LPL recently released its first Retirement Readiness Index, which looks at a broad range of metrics - including health, education, finance, the economy - to determine which states are most conducive to an overall successful retirement. The index is meant to be a discussion primer for advisors working with pre-retirement clients.
Methodology: LPL Research pulled public data sources for each of the 50 states and the District of Columbia. The index is based on six broad categories that represent retiree desirability and help preparedness - Financials, Healthcare, Housing, Wellness, Employment and Education, Community Quality of Life. Within each category, four to six subcategories provide depth and balance. For example, the wellness category looked at obesity rates, physical activity and percentage of smokers, to name a few. For each subcategory, each state was assigned a score based on the state's metric in relation to the national average and the distribution of the state-level data. The subcategory scores were then weighted to reflect relative importance and aggregated to a final grade for each category (A-F). The broader six categories grades were also weighted, resulting in an overall grade for each state (A-F). The weighting system was designed such that a very negative or positive score in one particular subcategory would have a large influence on the category grade, but a more limited influence on the overall grade. All data evaluated the 45 to 64-year-old demographic. Find a complete explanation of the Index, here.
