Move to Your Dream Destination BEFORE You Retire …

Four Midwestern states and one East Coast state won top-billing (“A” grades) in LPL Research’s recently released Retirement Environment Index.

I know, normally you would think western states or southeastern states would score high on retirees’ wish lists. States like Florida, Arizona and California, for example.

In this ranking system, these three so-called top retirement destination states — where seniors can enjoy warm climates year-round, a plethora of world-class golf courses and oodles of amenity-rich, active adult community options — received grades of “D,” “D” and “F,” respectively.

The LPL Research Retirement Environment Index is different from the typical “best places to retire” search — where findings often land outside the United States .

LPL takes a more holistic, stay-at-home approach. The investment advisory firm examines all 50 states and the District of Columbia through measures of pre-retiree desirability.

“Pre-retiree” is key to this study. LPL defines the pre-retiree contingent as 45- to 64-year olds.

In other words, people aren’t waiting until retirement to move to what they consider their dream destination. For many, they are already there.

Today, let’s look at where they’re going … and why.

Each state is ranked on its attractiveness as a retirement destination. LPL scores states on six key factors. Here are the factors — and sub-factors — involved:

Financial: A state’s fiscal health and the financial health of a state’s pre-retirees are likely to directly impact individuals’ ability to enjoy a fulfilling retirement. Financial factors rank high across all surveys of pre-retiree preparedness.

Healthcare: Access to, and cost of, healthcare are key determinants of retirement satisfaction. Along with financial factors, healthcare comprises a top concern.

Housing: The availability of affordable housing, and the presence of nursing care facilities, are both of vital importance and can be a major expense to consider during retirement.

Community Quality of Life: Social factors — which take into account crime rates, traffic patterns and weather conditions — are key determinants of retiree happiness and satisfaction.

Employment and Education: The 20 years before retirement can generate the highest rate of savings if fully employed. Employment may offer benefits beyond income, such as 401(k)s, pensions and health insurance.

Wellness: Personal habits and tendencies impact health during the last years of employment and into retirement. Poor habits are associated with premature death, poor quality of life and increased healthcare costs, in addition to strains on state-provided resources.

Subcategory scores were computed based on a state’s standing compared to the national average. Then, they were weighted on relative importance to achieve a final grade for each of the six categories.

Next, LPL weighted the six main categories to come up with an overall grade for each state. The following weights were assigned: Financial (35%), Healthcare (20%), Housing (15%), Community Quality of Life (10%), Employment & Education (10%) and Wellness (10%).

Obviously, each pre-retiree’s aspirations can differ.

For example, your financial situation might be solid, so you could give less value to the Financial category. Instead, you might give more importance to the Community Quality of Life category.

Either way, the report shows individual category grades. This lets you focus on one specific area or recalibrate category weightings to your liking.

Here’s a sneak preview from the report in illustrative form:

U.S. States by Overall Retirement Environment Index Grade

best states to retire in
Source: LPL Research, 3/5/16

You’ll notice from the map LPL’s top five ranked states (only “A” grades) were South Dakota, Wyoming, Iowa, Michigan and Virginia.

Virginia is for Lovers … and Pre-Retirees

Virginia nabbed the No. 1 overall ranking in the report for the second year in a row.

Here’s how LPL summarized its top spot:

Virginia retained its top spot in the Retirement Environment Index. One of just 12 states with no grade lower than a C, Virginia was a standout in the financial category, with a high median income relative to the national average, a low cost of living, healthy private sector retirement assets, and a below-average tax burden.

Virginia also received an A in community quality of life, boasting very low violent crime figures, good weather, and relatively low percentages of poverty and homes in foreclosure.

Would you be open to relocating to another state if it offers improvements in a one, a couple, or all of the six factors mentioned above?

If so, you’ll want to check out the overall rankings — and individual category rankings — in this report:

LPL Research Retirement Environment Index: State-by-State Holistic View into Pre-Retiree Landscape

Even if you’re happy with your home state, you can at least see where it ranks.


Grant Wasylik

Originally from Pennsylvania, Grant graduated from Juniata College with an economics major and accounting minor. Since graduation, Grant has worked in the investment industry for almost two decades by serving in various roles … Prior to coming to…