eye on sales and property taxes where the cost of living is low. Texas has low cost of living and sales taxes, but property taxes are high. Georgia has low sales tax and property tax, but an income tax.

    When I retire and my income will reduce. Georgia (and some other states) have caps in place by age for income taxes. So the low property taxes and low sales tax trumps the income tax that would be at a lower rate.

    A good analysis would look at which states provide reduced income tax and property tax to those over 65, combined with the local sales tax to form a complete picture at retirement age.

    To me simply looking at income tax is not the right focus.

    Also, the standard of living is important. Good hospitals, restaurants per capita, good airport, etc…

    Reply
  7. Deborah Robinson

    Curious as to how SC stacked up. Was surprised it didn’t make the list.

    Reply
  8. Tintin

    Another factor to consider:

    Positive Experience Index Scores Worldwide (2013)

    Paraguay 87
    Panama 86
    Guatemala 83
    Nicaragua 83
    Ecuador 83
    Costa Rica 82
    Colombia 82
    Denmark 82
    Honduras 81
    Venezuela 81
    El Salvador 81
    Indonesia 80
    Philippines 80
    Thailand 80
    United Arab Emirates 79
    Canada 79
    New Zealand 79
    Australia 79
    Chile 78
    Argentina 78
    Taiwan 78
    Sweden 78
    Iceland 78
    United States 78
    Netherlands

    Reply
    • Frank

      Costa Rica in the top 10… Lies and Propaganda.. I have spent last 10 years visiting family(1 month stays) in CR. The night before leaving; I can only listen to a James Brown song…

      Reply
      • Tintin

        Care to expound? TIA.

      • frank646

        Superhighways, coast to coast
        Easy takin’ anywhere
        On the transcontinental overload
        Just slide behind the wheel, how does it feel

        When there’s no destination that’s too far
        And somewhere on the way
        You might find out who you are

        Living in America
        Eye to eye, station to station
        Living in America
        Hand in hand, across the nation
        Living in America
        Got to have a celebration, rock my soul

        Smokestack, fatback, many miles of railroad track
        All night radio keep on runnin’ through your rock ‘n roll soul
        All-night diners keep you awake
        On a black coffee and a hard roll

        You might have to walk a fine line
        You might take a hard line
        But everybody’s workin’ overtime

        Living in America
        Eye to eye, station to station
        Living in America
        Hand in hand, across the nation
        Living in America
        Got to have a celebration

        I live in America, say it loud
        I live in America, wait a minute

        You may not be lookin’ for the promised land
        But you might find it anyway
        Under one of those old familiar names like

        New Orleans, New Orleans
        Detroit City, Detroit City
        Dallas,Dallas
        Pittsburgh P. A., Pittsburgh P. A.

        New York City,New York City
        Kansas City, Kansas City
        Atlanta, Atlanta
        Chicago and L. A.

        Living in America
        Hit me
        Living in America
        Living in America

        I live in America
        Right here, take my [Incomprehensible]
        I live in America
        Say it

        Living in America
        [Incomprehensible]
        Living in America

        Living in America
        Hit me
        Living in America
        Living in America

        I live in America
        Staying alive, we’ll make the prime
        I live in America
        Hey, I know what it means

        Living in America
        Hit me, I’ve been eye to eye, station to station
        Living in America
        Scream, let me

        Living in America
        Yes, now ain’t it funky?
        Living in America
        So nice, would you better stop?
        Living in America
        Whoa, I feel good
        Read more at http://www.songlyrics.com/james-brown/living-in-america-lyrics/#2eGrUEQxsTIaCXXX.99

  9. iDetroit

    Interesting. Can you write a follow up article that adds one or two more aspects to your analysis: 1) what is the age of the millionaire population by state and 2) do the millionaires consider themselves to be retired?

    I think you have to eliminate the population of “working millionaires” – highly compensated corporate executives and professionals and hands-on company owners) from the numbers to really answer the question you propose.

    Is there a way to access data that shows where people move (if they do) after they change their employment status to “retired”?

    Family is a powerful pull. I bet that’s the reason for the high number of millionaires in colder states.

    Tahoe and Hawaii – great combination! Thanks for the suggestion!

    Reply
    • Financial Samurai

      Tahoe + San Francisco + Hawaii = Trifecta of Living Goodness.

      Feel free to share your thoughts on iDetroit.

      Reply
  10. Tintin

    I live where I live now solely for my career. I would not live here, if it weren’t for my job, so I don’t see why my presence should count for anything (millionaire count.) Also, my former home town had an average household income of less than $25K/year, whereas my current home town has an average household income of over $100K/year. The meaning of millionaire in the two places is vastly different.

    Reply
  11. Kady

    “Clearly there must be lifestyle issues that more than weigh down the benefits of lower taxes…”

    Only partially correct.

    The tax which hits retirees most heavily is property tax, not income tax. Texas’ property taxes, along with New York and New Jersey, are among the highest in the nation. Thus, retirees under and with between 1 and 2 million in net worth tend to flee the state for that reason.

    Further, the assumption that since millionaires can live where they want, the number of millionaries is an indicator of “best states to retire”, is weak. MULTI-millionaires, even those with $2M in net worth, really don’t have to worry about taxes at all, because they are completely offset by investment returns.

    Reply
    • Financial Samurai

      Isn’t “multi” 3 or more?

      I think this quick analysis is actually very smart and has not been done before. Furthermore, I’m using my own situation as an example given I’ve been all around and have reached the post’s proposed financial status.

      Reply
  12. Susan Williamson

    Yes, California has high taxes but we want to be retired with FAMILY and then money

    Reply
  13. Tintin

    The retire abroad idea has some appeal, but why, of all sites on the planet, mention Chiang Mai? Aren’t there more appealing places in Thailand, Ecuador, Panama, Belize, etc.?

    Also, don’t you think you ought to restrict your millionaire data to retired millionaires only?

    Reply
    • Financial Samurai

      Because Chiang Mai is a great example of good living and how far your dollar can go. I’ve been everywhere around SEA after living there for four years.

      Reply
      • Tintin

        Thanks! Any other SEA spots worth looking into?

      • Financial Samurai

        I lived in Kuala Lumpur, Malaysia for four years. It is a terrific place that’s cheap to live. Food is amazing due to the Malaysia, Chinese, and Indian population and everybody speaks English too. You can buy great property for US$200/sqft.

  14. Katerina

    Um. Have you ever been to Delaware???? Rehoboth Beach, Lewes, Bethany Beach, and Dewey Beach. The Nation’s Capital vacations here every weekend.

    Reply
  15. Charles Ormsby

    You left New Hampshire off the “no income tax’ list … Atlantic ocean, Boston culture, four seasons … great state. Too many libs but not as bad as Massachusetts.

    Reply
  16. Howard

    Texas should be on the list. You must be looking at old data. Here is a current list from the Phoenix Global Wealth Monitor:

    http://rboot.co/1qE9VHX

    Reply
  17. Pat

    You completely ignored SD (not many millionaires) but is a no income tax state…and a great place for retirees…especially in the Sioux Falls (medical facilities are world class) or Rapid City area, especially if you are retired military!

    Am wondering if the author meant SD and not ND.

    Reply
    • Financial Samurai

      Look again! South Dakota is #5 on the list of cheapest taxed states.

      But my formula is to add BOTH cheapest tax states + number of millionaires to find the best states to retire.

      Reply
  18. Jeremy

    Good article. I am not close to retirement, but I would like to move to one of these states sooner than later, so that I can start saving some money, living comfortably in NYC is brutally expensive.

    Can someone expand on why California is NOT on this list? I want to move to Florida, but my wife wants California and I am against it. Internet research only takes me so far, I would like some ammo from others as to why California is a bad financial move.

    Reply
    • Financial Samurai

      I’ve lived in California for 13 years, and the taxes are outrageous! We call it, the “Sun Tax” to keep our happiness in check.

      13.2% state income tax at the top end anyone?

      But, California is still amazing and you can make a good income in places like SF. Just gotta pay to play.

      Reply
  19. Pam siegel

    Maybe the average annual taxes per year were low in the top states because of low income earned by the residents. I would like to see the chart based on salaries of $50,0000 or $100,000 to compare

    Reply
    • Financial Samurai

      That’s a good theory. But once you combine the low tax AND high number of millionaires, then your theory gets refuted.

      Reply
  20. john

    I like the idea of Mexico myself. Colorado is not so bad either. Maybe a winter/summer mix.

    Reply
  21. StuckinDC

    Many Washingtonians vacation at the Delaware beaches. No sales tax and low property taxes, along with reduced estate taxes make it a nice place to call home in retirement… even if your other home is in Washington, DC.

    Reply
    • Financial Samurai

      Well, isn’t everything a step up from Washington DC? I kid. I used to live in the suburbs in McLean, VA. Nice place.

      Reply
  22. Tom G

    Interesting analysis. But, you forgot New Hampshire as one of the state income tax free states (and no sales tax)! Ofcourse, if you retire in NH, you won’t be able to retire the snow shovel, but then again, labor is cheaper than other states and you can pay someone to do this work for you while you use the snow for enjoyment and health – XC skiing, snow shoeing, etc.

    Reply
    • Financial Samurai

      I hear ya on NH, but ouch, my back and my bones during the cold weather as you say!

      They are one of the lowest tax states in my chart, but they aren’t a state that has a lot of rich folks for a reason.

      Reply
  23. Family Guy

    What a sad way of looking at retirement: where can I escape to and live the good life and avoid giving back to my friends, family, neighbors, and society?

    I plan on retiring right here in my little rural town in Massachusetts, reasonably close to family. I will continue ue to volunteer in our town government, and will have time to volunteer more! I am perfectly willing to pay Massachusetts income taxes in exchange for the services that society will continue to provide me as I age.

    In fact, for me, the best place to retire is the place I know best, and that combines quiet, community support, good healthcare, and my friends and community.

    I spent my younger life trying to get to this place and meet good friends. Why would I want to leave that?

    Reply
    • Financial Samurai

      If you’d like to stay in your town you’ve stayed for years, then great!

      There are perhaps millions of people in America looking to find a better life, as they work towards a better life. Not everybody can be so lucky as to find that ideal job in the ideal place.

      This list helps provide some unique perspective into where people might want to live to save on taxes and find some new adventure. This is a personal finance/wealth management site after all!

      Reply
    • Iggy

      If you think that by paying your taxes, you in turn give back to your friends/society then you are deeply confused. The United States government is the most corrupt there is. If only you knew where your tax dollars really went. If only I knew…

      Reply
    • Scott

      I live in Massachusetts after living back West for years. The last three speakers of the House have been convicted of corruption due to a one party system here, couple that with terrible traffic, amazingly rude people, and high crime (Boston) and there is no way I’m retiring here. Do you REALLY know where your tax dollars have gone.? The Big Dig was projected to cost 3 billion and ended up costing 14 billion…

      Reply
    • TC

      LOL

      Reply
  24. Untemplater

    Very clever way to look at no income tax states. I never thought about that, but it’s a neat way to look at it. Among the list, I’d consider Florida, Nevada, or Washington for retirement. It will be nice to escape the tax grips of California someday. But for now I’m enjoying the sunshine.

    Reply
    • Financial Samurai

      Tax grips of California indeed! Can’t believe how many different types of taxes small business owners must go through.

      Without doing any analysis, Lake Tahoe, Nevada would probably be a good retirement spot, with Hawaii during most of the winter.

      Reply
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