Report: Virginia among best, Maryland among worst states for retirement

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Middle-Aged Couple Walking on a Boardwalk
Local,Maryland,Virginia,Andy Brownfield

Maryland's high tax burden is causing it to rank as one of the worst states to retire to, while Virginia is among the top 10, according to a report by Bankrate.com.

Maryland tied with Vermont for 44th in the personal finance website's list of best states to retire to, with its high cost of living and large state and local tax burden blamed for dragging it down in the rankings.

"If you're looking at the state and local tax burden, it's 10.2 percent [in Maryland]. Compare that with Virginia at 9.3 percent and D.C. also at 9.3 percent," said Chris Kahn, author of the report. "In terms of cost of living, it ranked 42 out of 51 states and D.C."

Best 10 states to retire to
1. Tennessee
2. Louisiana
3. South Dakota
4. Kentucky
5. Mississippi
6. Virginia
7. West Virginia
8. Alabama
9. Nebraska
10. North Dakota
Worst 10 states to retire to
1. Oregon
2. Alaska
3. Washington (state)
4. California
5. Wisconsin
6. Maine
7. Maryland
7. Vermont
9. Minnesota
10. Delaware

Kahn said Maryland also had an above-average crime rate, which hurt its ranking.

The Bankrate report considered factors like weather, access to doctors and hospitals, cost of living and tax burden. Virginia had a relatively low crime rate and cost of living compared with other states, landing it in sixth place among the top 10 states to retire to.

"There wasn't any one thing Virginia was stellar in, but they were pretty good in most areas we looked at," Kahn said.

State tax climate and cost of living are important factors to retirees in determining where to move, said Gabi Redford, an editor with AARP the Magazine.

"For the last few years, financial criteria have been huge," Redford said. "People are still recovering from the recession, and that could have impacted their retirement income."

Maryland has seen 40 tax and fee increases since Gov. Martin O'Malley took office in 2007, including a new wholesale tax on gasoline signed into law last month and an income tax increase on Marylanders earning more than $100,000 enacted last year. Meanwhile, Virginia's new gas tax plan effective July 1 is expected to lower prices at the pump while increasing sales taxes statewide.

However, nonfinancial factors can be more important to retirees deciding where to move.

Ric Edelman, president and CEO of the Edelman Financial Group, said retirees tend to overemphasize tax burden when deciding where to live, when in reality, housing costs can prove to have more of an impact on a retiree's finances than state and local taxes. Taxes are unique to an individual and the type of retirement income he or she has coming in.

"Probably the most important criteria is the distance to grandchildren -- if you like them close by, if you don't like them far away," Edelman said. "And that is, we find, the dominant factor that our clients use in determining where they want to live after retirement."

abrownfield@washingtonexaminer.com

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