The best state to retire in the U.S. is also one of the smallest, according to one new classification.
Based on its high marks for affordability, access to high-quality health care, overall well-being and other categories, Delaware, known as the “First State,” earned the top spot in Bankrate’s annual report. classification of the best states to retire in the US In 2023, the state ranked second, behind Iowa.
“While you might not think of Delaware as a typical retirement haven, it has a lot of strong selling points for retirees,” Bankrate analyst Alex Gailey told CBS MoneyWatch.
Bankrate ranked states based on their scores on five key metrics: affordability, overall well-being, access to health care, climate and crime. Given its extreme importance for the majority of retirees, accessibility had a greater weight than other categories – 40% of each state’s overall score. Well-being accounted for 25%, access to high-quality healthcare 20%, climate 10% and crime 5%.
“Delaware went from second to first place because of the affordability metric. It has the greatest weight in reflecting what is happening in the economy, with the cost of living increasing as much as it has,” said Gailey.
In fact, food prices have increased dramatically since 2019, with Americans spending more of their income on food than they have in 30 years. Home prices rose 5.3% from April 2023 to April 2024, according to a June report analysis from CoreLogic. Car insurance has skyrocketed 19.5% year over year in Juneshow the latest CPI data.
Americans also say they are behind in saving for retirement. Just one in five workers Those age 55 have $447,000 or more in retirement savings, Prudential Financial’s 2024 Pulse of the American Retiree Survey found. It is a separate study on preparing Generation X for retirement found that half of respondents said they would need a “miracle” to retire.
Although Delaware’s cost of living is higher than the national average, the state scored well on other affordability metrics. For example, there is no state or local sales tax, and residents do not have to pay income tax on social security benefits.
Delaware’s racial and ethnic diversity and its high percentage of residents age 62 and older also helped catapult it to the top of Bankrate’s list. The state also provides residents with access to high-quality health care – a key consideration for many retirees.
“Having access to good quality healthcare is very important in retirement because it is one of the biggest costs incurred,” Gailey said.
Worst state in the US to retire
In contrast, Alaska ranked 50th. The state’s low ranking was driven by its low scores at nearly every level, Gailey said.
Other low-ranking states include New York (49), Washington (48) and California (47), all of which are hurt by their high costs of living.
“The common thread is that they are expensive states to live in,” Gailey said. “In retirement, you have a fixed income, and it can be shocking and stressful to see your retirement savings dwindle.”
See the full classification here.
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