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The Best States to Retire in 2022

A comfortable retirement is a lifelong goal common to people of almost any age, in any profession, and from every state. 

But that isn’t to say retirement has equal value across state lines. Taxes, cost of living, and even climate give certain states an upper hand when it comes to retirement; the same income and investments can have much different values in different parts of the country. Today, we’re ranking the top states that can be ideal for retirement.

Before making any plans, we recommend speaking with a financial advisor, who can help you find the state that makes the most sense for your financial situation. Our free quiz can match you with up to three fiduciary advisors in just a few minutes, each obligated to work in your best interest. 

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns. However, research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.¹

Click Your State to Get Matched With Financial Advisors Who Serve Your Area

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Best States for Minimizing Taxes in Retirement

If shrinking your tax liability is high on your list of priorities, a few states stand out. The winners on our list below either have no state income tax, no tax on retirement income, or a substantial discount on the taxes levied on retirement income. But that’s just the start. 

While several additional states have no state income tax, the states that made our list also have favorable sales, property, inheritance, and estate taxes.

• Alaska
  
• Florida
• Georgia
• Mississippi
• Nevada
• South Dakota
• Wyoming

If those seven locations aren’t ideal, consider the next tier of tax-friendly states. Tax benefits aren’t quite as high as those above, but they do stand out in one specific category: no taxes on social security income. 

That’s not to say they don’t make up for it in other areas, however. Washington State, for example, has no state income tax, but does have a 6.5% state sales tax. Still, it’s always beneficial to avoid income tax when possible.

• Alabama
  
• Arkansas
• Colorado
• Delaware
• Idaho
• Illinois
• Kentucky
• Louisiana
• Michigan

IN THE PRESS:

Top States Favored by Retirees

While Alaska may have favorable tax policies, lounging in Anchorage may not be your idea of a relaxing retirement. To uncover where retirees actually want to live, let’s dive into another set of numbers.

According to the Federal Interagency Forum on Aging Statistics, six states are the standout favorites among the over-65 crowd.² No other states surpass their density of residents over the age of 65:

• Maine (20.6%)
• Florida (20.5%)
• West Virginia (19.9%)
• Vermont (19.4%)
• Montana (18.7%)
• Delaware (18.7%)

Best Overall State for Retiring

Now, let’s compare. By cross-referencing our list of “Best States for Minimizing Taxes in Retirement” with our list of states most densely populated with retirees, we find that only one state makes both lists.

The Sunshine State offers favorable taxes, pleasant climate, and reasonable cost of living.

The Bottom Line

Wherever your retirement dreams take you, it’s important to keep the above in mind and make the right decision for your financial situation.

A fiduciary financial advisor can help you consider not only the tax implications of a move, but also other factors specific to your situation.

Not sure where to start? We created a free quiz to help Americans find vetted, qualified financial advisors who serve their area.

This quiz asks you a few questions, then matches you with up to three fiduciary financial advisors. You even earn a free consultation with each of your matches, so you can compare them and be fully prepared to pick a financial advisor.

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Assuming 5% annualized growth of $500k portfolio vs 8% annualized growth of advisor managed portfolio over 25 years. 

The hypothetical study discussed above assumes a 5% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”.  Please carefully review the methodologies employed in the Vanguard Whitepaper  The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser.

This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.

SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments.

We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.

SmartAsset.com is not intended to provide legal advice, tax advice or financial advice (Other than referrals to Investment Advisers or Investment Adviser Representatives). SmartAsset is not a financial planner, broker or tax adviser. The Service is intended only to assist you in your understanding of financial organization and decision-making and is broad in scope. Your personal financial situation is unique, and any information and investing strategies obtained through SmartAsset.com may not be appropriate for your situation. Accordingly, before making any final decisions or implementing any financial strategy, you should consider obtaining additional information and advice from your accountant or other financial advisers who is fully aware of your individual circumstances.

Other than application and licensing fees, SmartAsset did not provide compensation for the aforementioned awards.

Sources:

1. Journal of Retirement Study Winter (2020). The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Journal of Retirement study.

2. Older Americans Key Indicators of Well Being. (2020)

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Retire in 2022

• New Hampshire
  
• Oklahoma
• Pennsylvania
• South Carolina
• Tennessee
• Texas
• Virginia
• Washington
• West Virginia