Lists are popular with online readers. This is particularly true for those contemplating where to retire. I often link to lists of the best and worst places to retire and comment on them. Often our home state of Tennessee appears on a top 10 “best” list but sometimes on a “worst” list. It depends on how you prioritize retirement criteria. For example, Tennessee is economically favorable for retirement because of its low cost of living and no state income tax.
To create the list, the editors used 5 factors: Fiscal health, property taxes, income taxes, cost of living, and climate. An interesting feature, however, is that you can reorder the list yourself by eliminating criteria that are not important to you.
My personal belief is that each of the 5 criteria used are important to a happy retirement.
Two states had a numerical tie as the worst states in which to retire: Connecticut and Illinois.
Although I think Chicago is quite livable for a large city, Illinois in general has terrible economic problems which it is trying to solve by increasing income taxes. For example, work and investment earnings are taxed at a 5% flat rate.
Property taxes are killers in most of these states. It is miserable to think that you could pay off the mortgage on the home where you are living in retirement but still face a monthly property tax payment of $500-$1000. For example, in New Jersey just the median property tax bill is over $6500. Ouch.
Minnesota (#7 on the list) punishes retirees with bad winter weather and with no income tax exemptions for Social Security or pension income.
We are sticking with Tennessee and Kentucky, thank you!
Read the list for yourself here: Worst States to Retire 2012: Northeast and Midwest Come Up Losers.