7 Places to Retire During an Economic Downturn
By Kelli B. Grant
February 25, 2008
FOLLOWING THE FLOCK of other
retirees to warmer climes may seem like the best way
to spend one's golden years. But it may not be the
smartest — especially during economic downturns.
"A retiree always needs to be careful about where
he or she chooses to spend retirement, but with
economic conditions changing so quickly it's even
more important to make a good choice," says Warren
R. Bland, author of "Retire in Style: 60 Outstanding
Places Across the USA and Canada." Not all places
are created equal when it comes to weathering
economic woes like the current real estate slump,
credit crunch and slowing job market, he says.
Choosing the wrong place could carry serious
"If you don't have a healthy local economy, it's
like a cancer," says Bert Sperling, founder of
Sperling's Best Places1,
which publishes reports on the best places to live
based on data analysis. "There's less money for
social services, for police patrols, even for
infrastructure like fixing potholes." The widening
subprime mortgage crisis makes ending up in the
wrong part of town all too easy as well. "You could
find yourself living in a deserted neighborhood," he
warns, "where everyone else has fled" — or been
After all those decades of stashing money away
for retirement, retirees should look for a place
that will not only make them happy, but also keep
their nest egg intact. Areas with a track record of
slow, steady economic growth and home price
appreciation are ones that will hold onto their
value best, notes Walter Molony, a spokesman for the
National Association of Realtors. These same places
are also more likely to rebound quickly when
nationwide economic conditions improve.
Here are seven recession-proof places our experts
believe soon-to-be retirees should consider:
1. Gainesville, Fla.
The University of Florida keeps Gainesville's
economy thriving and that's enough to turn most
retirees into die-hard Gators fans. "Because
colleges are relatively immune from recession, they
provide a very stable local economy," says Sperling.
The local AARP Senior Community Employment Program
also ensures paid work is available to retirees,
helping them compete against students for part-time
jobs in the local retail and health-care industries,
as well as at the university itself.
Last year, Gainesville ranked as the No. 1 place
to live in the "2007 Cities Ranked and Rated," put
out by Sperling's Best Places. "In a relatively
small package, you get all the amenities you'd get
in a much larger city," says Bland. The University
of Florida Health Science Center provides excellent
medical care, and residents can audit courses or
attend any of the university's guest lectures,
performances and exhibits.
The cost of living is on par with the national
average, and the state's lack of income tax helps
bolster retirees' savings. Local real estate has
also remained steady. The average sale price for
existing homes was $211,100 in 2007, down just 1%
from 2006. Buyers get plenty for their money. "For
prices that would be unbelievably low anywhere else,
you'll find fairly large, contemporary houses on
huge, half-acre or bigger properties," says Bland.
The University of Florida campus.
Courtesy of the Alachua County Visitors &
2. Ithaca, N.Y.
Ithaca not only boasts a breathtaking landscape of
hills, gorges and waterfalls, but — as home to
Cornell University and Ithaca College — it's also a
smart place to retire. While education is the city's
primary industry, there's a fair share of
manufacturing and high-tech jobs as well.
Unemployment stands at just 3.1%, nearly 2% below
the national average.
Like the best college towns, there's little that
progressive Ithaca lacks. The local music and arts
scene is bustling, aided by a downtown pedestrian
mall stocked with bookstores and an independent
cinema, among other mom-and-pop retailers.
Ithaca is also one of the most affordable places
to live in the United States. Almost three-quarters
of the city's homes are priced at values that
residents earning the median income of $64,500 can
afford, according to the National Association of
Home Builders' Housing Opportunity Index. The median
home sale price in 2007 was $149,000.
Cornell University overlooks Ithaca's Cayuga Lake.
Courtesy of the Ithaca/Tompkins County Convention
& Visitors Bureau
3. Orlando, Fla.
For retirees, Florida's biggest perk isn't the warm
weather but the lack of income tax. "Taxation, or
the potential for taxation, can be a big chunk of
your monthly budget when you're living on a fixed
income," says Alfred Peguero, a partner with
PricewaterhouseCoopers' Private Company Services,
which advises clients on retirement issues.
Compared with other major cities in this
retiree-friendly state, Orlando has a slightly lower
cost of living and much steadier home values. The
average sale price for existing homes in Orlando was
down 3% last year, to $261,300. Meanwhile, homes in
Sarasota dropped 7% to $310,900, and those in Fort
Myers dropped 6%, to $252,100.
While Orlando's theme parks and convention
centers aren't immune to hard economic times, other
industries, such as engineering and electronic
gaming, are booming. Orlando has also earned the
nickname "Hollywood East" for its growing number of
film and television companies.
Seniors won't have to go far to find quality
health care. One of the city's biggest nonprofit
hospitals, Florida Hospital, repeatedly ranks as one
of the best in the nation, according to U.S. News
and World Report. Its neurology department treats
more stroke patients than any other hospital in the
Downtown view from Lake Eola
Photo credit: istockphoto.com
4. Pittsburgh, Pa.
"Pittsburgh has this reputation for being a smoky,
industrial city — but that's just not the case
anymore," says Bland. Steel and chemical
manufacturing have largely given over to the
burgeoning high-tech industry, particularly robotics
and biomedicine. The city also hosts seven Fortune
500 companies, including PNC Financial Services
Group, Mellon Financial Corp., and electric
distributor Wesco International.
In his "Places Rated Almanac," author David
Savageau named Pittsburgh "America's Most Livable
City" in 2007, citing its cultural amenities and
vibrant downtown. The cost of living here is 5%
lower than the national average. And while the
median sales price of existing homes nationwide fell
1.4% last year to $218,900, Pittsburgh's increased
by 1% to $120,700, according to the National
Association of Realtors. Seniors can save on taxes
as well. The average state and local tax is 8.9%,
vs. 9.7% nationwide.
Other bonuses: a low crime rate (compared with
other cities its size) and more than 20 quality
hospitals. U.S. News and World Report named the
University of Pittsburgh Medical Center among its
"Best of the Best," in 2007, and awarded its
geriatric division a No. 8 spot.
Aerial view of Pittsburgh.
Courtesy of the Greater Pittsburgh Convention &
5. Portland, Ore.
"Hip. Unaffected, yet cosmopolitan. Portland is on
everyone's short list of hot cities these days,"
says Sperling. Careful land-use planning rescued the
city from economic decline in the 1960s, and today
Portland is known for its burgeoning arts and music
scene and eco-friendly vibe.
Compared to other West Coast metropolitan areas,
Portland is affordable but by no means cheap. The
cost of living here is 14% above the national
average. And the credit crunch has put many
residential areas out of reach for retirees with
less-than-stellar finances, cautions Molony. While
the National Association of Realtors reports that
the average sales price for an existing home was up
5% to $295,200 in 2007, properties in popular areas
like Irvington and Alameda Ridge can sell for well
Those who can afford to buy here, however, will
find the city packed with retiree-friendly
amenities, including public transportation and 30
senior centers. There are also plenty of jobs — both
paid and volunteer. Nike and Intel call Portland
home, as do plenty of other technology and
A Portland Aerial tram makes its way from the South
Waterfront up to the Oregon Health & Science
Courtesy of Travel Portland
6. San Antonio, Texas
Stroll along San Antonio's River Walk and it's clear
the city's economy is booming. The walkways feed
into an expansive downtown district of restaurants,
museums and boutiques adored by tourists and locals
alike. While the city relies heavily on tourism to
the Alamo and other area attractions, industries
such as financial services, health care and national
defense have kept the unemployment rate fairly
steady at 4%, one percentage point lower than the
current national average.
San Antonio's cost of living, at 7% below the
national average, makes it one of the more
affordable retirement destinations. Groceries, for
example, are an incredible 22% cheaper than other
metropolitan areas, notes Bland. "For a city with
more than 2.5 million people living in the
metropolitan area, that's really unusual."
Continued development has kept housing prices in
San Antonio 10% lower than the national average. The
average sale price for an existing home was $153,200
in 2007, according to the National Association of
Realtors. Yet, despite the nationwide housing slump,
home values here have increased 8% since 2006.
Retirees will find the lower taxes an added relief,
adds Peguero. Like Florida, Texas doesn't tax
income. The average state and local tax burden is
7.8%, almost two percentage points lower than the
The San Antonio River Walk serves as the hub for
restaurants, shops and downtown attractions.
Courtesy of the San Antonio Convention & Visitors
7. Tucson, Ariz.
A warm, sunny climate and rich cultural heritage
have long kept Tucson at the top of retirees' list
of winter vacation destinations. However, with a
cost of living that's 3% below the national average,
a strong job market and steady home prices, there's
plenty to enjoy about this city all year-round.
"Tucson is a dynamic, growing retirement spot, so
there are plenty of job opportunities — although the
pay is often low," says Bland. While it's not quite
a college town, Tucson relies heavily on the
University of Arizona as its second-largest
employer. Technology and tourism (mostly from
snowbirds) also provide plenty of jobs.
Steady expansion and new developments have kept
housing relatively affordable, with costs at about
20% below the national average. The average sale
price for existing homes dropped just 0.01% in 2007,
to $244,800. Expect real estate prices to remain
solid, thanks to increasing interest in the area as
a retirement destination. The most popular areas are
planned communities (retirement-specific and
otherwise) northwest of the city, including Oro
Valley and other towns in the foothills of the Santa
Tourists explore the desert outside Tucson on
Courtesy of the Metropolitan Tucson Convention and