The Washington region does well in a new study of best places to retire, although one will need a somewhat substantial nest egg to do so successfully.
The local area comes in 32nd in a study of 182 urban areas by the personal-finance Website WalletHub. The study looked at 48 key retirement metrics in four broad areas: affordability, quality of life, health care and availability of recreational activities.
“Only three in 10 workers report that they are ‘very confident’ they will have enough money for retirement,” analysts noted. “The data set [making up the ranking] ranges from the cost of living to retired-taxpayer-friendliness to the state’s health infrastructure.”
The good news for those planning to stick around the local area in their dotage (er, golden years)? Washington ranks at the very top of the list in available activities. The bad news? It is 162nd out of 182 in affordability. (D.C. ranks in the middle of the pack in quality-of-life and health-care categories.)
Perhaps surprisingly, D.C. outperforms some other local areas: Virginia Beach ranked 47th on the list, Richmond 63rd, Norfolk 113th and Newport News 121st. Baltimore came in 153rd.
Orlando tops the list overall, with a winning combination that included #13 for affordability, #9 for activities, #68 for health care and #70 for quality of life. Rounding out the top five were Charleston, S.C.; Scottsdale, Ariz.; Tampa; and Minneapolis. Coming in sixth to 10th were Denver; Cincinnati; Fort Lauderdale; Miami; and Atlanta.
On the other side of the coin, San Bernardino, Calif., ranked at the very bottom, followed by Newark; Bridgeport, Conn.; Spokane, Wash.; and Rancho Cucamonga, Calif. Also in the bottom 10: Wichita, Kan.; Vancouver, Wash.; Detroit; Jersey City; and Arlington, Texas.
If you want to reside among younger folks, Irving (Texas) is the place to go; its 65+ component is just 7.5 percent of the total population, compared to 24.3 percent in Scottsdale, which has the highest concentration of seniors among areas surveyed.
Brownsville, Texas, has the lowest adjusted cost-of-living index for retirees, 2.6 times lower than in Pearl City and Honolulu, Hawaii, the cities with the highest.
St. Louis has the most health-care facilities per 100,000 residents.
(To view the full report, see the Website at https://wallethub.com/edu/best-places-to-retire/6165.)
The COVID crisis has upended the plans of many potential retirees, and led others to consider the timing and location of their retirement. What tips might the experts have for those concerned about finances headed into retirement?
• “The largest shares of retirees’ expenditures are on housing, transportation, healthcare, food, entertainment and taxes. So the costs of these should be considered when selecting a location. Housing is far and away the largest cost for most retirees, so it is a primary consideration. Along with that go the level of real estate taxes, other property taxes and income taxes which can be nasty surprises if not researched in advance. Be careful because states with no income taxes, which may sound desirable, often make up for that with high real estate and other property taxes. Utility costs, as well as taxes on gasoline, are also important as these are pretty much non-discretionary to retirees,” said Deborah Allen Hewitt, clinical professor emerita of William & Mary’s Raymond A. Mason School of Business
• “A little planning can help you boost your retirement income, even as you are approaching retirement. For example, monthly Social Security benefits increase when you delay claiming – it is a tradeoff, as you give up some benefits now in exchange for higher monthly benefits in the future. But for many people, delaying Social Security claiming increases the lifetime value of benefits. Also, working a little longer can have a big impact on retirement income if it allows someone to delay Social Security. This is a strategy you can use even if you are nearing retirement and have not saved enough,” said Sita Nataraj Slavov, professor at the Schar School of Policy and Government at George Mason University.
• “Many older workers fear a retirement future fraught with limited resources, limited income, partial health insurance and limited opportunities to fulfill a productive and fruitful life on retirement. Some may even view retirement with few chances to return to the job market, if necessary. And for some, the pandemic has accelerated their retirement date,” said Steven Applewhite, professor emeritus at the University of Houston.
Biggest mistakes potential retirees make?
• “The biggest mistake is probably expecting returns in the stock market to remain positive and relatively high and costs of living to remain low. You need to plan for those years when the market declines by 15 percent to 25 percent, which happens about every seven to 10 years. Will you have enough available cash to cover your expenditures without having to sell equities at these low periods?” Hewitt said.
• “I would say one of the biggest mistakes is not thinking carefully enough about when to claim Social Security. The stakes are pretty high. Delaying claims can boost lifetime benefits for many people. It is also important to remember that claiming Social Security does not necessarily need to be linked to retiring,” Slavov said.
If you are looking exclusively for affordability, consider Fort Smith, Ark., which tops the WalletHub ranking in that category. However, it is only 92nd overall in the list.
Montgomery, Ala., is second on the affordability scale, but ranks 110th overall.
And consider the cases of Columbia, S.C., and San Francisco, which rank 11th and 12th, respectively, on the overall ranking. Columbia comes in sixth on affordability, but lower down in other categories, while San Francisco is 159th, affordability-wise, but is boosted by higher scores in other categories.