Personal Finance Blog By MoneyRates - September 2010

Also see the 2011 complete list of Best Place to Retire. 

MoneyRates.com has received a flurry of press coverage plus several questions and comments regarding our lists of 10 worst and 10 best states for retirement.

Some of you asked about specific states that weren't on either list -- or to see the entire list. To let everyone see where their state ranked, here's MoneyRates.com's entire list, from the best state for retirement to the worst state for retirement:

1. New Hampshire

2. Hawaii

3. South Dakota

4. North Dakota

5. Iowa

6. Virginia

7. Utah

8. Connecticut

9. Vermont

10. Idaho

11. Rhode Island

12. Nebraska

13. California

14. Massachusetts

15. Texas

16. Kansas

17. Kentucky

18. Minnesota

19. Florida

20. New Jersey

21. Colorado

22. West Virginia

23. Washington

24. Wisconsin

25. Wyoming

26. Arizona

27. Montana

28. Maine

29. Mississippi

30. Oregon

31. Oklahoma

32. New York

33. Alabama

34. New Mexico

35. Delaware

36. Georgia

37. Indiana

38. Pennsylvania

39. Louisiana

40. Illinois

41. Arkansas

42. Missouri

43. North Carolina

44. Ohio

45. Tennessee

46. Maryland

47. South Carolina

48. Alaska

49. Michigan

50. Nevada

With that, let the arguments begin!

MoneyRates.com recognizes that there will be differing opinions on this. In fact, most of the states in the bottom ten had a top-ten ranking for at least one of our criteria, proving that there is usually something to love about every state. Also, a recent MoneyRates.com/GetRichSlowly.org poll confirmed that proximity to family often outweighs all other considerations in choosing a retirement location.

Still, the importance of the MoneyRates.com list is to help retirees make their choices with open eyes. After all, while most of the bottom states ranked well in one category or another, most had bottom-ten rankings in multiple other categories. If a state has a great climate, but also has a high tax burden or a problem with crime, those are things you should know about before retiring there.

As always, we appreciate your comments. Specifically, was there something we missed? Is there a quantifiable factor that should be figured into our calculations of best and worst states for retirees? Your suggestions will give us food for future thought.

MoneyRates.com recently published a list of the best and worst states for retirees. These lists were compiled using a quantitative approach based on economic factors, crime rate, climate, and life expectancy. Naturally though, there is more to choosing a retirement home than just crunching the numbers, so we turned to the readers of MoneyRates.com and GetRichSlowly.org to get a sense of how more subjective factors stack up alongside the cold hard facts.

In a poll, we asked which was the most important factor in choosing a place to retire:

• Being near children and grandchildren
• Weather
• Economic conditions
• Low crime rate
• Life expectancy/health care

Based on the results so far, family is the clear winner. 40% of poll respondents said this was the most important factor in choosing a place for retirement. 28% cited economic conditions, and 20% cited weather. Life expectancy and crime rate were distant laggards, at 7% and 5% respectively.

These results are not surprising. For one thing, it explains why there are perfectly happy retirees in every state of the union, regardless of some of the problems those states may have. Factors on the MoneyRates.com list of best/worst state criteria are not stronger than family bonds, but they do provide a good starting point for people who are researching where they should life in retirement.

It is significant that economic factors ranked second only to family in the poll. One might wonder why the economy would be so important to a retiree, who no longer has to depend on a job for a living. However, with money so tight these days, retirees have to be concerned about things like cost of living and tax burden cutting too deeply into their savings. Also, employment is a factor, even for retirees -- nobody wants to live in an economically depressed area, and many retirees find themselves wanting or needing to work again, at least part-time.

In short, retirees want family around them, but they also want that family to be able to work and support themselves financially.

Most Americans have probably never heard of the National Bureau of Economic Research, but they know they don't agree with them.

The National Bureau of Economic Research (NBER) is the organization which officially sets the dates for recessions and expansions in the U.S. economy. They recently announced that the Great Recession actually ended over a year ago -- as of June 2009.

The news of the NBER announcement was not greeted with dancing in the streets.

Savings accounts and employment suggest otherwise

To many Americans, this does not yet feel like a recovery. Interest rates on savings accounts, driven down during the recession, remain near zero -- 0.18 percent on average as of September 20th, according to the Federal Deposit Insurance Corporation (FDIC). Money market rates aren't much better, at an average of 0.26 percent.

Employment also remains down, though it has shown some improvement. U.S. employment peaked at 137,951,000 jobs in December 2007. Then it started losing jobs, and by the time employment hit bottom in December 2009, the economy had lost 8,363,000 jobs.

So far this year, through August, 723,000 jobs had been added. This doesn't come close to restoring the number of jobs that were lost, but it is a start in the right direction -- and that's a key to understanding how savings accounts and employment factor into an economic recovery.

The long road of economic recovery

To understand how there can still be so much bad economic news even though the recession is over, think about someone who has lost 20 pounds of muscle during a serious illness. Even after the illness is over, it can take a long time before that person regains that lost weight and is up to full strength.

In short, there is a difference between starting a recovery and being fully recovered. The economy has a long road of recovery to travel, but at least now it is moving in the right direction.

Let us know what you think -- when will the recession finally be over, in your view, or do you already see signs of recovery in your daily life?

Banks and credit unions lost at least $6.3 billion in 2009 and 2010 following scrutiny over debit card overdraft fees and new federal regulations requiring them to get customers to opt in for overdraft coverage, says a new study by Moebs Services, a financial research firm in Lake Bluff, Ill.

A drop in profitability due to increased regulation isn't all that surprising. But the projected comeback is. Moebs predicts that next year's revenue from overdraft fees will climb to $38 billion, the highest ever for the industry.

According to the study, banks and credit unions lost about $2 billion in revenue at the end of 2009 when, under pressure from Congressional and consumer complaints, they started putting their own lid on fees. Then they lost another $2.3 billion during the first quarter of 2010 when they introduced opt-in registration and yet another $2 billion from operational costs to meet the new federal regulations that went into effect this summer.

Those require banks to get customers' permission to cover debit card overdrafts. Before, banks covered the overdrafts automatically and charged fees, much to the surprise of some customers.

Some banks lower checking account overdraft fees

Among banks and credit unions, 6.5 percent decreased their overdraft fees, according to the Moebs study.

"We have never seen this many institutions decrease the price of a fee service in almost 30 years of tracking bank and credit union pricing," Economist and CEO Michael Moebs said in a press release. "Our data shows institutions which decreased their overdraft fees, actually maintained or increased their overall revenue in the past year."

Other banks get in the game

Meanwhile, while giants such as Bank of America and Citibank dropped their overdraft programs, community banks and credit unions started offering them for the first time.

A relatively small share of customers pay overdraft fees. In fact 90 percent of overdraft revenue comes from frequent users, Moebs said. Almost all customers with 10 or more overdrafts a year opted in to the new programs. Among all consumers, consent ranged from 60 percent to 80 percent.

Apparently the banks were right. A lot of customers really are willing to pay for the service.