The Best and Worst States To Retire: What To Know About No. 1 and No. 50
According to recent studies, Iowa was ranked the best state to retire in while Alaska was ranked the worst. The ranking is based on key factors such as the overall cost of living, crime rate, taxes and the quality and accessibility of healthcare.
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If you or someone you know is thinking about retiring in Iowa or Alaska, here’s what you should know before making the decision.
Also see the best and worst places to retire if you have no money saved.
Cost of Living
According to the Missouri Economic Research and Information Center, Alaska ranked as one of the most expensive states to live, with a cost-of-living index (COLI) of 124.4 — meaning it is 24.4% more expensive than average.
The Last Frontier State is more expensive than many other areas of the country when it comes to groceries, housing, utilities, transportation and healthcare.
Iowa, meanwhile, is one of the least expensive states in the country, with a COLI of 89.7. The Hawkeye State is cheaper than Alaska in all areas besides transportation.
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Tax Advantages and Disadvantages
Taxes are another key factor when choosing where to retire. In both Iowa and Alaska, retirees don’t have to pay state income taxes. This means that Social Security benefits, 401(k) plans, IRA plans and pensions are not taxed. In Alaska, there is also no state sales tax.
In Iowa, people 65 or older are eligible for a property tax exemption worth $3,250, according to Lisa Croston of CENTURY 21 ProLink in Sioux City. “In subsequent years, the exemption doubles to $6,500. These tax incentives as well as the ‘Iowa Nice’ makes our state a great place to live.”
Iowa has a state sales tax rate between 6% and 7%. Alaska, in contrast, has no state sales tax, though there is a maximum local sales tax rate of 7.5%.
Crime Rate
“Retirees should do research regarding the crime rate wherever they’re thinking of living,” said David Triana, account executive at Delight Labs. “Avoiding a high crime rate is very important since retirees most likely will not be living with anyone other than their partner or, in some cases, alone.”
Crime rate is a significant factor when choosing where to live.
In Alaska, the reported number of crimes was 3,098 per 100,000 individuals in 2020, making it one of the states with the highest amount of crime. In that same year, Iowa had 2,002 reported crimes per 100,000 individuals, a significant difference.
Healthcare Options
Something else retirees should consider is the quality, affordability and accessibility of healthcare. Alaska ranks 39th in terms of overall healthcare, while Iowa ranks 15th, according to data from the Commonwealth Fund.
“Prioritize medical facilities,” said Nick Valentino, VP of market operations of Bellhop. “Even if you’re in perfect health now, you won’t stay that way forever. If your retirement destination is close to high-quality hospitals, medical systems and retirement homes, you’ll have plenty of care when you need it.”
Keep in mind that the closer to a big city you live — like Anchorage, Alaska, or Des Moines, Iowa — the more accessible health facilities tend to be. These cities may also come with a higher cost of living though.
Lifestyle and Recreation
Both Iowa and Alaska have a lot to offer when it comes to recreational activities.
“Think about what you want to spend your time doing in retirement,” suggested Brittany Mendez, CMO of FloridaPanhandle.com. “For example, if you want to spend your retirement being with your grandkids, you may simply want to move to where they are.”
For more active retirees who enjoy such activities as hunting, hiking, kayaking or exploring the great outdoors, Alaska has a lot to offer. Iowa also offers many outdoor recreational activities, as well as an array of more laidback options like golfing or sporting events.
Weather and Climate
For the most part, Iowa has a temperate, if rainy, climate. The state’s mean annual temperature is 68.8 degrees. Alaska, meanwhile, is known for its long, cold winters and relatively mild summers, though the weather varies depending on where you go.
“I would recommend avoiding moving somewhere with extreme weather conditions,” Triana said. “Granted, there are events such as hurricanes, tornadoes and blizzards which plague a lot of the country throughout the year, but it’s important to take into account the typical weather where you might retire.”
Bottom Line
Overall, Iowa ranks higher than Alaska when it comes to affordability, climate and crime rate. But both states have a lot to offer when it comes to tax benefits, lifestyle and recreational activities.
Everybody’s preferences are different, so take some time to explore your options. Ultimately, the best state to retire primarily depends on what you’re looking for and the lifestyle you want to lead during retirement. When in doubt, check out several states and cities.
“Avoid moving to a state or city you’ve never even been to before,” Mendez said. “I would highly recommend taking a vacation where you are thinking about moving to first so that you can actually see if you might like it there.”
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This article originally appeared on GOBankingRates.com: The Best and Worst States To Retire: What To Know About No. 1 and No. 50
