Study Names Alabama Among Top Five States for Stretching the Value of Retirement Dollars

Baby Boomers looking for more bang for their buck during retirement are in luck if they live in Alabama or four other states, according to a new study from independent researchers at The Tax Foundation.

Five states were found to stretch the value of $100 the most, offering an additional $13.38 to $15.74 in value when compared to the other 45 and the District of Columbia. Those five states included Mississippi, which took the lead at $115.74, followed by Arkansas ($114.16), Missouri ($113.51), Alabama (113.51) and South Dakota ($113.38).

The most expensive states, perhaps not surprisingly, were some of those with the highest taxes: the District of Columbia, where residents only received the value of $84.60 for $100, followed by Hawaii ($85.32), New York ($86.66), New Jersey ($87.64) and California ($88.57).

With the cost of senior living homes at a national average of around $90,000 per year, not including healthcare costs and the cost of living in general, getting more for less during retirement will make a difference for many of the 77 million Baby Boomers poised to retire during the next two decades.

These cost savings could also come in handy for Baby Boomers who worked in one part of the country and retire to one of these low-cost areas.

However, the values differ mainly because of economics: Mississippi, Arkansas and Alabama all have median household incomes below $42,000 as of 2012, making them some of the poorest states in the U.S. Therefore, one thing to consider for retirees might be the variety and availability of goods and services in these areas.

But lower incomes in poorer states still had the potential to make people feel richer in the states with lower median incomes. A $40,000 salary after taxes in Kentucky, for example, is equal to $53,000 after taxes in Washington, D.C. just to achieve the same standard of living.

Another consideration to make is the differences between urban and rural. While Mississippi averaged $115.74 for $100 value, urban areas like Jackson were actually more costly though still offering a value of $109.29. Rural Mississippi, however, valued $100 at $120.63 instead. Similar trends were noted in other states.

Leave a Reply

Your email address will not be published.