A record 10.6 million Americans 65 and older are currently in the workforce. By 2030, it will surge to 16 million, with older workers ages 75 and older projected to increase by 96.5% and workers 65 and older by 41.9%.
While many Americans are counting down the days until they retire, there are many reasons to remain in the workforce past age 67, which is when American workers can draw their full Social Security retirement benefit. For one, continuing to work helps build a more robust retirement portfolio, but many older workers may prefer to stay in the labor pool, whether because they love their work or because they want to remain part of a community. A survey of 2,000 professionals at or near retirement age found 70 percent need to work to pay for basic necessities, but almost 60 percent say they work because they enjoy it.
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Whatever the reason, an unprecedented number of Americans are putting off retirement. The projected growth rate can also be attributed to the acceleration of remote work due to COVID-19. Many seniors are working from home doing data entry, bookkeeping, writing, human resources, and more.
Given the burgeoning trend, we wanted to find out which states are best for older workers. We compared Census, CDC, and Tax Foundation data for every state across five categories including labor force participation for older adults, income, taxes, healthcare, and life expectancy. (See our full methodology at the bottom of the page.)
Key findings:
• Wyoming is the best state for older workers, and Kentucky is the worst.
• In Hawaii, 65 percent of households with a householder over 65 earn more than $50,000 per year, which is the highest rate in the country.
• Eight states collect no state income tax (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming), while California has the highest median income tax rate.
Best & worst states for older workers
Wyoming had the best overall score in our analysis, ranking in the top half for every category except life expectancy, where it was 30th. Along with several other states, Wyoming levies no personal income tax, and more than 98 percent of those over 65 are on Medicare, which gives Wyoming the advantage.
South Dakota, another state with no income tax, took second, while income tax-less Washington and Alaska tied for third. Virginia was fifth, while North Dakota, Colorado, Hawaii, Virginia, and Nebraska rounded out the top 10.
The worst state for older workers is Kentucky, according to our analysis. Though the commonwealth ranked fourth when it comes to the percentage of older adults covered by Medicare, it ranks at or near the bottom for life expectancy, income, and labor force participation.
Overall ranking scores (lower scores = better)
1. Wyoming: 64
2. South Dakota: 69
3. Alaska: 82
4. Washington: 82
5. Vermont: 85
6. North Dakota: 87
7. Colorado: 92
8. Hawaii: 96
9. Virginia: 98
10. Nebraska: 101
11. Massachusetts: 104
12. New Hampshire: 105
13. Connecticut: 106
14. Minnesota: 108
15. Utah: 108
16. Texas: 110
17. New Jersey: 111
18. Montana: 113
19. Florida: 115
20. Idaho: 116
21. Rhode Island: 116
22. Maryland: 117
23. District of Columbia: 120
24. Pennsylvania: 121
25. Nevada: 124
26. Iowa: 126
27. Delaware: 128
28. New York: 131
29. Kansas: 133
30. Arizona: 136
31. Tennessee: 136
32. Wisconsin: 136
33. Indiana: 137
34. California: 139
35. Oregon: 146
36. Missouri: 147
37. Ohio: 147
38. Illinois: 148
39. Maine: 150
40. Georgia: 151
41. Michigan: 151
42. Oklahoma: 152
43. South Carolina: 159
44. Mississippi: 164
45. Louisiana: 165
46. North Carolina: 165
47. Arkansas: 171
48. New Mexico: 175
49. Alabama: 176
50. West Virginia: 178
51. Kentucky: 180
Here are Arizona’s numbers that earned the ranking:
Median State Income Tax Rate: 4.2%
Average Life Expectancy (From Birth in Years): 78.7
% 65+ With Medicare Coverage: 96.5%
% of 65+ Householders With $50,000+ Annual Income: 50.2%
Workforce Participation
Nationally, older workers account for 6.6% of American workers, but that rate is expected to surge by nearly half through the end of this decade, as U.S. workers continue to remain in the workforce longer and longer. Just under 11 million older Americans are still participating in the labor force, whether full time or part time.
The District of Columbia and Vermont are tied for the highest percentage of labor force participation among those 65 and older, while West Virginia’s rate is the lowest, followed by Alabama and Michigan.
Income & Taxes
One of the biggest reasons for older adults to put off retirement is so they can increase their Social Security checks when they decide to stop working, but some states are better than others when it comes to income and income taxes.
Almost two in three Hawaii households led by a person 65 or older, which includes both those still working and those in retirement, have household income higher than $50,000, which is the highest rate for senior-led households of any state. Mississippi has the lowest rate; just over 37 percent of senior-led households have annual income of more than $50,000.
Of course, how much of that money you get to keep after taxes is another important consideration for workers of all age groups. There are currently eight states that do not collect income taxes on most workers, while North Dakota and Oklahoma have the lowest median rates among states that do collect income tax. California’s median income tax rate is the highest (almost 9 percent).
Life Expectancy & Health Coverage
Living a long and healthy life can mean that older workers don’t have to say goodbye to retirement and can simply put it off a few years. Hawaii has the highest average life expectancy from birth (81 years), though it’s believed that U.S. life expectancy will decline because of the COVID-19 pandemic. Still, eight states have average life expectancy above 80 years of age, which means that a person could put off retirement until a few years and still have many years to look forward to. West Virginia has the lowest average life expectancy (74.4), followed by Mississippi (74.6).
Part of being able to stay healthy well into your golden years, which means having access to healthcare. For the average person, that comes in the form of employer-provided health insurance coverage. Even if you remain working past the age of 65, older workers are still eligible to receive Medicare coverage, which may help close gaps in their employer-provided coverage or allow them to save on certain costs, including prescriptions and premiums. In all states, at least 90 percent of those over 65 are covered by Medicare, though Wyoming has the highest rate, 98.2 percent. D.C. has the lowest rate, 90.4%.
Conclusion
While some people may keep working because they have no choice, for many Americans, they would rather remain in the workforce for a few years for a variety of reasons. Our analysis indicates that there are many states that would appear to be friendlier to older workers than others.
Methodology & Data Appendix
To create our analysis of which states are best and worst for older workers, we compared Census, CDC, and Tax Foundation data for every state across five categories:
Labor force participation, people 65 and older
Median household income, householders 65 and older
Average life expectancy from birth, note: D.C. was not included in the data, so the average of all states was substituted for ranking purposes
Percentage of people 65 and older covered by Medicare
