During the past two decades about nine out of ten or 41.5 million Americans over 60 years old stayed in the same home, dispelling the myth that retirees are flocking to Florida or Arizona for their golden years, according to AARP's Aging Migration in Local Communities Report.
"The long-distance migration that is stereotyped as moving to the South or Southwest is limited because people tend to be connected with their community," says Bob Prisuta, AARP research director in Washington, D.C. "They have friends from having worked in the community. They know the merchants and the neighborhoods and may have family there."
The economic downturn since 2008 may also further ground retirees who hope to relocate.
"Since 2008, people have seen their retirement savings take a hit and the equity in their homes that people use to relocate may have declined," says Prisuta. "When they are stressed economically, retirees reach out to friends and family for mutual support so they may be even more reluctant to leave because of family connections and social services."
When they do relocate, retirees tended to downsize within the same state. Only about 24% moved, with 9 percent moving outside their county of residence and only about 4.5% crossing a state line when they moved.
"What drives migration are amenties, such as weather, recreational activities, low crime and low taxes. A secondary factor is that there are family members in some proximity," says Prisuta.
Traditionally, retirees have tended to prefer Florida and Texas because the Southern states have no state income tax, which means no levy on capital gains and dividends or on pensions and Social Security as primary income. Other states that have no income tax include Nevada and Alaska.
"In the past two years, the economy has tended to be fiscally weak so states are undertaking a lot of tax increases to strengthen their bottom line, which contributes to instability in the tax code," says Staff Economist Kail Padgitt at the Tax Foundation in Washington, D.C. "You want to live in a state that is fiscally sound."
Texas, with a tax liability of 8.4%, competes with Florida's at 7.4% for the lowest tax jurisdiction in the nation, while Illinois' tax liability is 9.9%, according to the Tax Foundation. New Jersey, New York, Connecticut and Maryland have the highest tax burdens at 11.8 and 11.7, 11.1 and 10.8, respectively.
The overall composite cost-of-living index for retirees is 132.1 in D.C., 204.7 in NYC, 134.5 in Los Angeles and 114.7 in Miami, with the lowest in Cookville, Tennessee, at 80.5, according to the Council for Community and Economic Research (CCER), which computes the cost of housing, health care, prescription drugs, consumer goods and services, groceries, utilities and transportation into one composite score.