Factors to Weigh When Choosing a Retirement State
Choosing the best place to retire is a deeply personal decision, and while many have traditionally flocked to the Sun Belt, the Northeast offers a compelling alternative. To determine the right fit, it’s essential to evaluate each state across several key criteria:
- Tax Friendliness: The impact of state and local taxes on a fixed retirement income can be significant. This includes income tax on pensions and Social Security, as well as sales and property taxes.
- Cost of Living: Affordability is crucial. This covers everything from housing costs to daily expenses like groceries and transportation.
- Healthcare Access and Quality: Proximity to top-rated hospitals, the availability of doctors who accept Medicare, and overall health outcomes for seniors are vital considerations.
- Neighborhood Safety and Crime Rates: Low crime rates contribute significantly to a retiree’s peace of mind and overall quality of life.
- Access to Recreation and Community: Opportunities for social engagement, outdoor activities, cultural events, and continuing education are important for staying active and engaged.
- Climate: While often a primary motivator for leaving the Northeast, some retirees prefer the four distinct seasons and are willing to trade constant sunshine for other benefits.
New Hampshire: The Top Contender in 2025
For many retirees, New Hampshire has emerged as a top choice, capturing the number one spot in recent Bankrate rankings. The state’s appeal lies in its combination of financial and quality-of-life benefits.
Financial Appeal
One of the biggest draws is the state’s tax structure. New Hampshire levies:
- No state income tax on wages.
- No state sales tax.
- No tax on Social Security benefits or most retirement account withdrawals, including IRAs and 401(k)s.
While the state does have some of the country’s highest property taxes, the lack of other major taxes can provide significant savings for retirees managing their income and expenses. The interest and dividends tax is also being phased out.
Quality of Life and Community
New Hampshire ranks exceptionally well for quality of life, scoring first in neighborhood safety, fifth in healthcare, and seventh for people of similar age. The state offers a wide range of activities, from lakes and beaches to mountains and forests, allowing for year-round recreation. The large and growing senior population means plenty of opportunities to connect with peers who share similar interests.
The Trade-off
The main disadvantage of New Hampshire, and most of the Northeast, is the cold winter weather. For those who can tolerate or even enjoy the snow, the state's comprehensive benefits can easily outweigh the climate factor. Its proximity to major cities like Boston is another plus.
Maine: A Strong New England Alternative
Ranking just behind its southern neighbor, Maine also presents a compelling case for retirement. With a high percentage of residents aged 65 or older, it offers a strong senior community.
Key Strengths
- Safety and Healthcare: Maine ranked second for neighborhood safety and third for healthcare in recent studies, indicating a secure environment with strong medical support.
- Recreation and Arts: The state is known for its beautiful coastlines, access to Acadia National Park, and a thriving arts and culture scene, ranking fourth for arts and recreation establishments.
Cost Considerations
While high in quality of life, Maine's cost of living can be a concern. Specifically, the costs for long-term care services like assisted living and in-home care tend to be higher than the national average.
Delaware: The First State for Financial Freedom
For those seeking a coastal lifestyle with major financial benefits, Delaware is a strong choice. It offers a unique mix of tax advantages and proximity to major East Coast hubs.
A Tax-Friendly Haven
Delaware’s primary appeal is its very tax-friendly environment for retirees:
- No state sales tax. This offers immediate savings on all purchases.
- No tax on Social Security benefits.
- Retirement income exclusion: Residents 60 or older can exclude up to $12,500 of eligible retirement income, including pensions, IRAs, and 401(k) distributions.
- Low property taxes: Delaware boasts some of the lowest property tax rates in the nation.
The Downsides
While the overall cost of living is lower than the national average, prices in popular coastal towns can be steep. Furthermore, public transportation is limited outside major urban centers like Wilmington and Dover.
Pennsylvania: An Affordable and Tax-Conscious Choice
Pennsylvania offers a great blend of affordability and financial benefits, particularly for those on a fixed income. The state provides a lower cost of living than many other Northeast states, with affordable housing options.
Retirement Income Exemptions
Pennsylvania is highly tax-friendly for retirees, exempting most forms of retirement income from state taxes, including:
- Social Security benefits
- 401(k) and IRA distributions (for those 60+)
- Payments from retirement accounts and pensions
Other Factors
While the state’s flat income tax rate of 3.07% can apply to other types of income, the retirement exemptions provide significant relief. The climate features distinct seasons with cold winters, but the robust recreational offerings and rich history make it an appealing option for many. One important consideration is the possibility of additional local Earned Income Taxes imposed by municipalities.
Comparing Key Northeast Retirement States
Here is a quick comparison of some of the top contenders based on recent data and key factors:
| Feature | New Hampshire | Maine | Pennsylvania | Delaware |
|---|---|---|---|---|
| Tax-Friendliness | No sales/income tax, but high property tax | Taxes some retirement income | No tax on many forms of retirement income | No sales tax, low property tax |
| Overall Affordability | Below average national rank, but high property tax | Moderate cost of living, higher long-term care costs | Below average national cost of living | Higher than average, especially at the coast |
| Healthcare Ranking | 5th (Bankrate 2025) | 3rd (Bankrate 2025) | Moderate, strong systems near cities | Strong, with major medical centers nearby |
| Safety Ranking | 1st (Bankrate 2025) | 2nd (Bankrate 2025) | High, but varies by location | High, with lower crime rates overall |
| Climate | Four distinct seasons, cold winters | Four distinct seasons, cold winters | Four distinct seasons, cold winters | Four distinct seasons, milder winters |
| Recreation | Outdoor sports, lakes, mountains, coast | Coast, national parks, culture | Historical sites, parks, rivers | Beaches, coastal towns, history |
Conclusion: Making Your Final Decision
Ultimately, the best Northeast state for you depends on your personal circumstances and what you value most. If minimizing taxes is your top priority, New Hampshire and Delaware are hard to beat, though you must weigh New Hampshire's property tax burden against Delaware's low-cost-living benefits. For those prioritizing safety, a vibrant senior community, and excellent healthcare, New Hampshire and Maine stand out. If affordability and strong retirement income exemptions are crucial, Pennsylvania offers a compelling value proposition. It is recommended to consult a financial planner and visit potential locations during different seasons to make the most informed decision.
This content was created based on recent analyses of retirement factors, including data from Bankrate's 2025 study. Bankrate's 2025 Best States to Retire Report
