The recent findings from a new Bankrate study challenge the conventional wisdom of retiring in sunny Florida, suggesting instead that a Midwestern state might offer better financial prospects for retirees. While warm weather has been a popular choice for many Americans in their golden years, the study indicates that opting for a Midwestern state like Iowa could be kinder to one’s wallet.
In their quest to identify the most favorable retirement destinations, Bankrate thoroughly examined all 50 states, considering various factors like affordability, the quality and cost of healthcare, overall well-being, weather, and crime rates. Surprisingly, Iowa emerged as the top-ranked state on Bankrate’s list, with Missouri and Nebraska also securing positions in the coveted top 10.
Bankrate analyst Alex Gailey pointed out the unique appeal of Iowa for retirees, citing its low cost of living, affordable yet high-quality healthcare options, and commendably low crime rate. With these factors in play, Iowa becomes a compelling choice for those seeking to maximize their retirement income in today’s economy.
Southern states, including Florida, Mississippi, and West Virginia, also garnered high rankings on Bankrate’s list, mainly due to the comparatively affordable housing options available in these locales compared to the national median. Conversely, according to Bankrate’s analysis, coastal states like Massachusetts, Washington, California, New York, and Alaska ranked among the least desirable states for retirement.
Iowa’s appeal extends beyond its affordability; the state is the sixth most cost-effective place to reside, as per data from the Council of Community and Economic Research. Moreover, it presents another enticing perk for retirees—no tax on Social Security benefits, per state law. This advantageous provision can significantly impact retirees, particularly during surging inflation.
As inflation rates have surged over the past couple of years, the idea of relocating to an area with lower living costs or affordable housing has become an attractive alternative for retirees with tighter budgets.
In light of recent polls showing that many Americans believe they’ll need at least $1 million in savings to retire comfortably, deciding when and where to spend one’s golden years requires even more careful consideration. The national average for an individual to lead a comfortable retirement life is approximately $967,000 in savings, translating to about $74,000 annually for the average American retiree.
However, the reality is that numerous individuals fall considerably short of this million-dollar goal. Studies reveal that the typical Gen-X household with a private retirement plan has only $40,000 in savings. In contrast, baby boomers have a median retirement savings of $120,000, and millennials have a median account balance of $32,000.
This lack of preparedness for retirement also has broader implications for the nation as a whole. According to the Pew Charitable Trusts, about 56 million private-sector workers lack access to employer-sponsored retirement plans, contributing to a projected $1.3 trillion shortfall for state and federal governments through 2040.
According to Bankrate, the ten top retirement states include not only Iowa but also Delaware, West Virginia, Missouri, Mississippi, Wyoming, Pennsylvania, Florida, Hawaii, and Nebraska. Each individual’s unique retirement scenario warrants careful consideration of location, as it can significantly impact their ability to enjoy a fulfilling life after work.