The 8 States With the Biggest Financial Problems

We always read your articles with lots of interest, thank you very much!
Two questions about this one:
1 - Do you mean Portland Oregon or Portland Maine? I suspect Oregon?
2 - I thought that Delaware was one of the best states to retire as far as taxes and cost of living. I am puzzled to see this state included with known expensive states in financial trouble like Massachusetts and Rhode Island, can you please expand your remarks about Delaware?
With much thankfulness for all the great work you do for all of us!

The potential of raising sales tax and property tax, and the inability of government to ever significantly cut spending does indeed give me pause to locate in the San Jose area for my retirement. I have worked in the San Jose area for decades and watched it turn from a terrific place with low crime and lovely neighborhoods to an embattled city that cannot pay its bills or keep its violent gangs off the streets.

The current state of affairs is the sorry result of union negotiated pensions which are far too generous. I do not believe in cutting the existing pensions, promises need to be honored, but the small adjustment to the pensions promised to newly hired employees is ridiculous. If these municipalities want to stop draining their coffers they need to simply stop giving in to the huge demands of labor unions. They need to immediately begin by saying that the maximum a newly hired pensioner can ever hope to receive is 50% of their highest earning year. The current 90% stuff is ridiculous.

I have spent time in many states, but in my humble opinion, California is the most beautiful of them all, terrific climate, terrific natural beauty, etc. Having spent the bulk of my adult years in California it is difficult to leave, but I am choosing to do so because I feel there is great likelihood that our taxes will have to be continually raised in order to pay for all of the demands put upon our wallets by our state government.

My wife and I pay nearly 10% of our income to state taxes. We also pay 9.75% sales taxes. California's democratic legislature continues to give, give, give rather than to say work, work, work to all of the takers who have flooded into the state over the years. What was a great state in 1980, 1990, and still in 2000, is no more. There is little incentive to work when the young are taught that the state will take care of them. California democrats own the house, the senate, and the governorship. Liberalism has won out, but the state is going to lose out. My dream had always been to retire in the wonderful golden state, but alas, it is no more.

BB - Good questions. To the first, it was Portland, OR. Should have specified that. To the second, we were also surprised by the inclusion of Delaware, which otherwise seems to enjoy a sterling reputation as a retirement state. The CRR study (there is a link to the whole study in our article) looked at 3 factors to come up with these percentages: pension obligations, OPEBs (other Pension and Benefit Obligations like health care expenses, etc.) and Debt Service. It appears that although Pension and Debt Service are reasonable for Delaware, its OPEBs are quite high, giving it a total 21% of own-source revenues. The Tax Foundation rated it 16th highest tax burden as a 2012.

Yes, I live in CT an the finances are a terrible mess. A few years back they doubled professional trades licenses. The people that work and pay taxes. Over the last few years they have laid off about 2,000 State workers. Just a few days ago our Governor proposed raising gun permits 400%, cutting funding to State Troopers, cutting funding to schools and he is doing a study on a way to tax people on the mileage they drive during the year. Our gas tax is very high. In 1991, our then newly elected Governor, who told all he was against an Income tax, immediately pulled the rug out and put the income tax to vote and it was ushered in. That was the cure all to our financial woes. Then somewhere along the way we got lotto to help then Indian casino's. Our Governor is looking under every rock to find something to increase costs to bring in more revenue but is not calling it taxes. He says increasing the gun permits 400% keep us in line with surrounding States. The only State with such high gun permit cost is NY.

So now, not only do we have more sources of income than we did years ago but we are more broke than years ago. Seems if they get a dime in income, they spend $1.00. They see it as a never ending waterfall of money. They were basing the budget on previous income from the years before. Then they realized shortfalls and not nearly the same amount of money was flowing in. Corporations are leaving and more people are leaving CT than coming in. By cutting monies to schools, that means town taxes will have to increase to cover costs. This State has killed the golden goose but still expects it to lay golden eggs...how does that work?

Another boost for Florida (does it need a boost?): their public pension funds are all paid up. Astonishing, I know, as I moved from Rhode Island where that can't be farther from the truth.

Florida is really booming and that is what makes it less appealing to me. There is a lot of traffic here in DC and the metro area and I definitely do not want that in my retirement. There are only two major highways out of the state in case of a hurricane or other disaster. On the other hand, no Florida state income tax is a plus but it is made up in real estate taxes. The humidity in the summer is bad but I do not think it could be worse in Florida than the humidity I have experienced in Indiana in the summer or here in DC. Most people in this country rely on air conditioning in the summer--with a few exceptions. My Aunt lives in Naples, Florida--loves it, but it takes a reservation two-three weeks in advance to get into a really good restaurant in season. They will be glad when the snowbirds begin to go home next month.

The traffic in Florida depends on where you live and when you drive. The larger the city, the heavier the traffic. My experience is that, if you're retired, try to avoid the major highways during rush hour and it's not bad. I've driven through DC many times on the way to Florida and find the traffic there, on I-95 and I-495, considerably worse than South Florida (except Miami). Actually, real estate taxes in Florida are considerably less in Florida than in most northeastern states. There is a significant homestead exemption for nearly everyone and cap on how much such taxes can go up each year.

Florida is way to crowded! Traffic a nightmare on seasonal basis no matter where you go. Internal florida is perhaps the exception but who would want to live there?

I am unaware of what traffic and living conditions are in the panhandle but the climate there is much like the climate all the way North to Atlanta.

Anyone familiar with the panhandle portion of florida?

As Global Warming continues more and more of Florida will be under water. Watch your elevations as much of Florida is only 1 or 2 feet above sea levels and Miami and surrounding areas is already feeling the effects in flooding at high tide.

Ron,
I live in Atlanta and have grand children in the panhandle of Florida so go down there often. I would say the humidity in the panhandle is generally more uncomfortable than Atlanta although we have our fair share as well. Temperatures are usually 5-10 degrees hotter than Atlanta in the summer.

And, of course, the Florida panhandle is much more susceptible to the effects of hurricanes than places further from the coast, such as Atlanta.

I have a friend who lived in the panhandle in Gulf Breeze for 15 years and recently he moved to Nashville, TN. He grew to dislike the panhandle--every summer daily thunderstorms make it unsafe to even talk on the phone. The beaches are beautiful, but after the last oil spill , he never felt they were as good as they had been before. The humidity made living there in the summer awful. Needless to say, he now loves Nashville--has been there almost a year and he is glad he left Florida.

Occasionally Atlanta will experience the remnants of a hurricane but nothing to be too concerned about. Generally some gusty winds along with rain. We are approximately 300 miles from the gulf and 280 miles from the Atlantic ocean.

Florida comments

Regarding Florida's financial status, I can't really comment on its current fiscal status, but can share some anecdotes.
I spend time in Vero beach, on the barrier island and in longboat key, which is another barrier island, right off Sarasota.
I can comfortably state that business and construction are booming in both of these coastal areas, meaning Vero on the Atlantic and Sarasota on the Gulf. Construction both commercial and residential, appear to be occurring on every available lot.
Again, these are pretty affluent parts of the state. Driving across the state, on route 70 and 713, all I saw were huge flatbed trucks hauling commercial materials back and forth , apparently between the coasts, about a three hour drive. Anyway, looks like Florida is doing ok, but these are just some personal observations.
I do think that it is getting more and more difficult to secure a reasonably priced "snowbird" winter rental and that renters should start looking early.
I also think that real estate prices are leveling off, but the "bargains" following the bank collapses, appear gone, at least until the next crash, if any.
Anyway, FWIW.

Thanx for all your great comments. I think I'll cross Florida off my retirement place to live.

Anyone have experience on the Georgia coastal area?

florida off your retirement thoughts lol not a chance out does any other are mentioned in this thread Florida is the top retirement state for a reason

Look..... Florida is a beautiful state with lots to do for free, but after living there for 10 yrs we could no longer deal with the humidity, bugs and thunderstorms every afternoon . Not a friendly job market either. It's not as budget friendly like it used to be either.

This might have some useful information for those interested in moving to another state. Tax information: http://www.cch.com/wbot2014/008retire.asp?

This information is from 2014.