BiggerPockets Money Podcast: The Best (and Worst) States in the US to Retire in 2024 (FIRE Faster?)
Release Date: November 5, 2024
In the latest episode of the BiggerPockets Money Podcast, hosts Mindy Jensen and Scott Trench delve into a crucial aspect of retirement planning: where to retire. Often overshadowed by the focus on when to retire, the location can significantly impact one’s financial independence and overall quality of life during retirement. Joined by Alex Gailey, a lead data reporter at Bankrate, the hosts explore the best and worst states in the US to retire in 2024, offering valuable insights for those pursuing the Financial Independence, Retire Early (FIRE) movement.
I. Setting the Stage: The Importance of Location in Retirement Planning
Mindy Jensen opens the discussion by highlighting a common oversight among those aiming for early retirement:
“People looking to achieve early retirement often focus on when they should retire, but they rarely focus on where they should retire.” (00:00)
Scott Trench echoes this sentiment, emphasizing that financial freedom is attainable for everyone, regardless of their starting point, but choosing the right location can either accelerate or hinder the journey.
II. Criteria for Ranking Retirement States
Alex Gailey outlines the comprehensive criteria used to evaluate and rank the states:
“Our study at Bankrate ranked all 50 US states based on affordability, overall well-being, quality and cost of healthcare, weather, and crime.” (02:00)
The weighting of these factors is crucial:
- Affordability: 40%
- Overall Well-being: 25%
- Quality and Cost of Healthcare: 20%
- Weather: 10%
- Crime: 5%
This methodology ensures a holistic assessment of each state's suitability for retirees, balancing both financial and quality of life considerations.
III. The Worst States to Retire in 2024
Alex presents the three least favorable states for retirement based on the outlined metrics:
- Alaska
- New York
- Washington
Alaska ranks poorly primarily due to its high living costs, though it fares better in overall well-being. New York struggles with affordability, particularly in housing and healthcare, despite a relatively strong overall well-being score. Washington shares similar affordability issues but offers better healthcare quality compared to Alaska and New York.
“The common thread among these three states is that they're costly to live in relative to the rest of the country.” (06:12)
IV. The Best States to Retire in 2024
Surprisingly, Delaware tops the list as the best state for retirement, followed by West Virginia and Georgia.
Delaware excels due to its tax-friendly policies for retirees, including no state or local sales tax and no income tax on Social Security benefits. Additionally, it boasts a high number of healthcare establishments and a temperate climate.
“Delaware checks a lot of the boxes for those who are wanting to retire.” (08:46)
West Virginia, ranking second, is celebrated for its unparalleled affordability. However, it faces challenges in healthcare quality and accessibility.
“West Virginia ranked number two as the best state to retire in our ranking. Really what catapulted it to the top was that affordability category, which carries a 40% weight.” (11:16)
Georgia continues the trend of affordable Southern states being attractive retirement destinations, balancing cost with quality of life.
V. Surprising Rankings and Neighboring States Dynamics
The episode explores surprising placements, such as Mississippi ranking significantly higher than Louisiana despite similar affordability metrics. Conversely, Pennsylvania stands strong at number seven, while neighboring Maryland lags at number 43.
“Mississippi likely just ranked better in some of these buckets versus Louisiana.” (16:35)
Mindy offers a clever solution for retirees in West Virginia seeking better healthcare by suggesting proximity to neighboring Virginia, which ranks higher in healthcare quality.
“If you wanted to live in West Virginia and get all of those benefits, just live really close to Virginia and then hop the border to go to your healthcare providers.” (12:49)
VI. Tax Considerations and Financial Implications
Scott Trench raises important points regarding tax implications, such as states that do not tax Social Security income or have favorable property tax systems. The discussion highlights:
- California and Texas: While they might appear attractive, high living costs and specific tax burdens (e.g., high property taxes in Texas) can counterbalance their benefits.
- Delaware’s tax advantages make it a compelling choice for retirees focused on minimizing tax liabilities.
Alex reinforces the importance of understanding state-specific tax structures and how they impact retirement finances:
“It's really important to do your homework in your specific state but also in your local area to understand how you're going to get taxed.” (22:37)
VII. Personal Factors Beyond Financial Metrics
The hosts and guest acknowledge that retirement location is not solely a financial decision. Factors such as proximity to family, community, and climate preferences play significant roles.
“This is such a personal decision where you choose to retire.” (19:04)
Alex emphasizes the balance between financial benefits and personal well-being, noting that no single state can perfectly fulfill all retirement needs.
VIII. Practical Takeaways and Final Insights
Mindy Jensen encourages listeners to leverage the rankings as a starting point for their retirement planning:
“I think this is absolutely something that somebody should take a peek at just to see where their state ranks.” (35:40)
Scott suggests further exploration into investment strategies and tax planning to maximize the benefits of retiring in favorable states:
“There's a way to plan that out a couple years in advance and that California can actually be relatively accessible to someone with a long-term time horizon.” (36:48)
Alex concludes by reiterating that while financial metrics are crucial, the emotional and personal aspects of choosing a retirement location are equally important:
“States that land at the top are financially friendlier for retirees. They have lower housing costs, healthcare costs for the most part, as well as tax benefits.” (31:26)
Conclusion
This episode of the BiggerPockets Money Podcast offers a comprehensive analysis of the best and worst states to retire in 2024, grounded in data-driven insights from Alex Gailey of Bankrate. By prioritizing affordability, alongside other factors like healthcare quality and overall well-being, retirees can make informed decisions that not only stretch their financial resources but also enhance their quality of life. The discussion underscores the personal nature of retirement planning, encouraging individuals to weigh both financial metrics and personal preferences when choosing their ideal retirement destination.
Listeners are left with actionable insights and a deeper understanding of how location can significantly influence their retirement trajectory, especially for those aiming to achieve financial independence earlier in life.