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.
• New Jersey. The median property tax in this state is the highest in the U.S. at $6,579. New Jersey also has the highest tax burden, a large budget deficit issue and a very high cost of living. The state has both an estate and inheritance tax. One advantage to living in New Jersey is the state excludes most pension and Social Security income for couples making less than $100,000.
• Minnesota. A retiree couple living in Minnesota would receive the fourth-highest income tax due to the absence of any pension or Social Security exceptions in the state. Property taxes are just below the top 10. Minnesota also has a large budget deficit issue.
• New York. The state has the fourth-highest median property taxes and one of the highest tax burdens. The state, however, does offer generous exemptions for Social Security and pensions, along with a high standard deduction. The cost of living in New York is one of the highest.
• Maine. The property taxes in Maine are much lower than New York’s, however a retiree couple in the state would be taxed $1,000 higher for income taxes. The cost of living is much lower in Maine, which is a plus for the state.
• Wisconsin. Property taxes are among the highest in the country here. The state has a high foreclosure rate. Wisconsin’s high income taxes are mitigated somewhat for retirees because Social Security income is exempt and because there is a high standard deduction.
Click here for more information on this top 10 ranking.