Fewer Americans plan to work after age 62. In a March 2022 survey conducted by the Federal Reserve Bank of New York, 49.2% of Americans plan to work after age 62, a figure 6.2% lower than the previous two years. . However, it can be difficult to make early retirement a reality. Extending retirement savings long enough to live comfortably is difficult, but some cities are better than others at making early retirement plans a reality.
In this study, we determined the best places for early retirement, comparing the 100 largest cities in four categories. They include tax friendliness, senior care, affordability and livability. For more information on the underlying metrics in each category and how we gather our findings, read our Data and Methodology section below.
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• Arizona cities are the most affordable for young retirees. Four of the top 10 cities are located in Arizona. Gilbert and Chandler claim the top two spots, while Scottsdale and Mesa place fourth and seventh, respectively. All four cities are very tax-efficient for retirees. Specifically, we estimate that the effective tax rate for retirees is less than 19% on average across the four cities and that the state of Arizona does not tax capital gains.
• Housing costs represent around 20% of income in the top 10 cities. The general rule is to spend no more than 30% of your income on housing costs, which is particularly important for retirees who have a fixed budget. In the top 10 cities for early retirement, median housing costs average 20.42% of median household income.
1. Gilbert, Ariz.
Of the 14 individual metrics we looked at, Gilbert, Arizona ranks in the top five cities for three of them. It has the fifth-best average housing cost to income ratio (19.35%) and ranks third for its low violent and property crime rates (109 and 1,077 per 100,000 population, respectively).
2. Chandler, AZ
Chandler, Arizona is located less than 10 miles from Gilbert. In our four categories, Chandler ranks 12th for tax friendliness and 13th for senior care. In terms of health and elderly care, the average annual cost of a Silver health insurance plan is around $8,600 (16th best) and there are 11.19 retirement homes available per 100,000 population (13th best). Housing costs relative to income fall below 20% (seventh best).
Henderson, Nevada ranks 10th in our tax category: it has an effective income tax of 16.24%, an effective average property tax of 0.58%, and the state has no income tax. capital gains. Henderson also has the eighth highest property crime rate (1,426 per 100,000 population) and the 12th highest violent crime rate (208 per 100,000 population). Food and entertainment establishments account for nearly 12% of all establishments, ranking them 11th.
4. Scottsdale, Arizona
Scottsdale, Arizona ranks well in tax friendliness (15th best) and senior care (14th best). This city also has an average effective property tax rate of 0.52% (fourth best). In terms of senior care, Scottsdale ranks 13th in the number of nursing homes per capita (about 11 per 100,000 people) and 16th in the average annual cost of a Silver Health Insurance Plan ( approximately $8,600). This city also has the sixth best housing cost relative to income (19.72%) and the eighth best violent crime rate (179 per 100,000 population).
Of the cities we considered, the most affordable Texas city for early retirement is Plano. This city ranks in the top 30 in all four categories in this analysis: 16th in the taxation category, 27th for affordability and livability, and 30th for senior care. Plano also has the best effective income tax for retirees (16.24%) and there is a capital gains tax in Texas. Additionally, it ranks second in housing costs relative to income (19.26%), fifth in violent crime rate (155 per 100,000 population), and ninth in number of medical facilities per capita (nearly four per 1,000 inhabitants).
6. Louisville, Kentucky
People looking to retire early may be interested in Louisville, Ky., because the city ranks highly in our affordability and livability categories. This city’s median annual housing costs are only 20.30% of median household income (11th best) and the estimated annual cost of living is $24,505 (19th best). The city is also relatively safe. It has the ninth lowest property crime rate (about 1,441 per 100,000 population) and the 21st best violent crime rate (less than 346 per 100,000 population).
Arizona’s third most populous city, Mesa ranks well for categories, senior care, and tax friendliness. Residents here can expect to pay around $8,600 a year for a Silver health insurance plan (16th best). There are also about 11 nursing homes per 100,000 people (13th best) and three medical facilities per 1,000 people (44th best). In terms of taxes, the average effective property tax rate is the seventh lowest at 0.53%, and Arizona’s state capital gains tax is 4.50%.
8. Boise, ID
Boise is the only city in Idaho in the top 10, and it ranks in the top 30 in three categories: affordability (19th best), senior care (22nd best), and livability (29th best). When comparing specific metrics, Boise has the seventh highest concentration of retirement homes (about 12 per 100,000 population), 10th lowest annual cost of living ($23,106), 10th best comparison housing costs relative to income (20.04%) and the 14th-lowest violent crime rate (less than 293 per 100,000 population).
9. Pittsburgh, Pennsylvania
Pittsburgh, Pennsylvania ranks ninth in senior care and 12th in affordability. The average annual cost of a Silver health insurance plan is just under $8,400 (15th best). Additionally, the average annual cost of living in Pittsburgh is $23,403 (14th lowest) and housing costs are 22.18% of median household income (33rd best).
10. Lexington, Kentucky
Lexington is the second Kentucky city in our top 10. In our four categories, Lexington ranks first in affordability (ninth best) and livability (19th best). By specific metrics, Lexington ranks ninth for housing costs relative to income (20.01%), 12th best for estimated annual cost of living ($23,163), 16th best crime rate violent (about 320 per 100,000 population) and 19th best for the average number of days with extreme temperatures (less than 15 per year).
Data and methodology
To find the best cities for early retirement, SmartAsset looked at data from the 100 largest cities in the United States. We compared them in four categories, covering 14 individual measures:
Tax friendliness. We analyzed the effective income tax of a retiree with an income of $50,000, the average effective tax rate on property, sales tax (state and local combination), and income tax. state capital gains. Data is from the Census Bureau’s 2020 5-Year American Community Survey and filled1031.com.
Elderly care. This category includes the average annual cost of Silver Health Insurance, nursing homes per 100,000 population, and medical facilities per 1,000 population. Data comes from the Census Bureau’s 2020 5-Year American Community Survey and the Kaiser Family Foundation’s Health Insurance Calculator.
Affordability. To create this score, we looked at an individual’s estimated annual cost of living, home value-to-income ratio, and housing costs relative to income. Data is from the Census Bureau’s 2020 5-Year American Community Survey and MIT’s Living Wage Calculator.
Habitability. This includes property and violent crime rates, concentration of dining and entertainment establishments, and average number of days with extreme temperatures (i.e. below 30 degrees or above 80 degrees) . Data comes from the Census Bureau’s 2020 American Community Survey, the 2020 FBI Crime Report, quarterscout.com, and the National Oceanic and Atmospheric Administration.
First, we ranked each city across all metrics, assigning equal weight to each. We then averaged the rankings across the four categories listed above.
For each category, the place with the highest average ranking received a score of 100. The place with the lowest average ranking received a score of 0. We compiled our final list by averaging the scores categories.