That depends on whom you ask. A lot of people have chosen to retire here and are happy with their decision. California, particularly the Bay Area, is undergoing a tectonic reordering of the demographic landscape as the population ages. By 2040, more than 1 in 5 Californians will be 65 or older. Already, there are about as many senior citizens in San Francisco as there are children. Clearly, many people think California is a good place to live out your golden years, especially if you've made the right financial moves.
But not everyone agrees. Retirement planning services platform Retirement Living recently published its annual ranking of the best and worst states to retire in the U.S. Wyoming, West Virginia and Florida took the top three spots.
California's place on the list: No. 46. The fifth-worst state to retire, in other words.
There are many, many factors you could take into consideration in putting together a list like this. No one study could capture everything that's good and bad about living and retiring in California. But here's a look at why California landed so low on this list - and what it misses about the state's advantages.
How the study ranked states
Jailyn Montero, a media relations specialist for Retirement Living, explained the methodology: Researchers categorized data points in three areas, affordability, economic strength and quality of life.
- To measure affordability, the study looked at the amount of savings needed to retire and the state's income and property tax rates.
- Economic strength looked at the senior poverty rate and the percent of seniors still working past age 65.
- Quality of life was heavily weighted in how states were ranked, accounting for 60% of a state's overall score, and took into account things like wellbeing index, weather, property and violent crime, and health care facilities per capita.
The factors that brought down California's ranking the most had to do with the cost of living, Montero said, including state taxes, the percent of seniors living in poverty (12%) and the percent of seniors working past what's traditionally considered retirement age.
California actually moved up in Retirement Living's rankings from the 2024 results. This year, researchers removed opinion-driven survey data from their results. People's perceptions about what it's like to live in other states - especially a place that looms as large in the popular and political imagination as California - do not always reflect reality. And it's highly unlikely most seniors surveyed would have lived in enough states to make an informed assessment.
When that opinion data was factored in for the 2024 list, California ranked dead last.
What the study misses about California
Taxes are a critical part of what makes a retirement destination affordable, and the Retirement Living study oversimplifies and likely overestimates how much people - particularly older adults - get taxed here.
The study simply compares the top marginal tax rate for each state. Some states, including Wyoming, Texas and Florida, don't tax income at all. Fourteen states, including Arizona, Idaho, North Carolina and Georgia, use a flat tax rate, ranging from 2.5% to 5.8%. But in California, we have a graduated income tax, so the more money you make, the higher tax rate you pay, with the top rate at 12.3%. Taxpayers earning more than $1 million get another 1% tacked on. The study uses that top rate of 13.3%, but realistically, most seniors probably land in the 6% to 9% state income tax rate, Montero said.
California is also one of the states that doesn't tax Social Security, and whether or not those benefits are taxed wasn't factored into the state rankings, Montero said. If you rely exclusively on Social Security benefits in retirement, which millions of seniors do, you'd pay no state income taxes in California.
Plus, as every California homeowner knows, your property taxes are strongly impacted by Proposition 13, the 1978 law that limits how much they can increase each year. If you've owned your home long enough to have paid off the mortgage, you are probably paying a fraction of the property taxes that your new next-door neighbor is paying. Montero said Prop 13's property tax limitations were also not factored into their assessment.
So, if you're moving to California for the first time and planning to buy property, and you're still earning more than a million dollars a year in income, then you could get hit with a mighty tax bill. But if you're already living here and have owned your home for some time, you may be getting a better deal than you would be if you pulled up stakes to move to somewhere like Wyoming, West Virginia or Florida.
Again, no study can take every possible facet of retirement into account. But another key one that's missing: Montero said her team included a category for golf courses per 1,000 senior residents. But pickleball court availability? Nowhere to be found.
Here's the overall ranking of all 50 states:
1. Wyoming
2. West Virginia
3. Florida
4. Montana
5. Delaware
6. Maine
7. Pennsylvania
8. Mississippi
9. Idaho
10. Kentucky
11. Missouri
12. North Dakota
13. Michigan
14. South Dakota
15. Indiana
16. Iowa
17. Arkansas
18. Alabama
19. Ohio
20. Wisconsin
21. Georgia
22. Alaska
23. South Carolina
24. Minnesota
25. Tennessee
26. Oregon
27. Louisiana
28. Kansas
29. Nebraska
30. New Hampshire
31. North Carolina
32. Nevada
33. Utah
34. New Mexico
35. Washington
36. Colorado
37. Oklahoma
38. Illinois
39. Arizona
40. Rhode Island
41. Virginia
42. Vermont
43. Texas
44. Connecticut
45. Maryland
46. California
47. New Jersey
48. Massachusetts
49. New York
50. Hawaii
