Bankrate.com recently ranked the 10 best states for retirement. The list, which includes such rugged spots as Colorado, Utah, North Dakota and Wyoming, was topped by, of all places, South Dakota.
If you’re a retiree, are you ready to sell the house, pack up and move out there?
Before any South Dakotans who happen to be reading this make plans to hang me in effigy, I want to point out that this column is not at all about South Dakota. I’ve personally never visited there – for all I know, it’s a wonderful place to live. This is really about publications and websites that inform us about places or things that we ought or ought not to like. It’s just one more example of how the media take generalizations and promote them as personalized advice.
Factoring the factors
First, how did Bankrate come up with its recommendations? The criteria it listed include factors such as cost of living, crime rate, tax burden, weather and quality of health care. So far, so good.
But how does one prioritize them? I might be extremely sensitive to frigid, snowy winters while your hot button might be safety. I don’t see how one can reach a conclusion about which location is better without being able to apply personal choices to the weighting of each of these factors.
The second problem is the common mistake of using averages without considering variability. Take the weather, for example. What’s it like in South Dakota? I imagine you’d get a different answer from a respondent in Rapid City than from one living in Webster, in the northeast corner of the state.
How about crime? Imagine trying to rate California. If you based it on the crime rate in Compton, it would be high. But if you chose Los Altos instead, it would come out low. Would the average tell you very much? For factors such as these, a range would be more useful than a simple average.
The third issue is probably the most important: What type or overall quality of life do you want in your retirement? Bankrate tried to address this question by including “feelings of well-being” as a basis for its ratings. The data come from a Gallup-Healthways Well-Being Index, a daily survey of 500 Americans focused on various elements of well-being, including feeling safe, taking pride in your community, keeping motivated, maintaining supportive relationships and managing financial stress.
I infer that South Dakotans answered these questions more positively than residents of other states. But doesn’t it really depend on what you want to be doing in your retirement and with whom? Do you like hanging out with friends at the local Starbucks? If so, are there any friends in South Dakota you could call, or any Starbucks, for that matter?
If you’re a baseball fan, does the state have any good teams, or are you relegated to watching on TV? I wouldn’t think, for example, that South Dakota would be at the top of the list for a retired surfer from Santa Cruz.
Rather than coming up with specific recommendations from generalized data, the media could provide more value by collecting and making available the raw data so that we could make our own decisions. Whether it’s retirement planning, education planning, investing or tax planning, we each have our unique goals, aspirations, financial situations and comfort levels for risk. The right answer for one person could be very different for another.
By the way, the five states Bankrate rated the worst for retirement were New York, West Virginia, Alaska, Arkansas and Hawaii. Aren’t you glad you’re living here?