New research, the LPL Research Retirement Index, from LPL Financial ranked U.S. states on their attractiveness for pre-retirees as they save and prepare for the challenges ahead in retirement. According to David Reich, Executive Vice President Head of Retirement Partners at LPL, this new index is important because most other retirement indexes examine how people are doing in retirement as opposed to looking at those people saving for retirement. Reich believes that this retirement index is crucial to jumpstarting conversations with younger individuals about the importance of saving for retirement. It is crucial that young Americans stay proactive with regards to saving and preparing for retirement. Additionally, they need to be aware of the specific roadblocks they face when trying to save for a secure retirement. The research index took a holistic approach to retirement preparedness by incorporating the common roadblocks to a secure retirement into six key factors, each with a variety of supporting data points, in order to evaluate the overall ability of each state’s residents to prepare for retirement. Virginia was ranked as the top state for pre-retirees and New York was ranked as the worst state. However, it is important to note that this index does not indicate whether a particular state is a good state to relocate to in retirement.
The states were ranked on six main categories: 1) Financial, 2) Healthcare, 3) Housing, 4) Community Quality of Life, 5) Employment & Education, and 6) Wellness. A poor rating by the index does not necessarily mean that you should immediately move to a state with a better ranking, but instead it should make you step back and review your own retirement preparedness. Are you saving enough money? Do you have good job prospects in your area? How are the healthcare and education systems? Do you feel happy in your current situation? Perhaps the best decision for you is to continue living in your current state but to place a greater amount of focus on a certain aspect of your life that poses a risk to your retirement preparedness. For example, if you live in a state with a poor healthcare rating for pre-retirees, consider saving more each year for healthcare expenditures, enrolling in a more comprehensive healthcare insurance plan, or taking advantage of an HSA account to meet unexpected healthcare costs. Before you make any changes to your lifestyle, make sure to consult a retirement planning expert to ensure that the decision fits into your overall retirement income plan. Below is the ranking of states as it relates to ease of preparing for retirement. Check out where your state is ranked.