UPDATED: May 21, 2013
In December, I updated this post with the best places to retire on less than $40,000 annually. While I certainly don’t think these types of articles should be the end all be all of your retirement planning decisions, I do find the information interesting and think it could help those trying to decide between different locations. In “10 Worst States for Retirement,” Chris Kahn of Bankrate found that the most touristy and best looking states are often the worst places for retirees. This top ten list was created using factors like crime rates, taxes, cost of living, and access to medical care.
Number 10, Delaware, has a high cost of living and crime rate, but lower than average access to medical care. Minnesota’s cold weather, high taxes, and high cost of living place it in number 9 on the top 10 ten list. In a tie for 7th, Maryland and Vermont share high taxes and high costs of living. Vermont also has very cold weather on average and Maryland’s crime rate is nothing to brag about. Maine comes in 6th place because of its frigid weather and high taxes and cost of living. In 5th place is Wisconsin with the same negatives as I just listed for Maine. California, at #4, is gorgeous but expensive. With one of the highest costs of living in the nation as well as very high taxes, it might not be the best place for retirement. Washington at #3 is another cold state with high taxes, cost of living, and crime rates.
The bottom line with Alaska is that it’s cold. This #2 state also has the second highest cost of living behind Hawaii. The #1 worst state for retirement, Oregon, is so-titled for its cold temperatures, high cost of living, high crime rates, and high taxes. They are all above the national average. Here’s the thing though, these states are beautiful and boast many different wonderful attributes as well. You really have to weigh the costs and benefits with each potential retirement location, much like you do for an annuity or other major decision.
UPDATED: December 12, 2012
Last month, I summarized the seven retirement decisions that Emily Brandon of U.S. News & World Report recommends thinking long and hard about. I just read an article about the best places to retire on less money that I thought would complement those other retirement decisions. Ms. Brandon gives us the “Best Places to Retire for Under $40,000.” An average married couple will receive Social Security payments amounting to around $30,000 each year. Using an annuity to finance the remaining $10,000 or so will help you live comfortably in many different locations around the globe.
In Albuquerque, NM, the cost of living is low and there are many amenities and ways to get around the town. Augusta, GA has affordable housing, lots of golfing, and an abundance of museums. In Columbia, SC, the cost of living is low with big city living amenities. Jackson, MS affordability extends to its theater district and haven of music. Knoxville, TN has lots of stuff to do outdoors as well as well as a huge arts and music community. In Little Rock, AR, great hospitals are close by and there are many other attractions as well.
The Kentucky Derby’s Louisville has an affordable cost of living and its other entertainment options cost less than in other places of the U.S. Pittsburgh, PA has great medical care, an abundance of senior discounts, and plenty of popular sports teams for the enthusiast. St. Louis has all that Pittsburgh has to offer seniors as well. In San Antonio, TX, senior living is affordable and the state has no income taxes. So when you are looking to retire, you might want to check into one of these cities while preparing for the seven other retirement decisions.
If you are looking to retire soon or just want to be prepared even if it is decades away, Emily Brandon of U.S. News & World Report has some advice to ease your stress. In “7 moves new retirees will regret,” she recommends taking stock of these seven issues before you regret decisions you’ve made. Retirement is glorious for many reasons, but don’t jump in before you have everything in order. It can be alluring to move to a “better” location in retirement, when you are no longer tied down to a job, but think carefully about all of the details involved if you move away from everything you know. Not only will it be difficult to leave friends and family, but you will have to find a new trusted doctor, auto mechanic, and even your local post office. Moving to warmer weather or an area with a lower cost of living might be right for some retirees, just make sure to think about everything involved in a move.
Make sure that you are vested in your retirement plan before quitting your job or retiring. Be familiar with your anniversary date and the date that you will be fully vested. The last thing you want to do is retire before you will receive pension payouts or be able to transfer the full amount to a 401k annuity from your retirement savings plan. Those retiring at age 65 or older qualify for Medicare, but if you are retiring younger than age 65, look into all of your health insurance options. Some employers offer health insurance to retirees; with other employers you can buy into COBRA for 18 months and continue your health insurance. But you may have to search for individual health insurance or get on a spouse’s health plan if possible.
Most retirees are in good health at retirement, but make sure to plan for a time when you may not be. Get your wishes in writing for future health care plans and keep in mind that it may be useful to live close to a health facility and future long term care facility. If you don’t need to use those services, great, but plan for the future while you are still in good health. While you are eligible to receive Social Security payments when you turn 62, the longer you delay receiving payments, the more money you will receive in monthly payouts. Full retirement age is 66 for Baby Boomers. If you wait until then, or even until age 70, to receive Social Security payments you will substantially increase your monthly income.
Annuities, 401ks, and other retirement accounts require minimum distributions at some point. For most, you have to take a minimum withdrawal once you are 70 1/2. If you forget to take these withdrawals, you get a tax penalty of 50% in addition to the taxes you will already pay. Make sure you are familiar with your required withdrawals to avoid any added penalties. While there are expenses that decrease in retirement, spending money becomes easy once you have a lot more time on your hands. Keep good track of how much you are spending on traveling and new hobbies like golf or dining out with friends. Those expenses add up, so ensure that you are not spending through your retirement savings too quickly. Using an annuity to meet your monthly expenses in retirement is a good way to manage your costs and keep yourself from spending too quickly.
Written by Rachel Summit
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