Where Seniors Are Most Prepared for Retirement
More than a fifth of Americans have nothing saved for retirement, according to a Northwestern Mutual survey. What’s more, analysis from the St. Louis Federal Reserve shows that families with money parked in retirement accounts only have $1,100 saved up, on average. But in some locales, retirees are bucking the trend and living a life full of the pleasures that come with careful retirement planning and financial security.
In order to rank the places where seniors are most prepared for retirement, we looked at seven factors. Specifically, we analyzed data on retirement income, food stamp reliance for seniors, the poverty rate for seniors, the homeownership rate for seniors, the percent of seniors with retirement income, the housing-cost-burdened rate for seniors and housing costs as a percent of retirement income.
- Arizona tops the list - Arizona has three different cities with seniors who are financially well-prepared for retirement. This state is also a targeted landing spot for many retirees. It may be the case that those with the means to move end up in temperate Arizona, enhancing the retirement-preparedness scores of Surprise, Sun City and Mesa in the Grand Canyon State.
- Large cities score poorly - New York, Los Angeles and Chicago all land in the bottom 10. Seniors who are not working may feel the pinch in these high-cost-of-living cities. The fact that many seniors were unable to buy homes in these cities also hurts their score.
- The Villages, Florida
The retirement community known as The Villages is home to retirees with high incomes and low rates of poverty. In addition, the vast majority of retirees own their homes without being housing-cost-burdened. Across all the metrics we analyzed, The Villages ranked no worse than third.
- Huntsville, Alabama
In Huntsville, Alabama’s tech hub, the average retiree has about $55,178 in retirement income, between Social Security and private sources. For that metric, Huntsville ranks 10th in our study. Another positive metric for the future viability of Huntsville retirees: Under 19% of Huntsville seniors are housing-cost-burdened.
- Surprise, Arizona
Surprise has the second-lowest rate of senior food stamp use, at 2.3%. Additionally, just 5.2% of seniors here fall under the poverty line. In both of those metrics, Surprise ranks in the top three. Also, nearly 88% of seniors here own their home, the second-highest rate in the study.
- Sun City, Arizona
Sun City seniors tend to have low incomes but still has the lowest ratio of housing costs to retirement income in the study. Just 23% of seniors here spend 30% or more of their income on housing. Sun City is another place with a high senior homeownership rate: More than 84% of seniors own their home.
- Anchorage, Alaska
Seniors in Anchorage have high incomes and low rates of poverty. In fact, Anchorage ranks fourth in total retirement income, and more that 57% of seniors here have private retirement income. Only 22.5% of Anchorage seniors are housing-cost-burdened despite the relatively high cost of living one finds in Anchorage.
- Mesa, Arizona
Just 4.5% of seniors in Mesa use food stamps. Only eight other cities in the study beat that figure. The senior homeownership rate here is also high, with 82% of seniors owning their home.
- Lexington, Kentucky
Lexington takes a top-10 spot thanks to its affordability. Seniors who live here don’t tend to have the highest incomes, but they are still prepared to handle the local costs of living. Fewer than 22% of seniors in Lexington spend 30% or more of their income on housing.
- Fort Wayne, Indiana
Fort Wayne is another city on our top ten list with a low cost of living. On average, housing costs equal just 23% of income for retirees. What’s more, only 19.6% of seniors are housing cost-burdened. In those two metrics, Fort Wayne ranks in the top 10.
- Virginia Beach, Virginia
Virginia Beach is one of the pricier places in this top 10, with a cost of living that ranked 86th in our study. Still, just 5.4% of residents here fall below the poverty line, the fourth-lowest rate in the study. In addition, only 4.6% of seniors make use of food stamps, another low score. In Virginia Beach nearly 59% of seniors here have private retirement income, and 82% own their homes.
- Colorado Springs, Colorado
Colorado Springs ranks in the top 30 in five out of seven metrics we looked at for our study. The highlights include the eighth-highest rate of retirement savings and 11th-lowest senior poverty rate. But Colorado Springs is a fairly expensive city with over 27% of seniors are housing-cost-burdened, according to our data.
In order to rank the places where seniors are prepared for retirement, we looked at data for the 100 cities with the largest 65-or-older population. We then ranked them using the following seven metrics:
- Average senior retirement income. This is private retirement income, from savings, IRA, 401(k) or pensions, combined with Social Security income for households where the head of household is 65 or older.
- Percent of seniors under the poverty line. This is the percent of seniors who fall under the poverty line.
- Percent of seniors who use food stamps/SNAP benefits. This is the percent of households who use food stamps where the head of household is 65 or older.
- Percent of seniors who own their homes. This is the percent of households where the head of household is 65 or older and the residents own their home.
- Percent of seniors with retirement income. This is the percent of households where the head of household is 65 or older who have retirement income from private means. It includes money from income streams like annuities, insurance, IRAs and retirement pensions.
- Percent of seniors who are housing cost-burdened. This is the percent of households where the head of household is 65 or older and spends 30% or more of income on housing.
- Housing costs as a percent of senior income. This is housing costs divided by average senior retirement income.
Data for all metrics come from the U.S. Census Bureau’s 2017 5-year American Community Survey.
To create the final score, we ranked each city in each metric. Then we found each city’s average ranking and gave equal weight to all metrics. We indexed the cities using their average ranking. Ultimately, we gave the city with the best average ranking a score of 100 and the city with the worst average ranking a score of 0.
Tips for Preparing for Retirement
- Invest as much as you can as early as you can - By carefully budgeting and exposing your savings to the stock market early in your career, you can take advantage of compound interest. After a while, what were modest savings can turn into a sizable retirement chunk.
- Get an expert’s opinion - Planning your finances over 30 or 40 years, while trying to strategize how to fund your children's college education and secure your own retirement, is complicated. A professional financial advisor can help you manage your finances while leaving no stone unturned. If you are not sure where to find the right financial advisor, check out SmartAsset's financial advisor matching tool.
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