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California Not on Worst 10 List for Retirement

Published on: March 06, 2012

It is so refreshing that California, the land of the Winter sunshine and warmth, recently wasn’t selected as one of the 10 wost places to retire in the U.S. Not that anyone bases their decisions on polls! Three new states made the list while 3 departed, including Nevada and California (bad financial shape and high property taxes, but almost no income tax on prototypical senior couple, plus a great climate). California has gotten a bad wrap in polls. Recently Americans said California is one of the least loved states. It also has some of the most polluted cities in the U.S. But still, people continue to move to California and its population continues to grow annually by hundreds of thousands.

In the 2012 survey of worst states to retire the most important factors were fiscal health, property taxes, income taxes, cost of living, and climate. Each criterion was worth up to 1 negative point. For survey details see TopRetirements.com .

WORST U.S. STATES TO RETIRE 2012:

  1. Connecticut. High property taxes, income taxes, and cost of living. Most pension income is taxable, although there are some significant exemptions for social security, depending on income.  3rd highest tax burden of any state recently.
  2. Illinois. Facing serious economic troubles, its pension funding, deficit spending, unemployment, and foreclosure rates are among the worst of any states. The state began to address its problems last year when it raised income tax rates. Although Illinois does not tax most pension or social security, other earnings and investment income are taxed at a fairly high rate thanks to its 5% flat tax rate.
  3. Rhode Island. Severely underfunded pension & health liabilities and budget deficits, and 5th highest median property taxes paid means that retirees in the Ocean State would face much higher income taxes here than they would in most other states.
  4. Vermont.  Has very high median property and income taxes, with a top 10 cost of living.
  5. Massachusetts. Property taxes are among the highest of any state. Even though social security income is exempt, income taxes would be high because of the flat rate applied to other earnings. Most government pensions are exempt, but private sector ones are taxed. The cost of living is high.
  6. New Jersey. The biggest losers when it comes to property taxes, residents pay a median property tax in the Garden State that’s the highest in the U.S. around $6579.  It also has the highest tax burden, a large budget deficit, and a very high cost of living. New Jersey has both an estate and an inheritance tax. On the plus side, it excludes most pension and social security income for couples making less than $100,000.
  7. Minnesota. 4th highest income tax for typical senior couple. That is mostly due to the absence of any pension or social security exemptions. Property taxes are just below the top 10. Minnesota has a large budget deficit issue.
  8. New York. The 4th highest median property taxes and one of the highest tax burdens, its cost of living is one of the highest, plus a very cold winter climate. On the plus side, it offers generous exemptions for social security and pensions, along with a high standard deduction.
  9. Maine. Property taxes are much lower than New York, while  income tax is around $1000 higher. Winters are even colder than New York, but cost of living is lower. Maine’s governor has vowed to try to exempt retirement income from taxation. Nothing has happened yet.
  10. Wisconsin. Property taxes are among the highest in the country and high income taxes, but on the plus side, social security income is exempt and because there is a high standard deduction.

 

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