Louisville, Lexington ranked nation’s top two cities for early retirement

Ranked by SmartAsset

LEXINGTON, Ky. (Jan. 30, 2017) — Louisville and Lexington are the top two places in the nation for early retirement, among the nation’s 80 largest cities, according to SmartAsset, a New York-based personal finance company. Louisville was ranked No. 1 and Lexington No. 2.

SmartAsset said of Louisville: “The Gateway to the South is also an excellent option for people looking for a city where they can retire early. Louisville has low housing costs, annual healthcare costs of less than $6,000 on average and an average effective income tax rate of only 12%. Plus the sales tax is a relatively low 6 percent. While living cheaply is certainly a perk, Louisville does come with a few drawbacks that retirees will want to know about. For one, it’s ranked 48th in our study for number of medical facilities per resident.”

SmartAsset said of Lexington: “Lexington, the second-largest city in Kentucky, lies about 80 miles east of Louisville. These two Kentucky cities have much in common, like low costs of living and affordable healthcare. Where Lexington differs from Louisville is in its income tax rate. Lexington’s almost 17 percent average effective income tax rate is higher than Louisville’s. Lexington ranks 51st in that metric.”

SmartAsset used 10 metrics to rank cities:

• Average effective income tax rates for people ages 55-64. To find this we ran 2,100 simulations on SmartAsset’s retirement income tax calculator. We calculated the federal, state and local income taxes paid in each city for people ages 55, 60 and 64. We simulated taxes using incomes ranging from $20,000 to $80,000 per year.
• Local sales tax rate. Data comes from sales-tax.com
• Average effective property tax rates. Data comes from the U.S. Census Bureau’s 2015 American Community Survey.
• Median housing costs as a percent of median income. This is the median housing cost in each city divided by the median individual income in each city. Data comes from the U.S. Census Bureau’s 2015 American Community Survey.
• Cost of living. The national average cost of living is 100. Data comes from the Council for Community and Economic Research and is from 2014.
• Average annual cost of a silver health insurance plan. To find this number we used the Kaiser Family Foundation health insurance calculator. We estimated the cost of a silver plan for a 60-year old in each city, not including any subsidies.
• Property crime rate. This is the number of property crimes per 100,000 residents. The property crime data comes from FBI’s 2015 Uniform Crime Reporting Program and from local police departments and city websites.
• Violent crime rate. This is the number of violent crimes per 100,000 residents. The violent crime data comes from FBI’s 2015 Uniform Crime Reporting Program and from local police departments and city websites.
• Unemployment rate. This is meant to measure the general economic health of an area. Data comes from the U.S. Census Bureau’s 2015 American Community Survey.
• Medical facilities per 1,000 residents. Data on medical facilities comes from the U.S. Census Bureau’s Business Patterns Survey. Population data comes from the U.S. Census Bureau’s 2015 American Community Survey.

SmartAsset ranked each city across each of the 10 metrics giving a half weight to the violent and property crime rates. All other metrics received full weight. They then then averaged each city’s ranking and based our index off of those average rankings. The city with the highest average received a score of 100 and the city with the lowest average received a score of 0.