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Robert Powell
Dec. 9, 2010, 12:01 p.m. EST
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By Robert Powell, MarketWatch
BOSTON (MarketWatch) "” Plenty of folks are aware of the best states for retirees. But what are the 10 worst states in which to spend your golden years?
People of Illinois, California, New York, Rhode Island, New Jersey, Ohio, Wisconsin, Massachusetts, Connecticut and Nevada "” you probably already know the answer.
The list, with Illinois leading the pack, comes from website TopRetirements.com. According to John Brady, president of TopRetirements.com, the 10 states earn this dubious distinction largely because of three factors: fiscal health, taxation, climate. See the worst-state rankings at TopRetirements.com.
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As for fiscal health, six of the 10 worst states for retirees on TopRetirements.com's list were among those just identified by a Pew Center for States report as being in "fiscal peril."
The report, "Beyond California: States in Fiscal Peril," showed that "some of the same pressures that have pushed California toward economic disaster are wreaking havoc in a number of other states, with potentially damaging consequences for the entire country."
Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin joined California as the 10 most troubled states, according to Pew's analysis. Read the Pew Center for States report.
Of note, TopRetirements.com's Brady suggested that retirees and would-be retirees might want to avoid states in fiscal peril because these locales might be expected to face decreasing services and increasing taxation.
Topping his website's list, Illinois's fiscal health could be the worst of any state, observed Brady. "It even borrowed money to fund its pension obligations," he said. As for California, he said the Golden State "” though it does have a warm climate "” is expensive and its finances are in disarray. What's more, he added, it has paid some bills with vouchers.
New York wasn't mentioned as being in fiscal trouble by the Pew Center, but it does have "very high taxes, including property taxes." In fact, Brady said New York has the second-highest tax burden and fifth-highest per capita property taxes. Plus, he said, the Empire State has a "dysfunctional state legislature." As if that wasn't bad enough, it's terrifically expensive to live in New York. The only benefit to living in New York, he said, is that pensions are exempt from income tax.
As for Rhode Island, Brady said it's probably the worst-off state in the Northeast from a financial viewpoint. It also has high taxes, though he noted that the state does boast some great places to live.
New Jersey, according to Brady's analysis, has the highest property taxes in the U.S., as well as the highest total tax burden of any state, as reported in a 2008 Tax Foundation report. Plus, New Jersey has serious pension-funding issues, Brady noted. States with the greatest tax burdens after New Jersey were New York, Connecticut, Maryland, Hawaii, California, Ohio, Vermont, Wisconsin and Rhode Island, joined by the District of Columbia. Read the Tax Foundation report.
MarketWatch A downtown Chicago street corner in the midst of a January 2009 blizzard "” the type of weather that contributed to poor rankings for not just Illinois but Wisconsin and Ohio.
According to Brady, Ohio has high taxes and high unemployment (9.9% in October). Plus, it has cold winters.
Of the 40 largest cities in the United States, Milwaukee has the coldest winter weather, based on normal daily temperatures, according to Current Results, a website that tracks weather trends. The lakeside Wisconsin city's daily winter mean temperature is 24.1 degrees Fahrenheit. But fellow Great Lakes metropolis Cleveland is the fourth-coldest U.S. city, with a daily winter mean temperature that's not much higher at 28.4 degrees Fahrenheit.
Robert Powell writes about retirement issues and produces the "Retirement Weekly" subscription newsletter.
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