According to a report by financial services company Bankrate, Delaware emerged as the best state for retirement in 2024 in the United States. Factors such as tax-friendly status and favorable climate contributed to Delaware’s top ranking. Despite being a pricier state to live in, Delaware offers good affordability metrics for retirees.
Delaware is considered a tax-friendly state for retirees, with no state or local sales tax and no taxation on Social Security benefits. The average property taxes are relatively lower at around $1,939 annually. The state boasts rare occurrences of natural disasters like earthquakes, tornadoes, and hurricanes, with a temperate climate. However, Delaware’s weaker points include its cost of living, crime rate, and cost of health care.
Following Delaware, the top five states for retirement include West Virginia, Georgia, South Carolina, and Missouri. On the other hand, Alaska retained its position as the worst state for retirement for the second consecutive year, with New York, Washington, California, and North Dakota following suit.
Bankrate’s analysis revealed that Alaska scored poorly in affordability, quality and cost of health care, weather, and crime, contributing to its unfavorable ranking. The geographical split in the ranking shows that the Midwest and South claim the top five spots, while the Northeast and West claim the bottom five states primarily due to differences in the cost of living.
Delaware ranks in the middle in terms of retirement age and the required amount of money for a comfortable retirement. The age of retirement in Delaware is 63, higher than West Virginia and lower than the District of Columbia. The state ranks 18th out of 50 states and the District of Columbia for the highest annual cost of a comfortable retirement, estimating an average of $58,418 for retirees, with nearly $1 million needed to survive until the age of 80.
Challenges of Retirement Planning
The Bankrate report aligns with concerns about the financial preparedness of soon-to-be-retired Americans for life after retirement. A Prudential Financial press release highlighted that 55-year-old Americans are less financially secure than older generations, with median retirement savings of less than $50,000, significantly below the recommended goal of eight times their annual income saved by this age.
Concerns about outliving savings, inflation, and potential cuts in social security benefits add to the challenges faced by retirees. Inflation rates have remained elevated, impacting people’s budgets and retirement savings plans. The possibility of lower social security payouts due to the depletion of the social security trust fund by 2035 poses additional financial challenges for retirees relying on these funds.
Overall, the report underscores the importance of sound financial planning and preparedness for retirement to navigate potential challenges and ensure a comfortable and secure post-retirement life.
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