Nice place to live, but tough on retirement

We're number one - for all the wrong reasons.

The website TopRetirements.com says Connecticut is the worst state in the nation in which to retire, with nearby Rhode Island ranked third worst and Massachusetts ranked fifth worst. I think it's fair to say that parts of New England were hardly a "best in show" in this year's survey of the worst places for retirees.

The purpose of the annual survey, explains the Connecticut-based website's president John Brady, is to help baby boomers understand - with all other things being equal - where they can enjoy their golden retirement years without taking on more problems.

Connecticut, apparently, isn't so hospitable to those golden years.

The survey says it uses five factors: fiscal health (ours is slowly improving); property taxes (not improved); income taxes (still a hot button in Connecticut); cost of living (not so cheap around these parts); and climate (don't ask about last winter).

Brady says the 2012 survey had a "numerical tie" for first place, with Connecticut and Illinois vying for the designation of the worst state. Turns out we won because Connecticut, according to the online survey, "has much higher property taxes, income taxes and cost of living than Illinois."

Says Brady, "Property taxes are really the worst for retirees. So a lot of people look for a low-tax state (when they retire)."

"The states in the northeast, and to a certain extent the industrial Midwest, have big infrastructures, and they've got property taxes that are very high," says Brady. "They are losing retirees ... many baby boomers are not getting the retirement they expected, and the ones who can are voting with their feet.

"They can move to South Carolina with a house that's just as nice and have some money in the bank (from selling their Connecticut home)," he adds.

Most pension income - certainly important to retirees - is taxable in Connecticut, says Brady, although there are some significant exemptions for Social Security - depending on your income. In addition, the survey notes that Connecticut had the third-highest tax burden of any of the 50 states in 2009. The survey does, however, end its description of our dubious "We're Number One" status on a higher note, saying, "The Nutmeg State does have considerable charm and some terrific places to live like Stonington and Madison, if you can afford to live there."

As for nearby Rhode Island, it's not much rosier, at least according to this survey. It cites the Ocean State's "severely underfunded" pension and health-care liabilities and its budget woes, which have attracted national headlines. The survey does conclude, not unlike Connecticut's writeup, that Rhody has "some great places to live."

It's a similar refrain for Massachusetts, with the survey lamenting that the Bay State has property taxes "that are among the highest of any state." It also sounds this general alarm for retirees: "The cost of living is high."

Now, I truly like living in Connecticut. I've been here all my life, and there's much to tout - strong universities, a skilled work force, high per-capita income, easy access to New York City and Boston. But this isn't the first survey to cite the high costs associated with living here. Retirees should be a coveted, and much sought after, demographic group for this state. Instead, a website devoted to seniors is telling them Connecticut's an expensive place to spend your retirement.

Brady, too, says he likes living in Connecticut. He runs a successful business here and enjoys Connecticut's many benefits, including living in a pleasant shoreline community. But facts are facts, he says, and the overall expense of living in Connecticut can be a burden to those who retire and rely on a fixed income.

Brady does stress that retirement isn't just about the bottom line, so to speak. "We do try to make the point that the most important thing you can consider is really being near your family and your friends," he says.

Nonetheless, baby boomers and soon-to-be retirees pay attention to a lot of facts, including taxes and overall cost of living.

"It's a tough battle for the northeast," laments Brady of the survey's results. "It's ironic, because I love Connecticut."

Anthony Cronin is The Day's business editor.