Top 10 Worst States to Retire in the U.S.—And No. 1 Isn't California or New York

Alaska has been ranked as the worst state to retire in the U.S. for the third consecutive year, according to Bankrate’s 2024 study of the best and worst states to retire. Despite some attractive tax benefits, several factors contribute to Alaska’s unfavorable ranking, including its high cost of living, challenging weather conditions, and elevated healthcare expenses.

Bankrate’s comprehensive study assesses all 50 states across five weighted categories to determine the best and worst states for retirement. Affordability is the most significant factor, accounting for 40% of the overall ranking. This category examines local and state sales taxes, the general cost of living, and average annual property taxes. Alaska’s high cost of living significantly impacts its ranking. According to RentCafe, the cost of living in Alaska is approximately 30% higher than the national average. Housing costs are about 17% higher, and both utilities and healthcare expenses are nearly 50% higher than the national average. For retirees on fixed incomes, these higher costs can be a substantial burden, making day-to-day expenses more challenging to manage.

The overall wellbeing category makes up 25% of the ranking and includes factors such as the number of adults over 62 per 100,000 residents and access to food and healthcare. Alaska’s challenging geography and remote locations can limit access to essential services, which is particularly concerning for retirees who may require more frequent medical attention or social services.

Healthcare quality and cost represent 20% of the overall ranking. This category looks at the cost of healthcare at the state level and the performance of each state’s health system. While Alaska boasts some high-quality healthcare facilities, the costs are substantially higher than the national average, further straining retirees’ finances.

Weather is another critical factor, accounting for 10% of the overall score. Alaska’s harsh weather significantly impacts its ranking. The state experiences extreme winter temperatures that can drop as low as -10 degrees Fahrenheit, though summer temperatures can range from 45 to 75 degrees Fahrenheit. Such climatic conditions are less appealing for many retirees seeking milder climates. The severe winters can also lead to increased utility costs, another financial burden for those on a fixed income.

Crime rates account for the remaining 5% of the ranking. While Alaska has areas with low crime rates, certain regions report higher levels of property crimes and violent crimes, which can be a concern for retirees seeking a safe and peaceful environment.

Despite its high cost of living, Alaska is very tax-friendly for retirees. The state does not impose income tax, estate taxes, or inheritance taxes. Additionally, retirement benefits from Social Security and pension payments are not taxed. However, these tax benefits are often outweighed by the state’s overall expense and harsh living conditions.

The issue of affordability is a common thread among other low-ranking states such as New York, Washington, and California, all known for their relatively high costs of living. These states face similar challenges with high housing, healthcare, and general living expenses. However, this doesn’t necessarily mean they should be discounted as potential retirement destinations. With adequate financial planning, retirees can potentially enjoy the amenities and lifestyles these states offer.

While financial considerations are crucial, non-financial aspects also play a significant role in determining the best places to retire. Access to social and community-building activities is particularly important for retirees. Kerry Hannon, a retirement expert and author of “In Control at 50+: How to Succeed in the New World of Work,” emphasizes that a sense of community and human connection is vital for healthy aging. Loneliness and isolation can have detrimental effects on retirees’ mental and physical health, making it important to consider community engagement when choosing a retirement location.

In summary, Alaska ranks as the worst state to retire primarily due to its high living costs, severe weather, and healthcare expenses, despite its favorable tax environment. The ranking underscores the importance of balancing both financial and social factors when selecting a retirement destination. For those considering retirement, evaluating a state’s overall affordability, healthcare quality, weather conditions, and community engagement opportunities is essential to ensure a comfortable and fulfilling retirement experience.