Thinking about how to engineer your best life in retirement?
Where you retire could affect your lifestyle and finances dramatically. So choosing which state you want to live in when you finally reach the happy state of retirement is an important decision.
MoneyRates conducts its Best States for Retirement study every year precisely because things change. Being aware of the issues that affect retirees and how well each state is addressing those concerns can help you in your decision.
Read on to see what brought each of the top ten states for retirement in 2020 to its position in the ranking.
Best States for Retirement 2020 - What We Considered
What determines a good place for retirement? The answer is different for everybody; but in most cases, you'll probably arrive at several factors that are important to you if you think about it.
To highlight the variety of ways location could affect your retirement lifestyle, MoneyRates.com evaluated all 50 states based on five categories:
- Healthcare conditions
Using figures from the Centers for Disease Control on life expectancy at age 65 and available nursing-home capacity, as well as healthcare cost data from the Council for Community and Economic Research (C2ER), the study measured the effectiveness, availability and affordability of healthcare in each state.
- Personal security
Based on statistics from the Federal Bureau of Investigation on incidents of violent and property crime in each state, this study measured the risk to your physical safety and your possessions due to crime.
- Local economy
Figures on employment from the Bureau of Labor Statistics, on property taxes from the Tax Foundation and on cost of living from C2ER were used to measure the affordability and economic strength of each state.
- Weather conditions
Figures on temperature averages and extremes from the National Oceanic and Atmospheric Administration (NOAA) were used to measure how comfortable and consistent each state's temperatures have been, while precipitation statistics from NOAA were used to measure whether states were particularly drought-prone or experienced heavy amounts of rain or snow. Data from the Universal Ecological Fund were measured relative to the size of each state to determine the frequency of severe weather events.
- Popularity with older residents
Finally, to get a bottom-line measure of how popular each state is with older residents, the study considered U.S. Census data on the percentage of each state's population that is aged 65 or older.
In all, this study considered more than a dozen data series grouped into the five categories listed above. Which of these categories is the highest priority for you is a matter of personal taste; but by highlighting these issues, MoneyRates hopes to help people think through the full range of options involved in choosing a place to live in retirement.
Top 10 States for Retirement 2020
Based on the average rankings across the five categories described above, the following are the ten best states for retirement in 2020:
How Much Should I Save for Retirement? Consult a Calculator
You shouldn't wait until the end of your career to think about where to live in retirement. This should be something you consider as you plan and save for retirement.
Retirement calculator can help you set retirement-savings targets based on how much you'll need to support your retirement lifestyle, but how do you know what that retirement lifestyle will cost?
Common rules of thumb about basing retirement savings on a certain percentage of income or your current expenses may fall short if you plan a lifestyle change in retirement. Thinking ahead about what kind of future lifestyle you want can help you calculate how much to save for retirement. Where you plan to live is a big part of that future lifestyle.
The nice thing is that envisioning the specifics of where you want to live in retirement doesn't just help you plan for retirement more accurately. The vision of where you hope to spend your retirement years should help motivate you to do the tough job of saving year-in and year-out to support your future lifestyle.
Saving for Retirement - 401(k) Plans, IRAs and HSAs
Saving for retirement takes more than planning. Ultimately, you have to use the right tools to turn those plans into reality.
It helps if you're aware of the different types of retirement savings tools at your disposal, such as:
- 401(k) plans
These are voluntary retirement programs commonly offered by corporate employers. How much you choose to contribute is up to you, and that goes a long way toward determining what kind of retirement you will be able to afford.
In particular, if your employer offers matching contributions, you should make it a priority to contribute enough to take full advantage of the employer match.
- Individual Retirement Arrangements (IRAs)
Even if your employer doesn't offer a 401(k) plan, IRAs give you the opportunity to build tax-advantaged retirement savings. The tax treatment depends on whether you choose a Roth IRA or a traditional IRA, so learn the difference between these two options to choose the one that best fits your situation.
- Health Savings Accounts (HSAs)
Did you assume HSAs were just for paying near-term medical bills? Given that healthcare represents an even greater proportion of expenses in retirement, HSAs can also offer powerful tax advantages to enhance your retirement savings.
How do you make a retirement dream come true? Start by using a retirement calculator to see what it would take to afford that dream, factor in how location could help or hinder your plans, and then use appropriate retirement savings tools to meet your goals.
Best States for Retirement 2020 - Full List of States
|Best States for Retirement 2020|
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