Connecticut Ranked Worst State to Retire

The list for 2012 is based on five considerations including fiscal health, property taxes, income taxes, cost of living and climate.

Connecticut was ranked first place on the worst states to retire list. TopRetirements.com stated that Connecticut received the top spot due to its high property and income taxes. According to the news release, most pension income in Connecticut is taxable. The state also had the third-highest tax burden of any state in 2009.

Other states in the top 10 include:

•  Illinois. Its pension funding, deficit spending, unemployment and foreclosure rates are among the worst of any states. The state began to address its problems last year when it raised income tax rates. Although Illinois does not tax most pension or Social Security, other earnings and investment income are taxed at a fairly high rate due to its 5% flat tax rate.

•  Rhode Island. This state has severely underfunded pension/health liabilities and budget deficits.  It has the fifth-highest median property taxes paid.

•  Vermont. This state has a very high median property and income tax, with a top 10 cost of living.

•  Massachusetts. A retiree living in this state would face property taxes that are among the highest of any state. Even though Social Security income is exempt, income taxes would be high because of the flat rate applied to other earnings. Most government pensions are exempt, but private sector ones are taxed. Also, the cost of living in Massachusetts is high.