Before you go, we thought you'd like these...  Many people look forward to the day they can hang up their work clothes for good and enjoy their golden years. For most people, retirement occurs sometime in their late 60s or even their 70s. However with careful planning and prudent financial management, it is possible to retire even earlier. There are many factors at play when determining whether a place is suitable for an early retirement. First and foremost are financial concerns.  This is the 2016 version of this study. Read the 2015 version here.  If you are retiring early, you'll need to make sure you have enough saved for housing, healthcare and enough left over to eat and live comfortably. In order to get the most out of what could be a limited retirement income, you'll want to stretch your dollars to their max. States with low taxes on retirement income and low property taxes enable you to do that. And after making the most efficient use of your dollars, you will probably want to make sure you have activities to do in your free time. Plus, in order to get the best healthcare during older age, the availability of doctor's offices is important. We looked at all these factors in order to create our ranking of the best states for an early retirement.  In order to understand where we got our data and how we put it together please read the Data and Methodology section below.  Thinking about an early retirement? Check out our retirement calculator.  Best states for early retirement  Best states for early retirement  Average Effective Tax Rate: 3.7%  Annual Health Insurance Cost: $8,945  Non-Housing Cost of Living: 120  Median Annual Housing Costs: $16,776  Average Effective Property Tax Rate: 2.1%  Average State and Local Sales Tax Rate: 6.4%  Average Effective Tax Rate: 4.7%  Annual Health Insurance Cost: $10,272  Non-Housing Cost of Living: 100  Median Annual Housing Costs: $10,392  Average Effective Property Tax Rate: 0.9%  Average State and Local Sales Tax Rate: 6.9%  Average Effective Tax Rate: 4.5%  Annual Health Insurance Cost: $6,816  Non-Housing Cost of Living: 107  Median Annual Housing Costs: $12,192  Average Effective Property Tax Rate: 1.1%  Average State and Local Sales Tax Rate: 7.3%  Average Effective Tax Rate: 4.5%  Annual Health Insurance Cost: $5,306  Non-Housing Cost of Living: 119  Median Annual Housing Costs: $16,920  Average Effective Property Tax Rate: 1.2%  Average State and Local Sales Tax Rate: 6.3%  Average Effective Tax Rate: 2.0%  Annual Health Insurance Cost: $8,347  Non-Housing Cost of Living: 113  Median Annual Housing Costs: $18,000  Average Effective Property Tax Rate: 2.4%  Average State and Local Sales Tax Rate: 7.0%  Average Effective Tax Rate: 7.1%  Annual Health Insurance Cost: $6,991  Non-Housing Cost of Living: 117  Median Annual Housing Costs: $12,432  Average Effective Property Tax Rate: 1.0%  Average State and Local Sales Tax Rate: 0.0%  Average Effective Tax Rate: 4.4%  Annual Health Insurance Cost: $7,726  Non-Housing Cost of Living: 100  Median Annual Housing Costs: $10,884  Average Effective Property Tax Rate: 1.9%  Average State and Local Sales Tax Rate: 5.4%  Average Effective Tax Rate: 4.0%  Annual Health Insurance Cost: $6,862  Non-Housing Cost of Living: 95  Average Effective Property Tax Rate: 1.85%  Average State and Local Sales Tax Rate: 6.8%  Average Effective Tax Rate: 6.5%  Annual Health Insurance Cost: $6,418  Non-Housing Cost of Living: 100  Median Annual Housing Costs: $17,280  Average Effective Property Tax Rate: 1.1%  Average State and Local Sales Tax Rate: 6.0%  Average Effective Tax Rate: 3.6%  Annual Health Insurance Cost: $7,346  Non-Housing Cost of Living: 111  Median Annual Housing Costs: $17,256  Average Effective Property Tax Rate: 0.8%  Average State and Local Sales Tax Rate: 8.5%  Average Effective Tax Rate: 3.7%  Annual Health Insurance Cost: $7,757  Non-Housing Cost of Living: 96  Median Annual Housing Costs: $9,744  Average Effective Property Tax Rate: 1.0%  Average State and Local Sales Tax Rate: 7.9%  Average Effective Tax Rate: 6.0%  Annual Health Insurance Cost: $6,672  Non-Housing Cost of Living: 145  Median Annual Housing Costs: $18,396  Average Effective Property Tax Rate: 0.3%  Average State and Local Sales Tax Rate: 4.4%  Average Effective Tax Rate: 3.9%  Annual Health Insurance Cost: $7,286  Non-Housing Cost of Living: 97  Median Annual Housing Costs: $11,364  Average Effective Property Tax Rate: 0.9%  Average State and Local Sales Tax Rate: 7.0%  Average Effective Tax Rate: 3.6%  Annual Health Insurance Cost: $7,757  Non-Housing Cost of Living: 102  Median Annual Housing Costs: $9,756  Average Effective Property Tax Rate: 0.6%  Average State and Local Sales Tax Rate: 7.2%  Average Effective Tax Rate: 4.7%  Annual Health Insurance Cost: $6,300  Non-Housing Cost of Living: 108  Median Annual Housing Costs: $18,924  Average Effective Property Tax Rate: 0.5%  Average State and Local Sales Tax Rate: 5.8%  Average Effective Tax Rate: 3.8%  Annual Health Insurance Cost: $7,603  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $9,072  Average Effective Property Tax Rate: 0.9%  Average State and Local Sales Tax Rate: 8.8%  Average Effective Tax Rate: 2.6%  Annual Health Insurance Cost: $6,708  Non-Housing Cost of Living: 117  Median Annual Housing Costs: $13,740  Average Effective Property Tax Rate: 1.6%  Average State and Local Sales Tax Rate: 7.0%  Average Effective Tax Rate: 2.9%  Annual Health Insurance Cost: $4,428  Non-Housing Cost of Living: 111  Median Annual Housing Costs: $15,060  Average Effective Property Tax Rate: 1.7%  Average State and Local Sales Tax Rate: 8.5%  Average Effective Tax Rate: 3.0%  Annual Health Insurance Cost: $7,817  Non-Housing Cost of Living: 112  Median Annual Housing Costs: $10,608  Average Effective Property Tax Rate: 1.4%  Average State and Local Sales Tax Rate: 5.5%  Average Effective Tax Rate: 4.5%  Annual Health Insurance Cost: $7,027  Non-Housing Cost of Living: 93  Median Annual Housing Costs: $9,636  Average Effective Property Tax Rate: 0.9%  Average State and Local Sales Tax Rate: 7.0%  Average Effective Tax Rate: 4.1%  Annual Health Insurance Cost: $7,380  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $8,724  Average Effective Property Tax Rate: 0.4%  Average State and Local Sales Tax Rate: 9.0%  Average Effective Tax Rate: 3.1%  Annual Health Insurance Cost: $5,616  Non-Housing Cost of Living: 112  Median Annual Housing Costs: $13,020  Average Effective Property Tax Rate: 1.8%  Average State and Local Sales Tax Rate: 6.2%  Average Effective Tax Rate: 4.9%  Annual Health Insurance Cost: $7,121  Non-Housing Cost of Living: 96  Median Annual Housing Costs: $9,948  Average Effective Property Tax Rate: 0.7%  Average State and Local Sales Tax Rate: 6.0%  Average Effective Tax Rate: 4.1%  Annual Health Insurance Cost: $9,358  Non-Housing Cost of Living: 104  Median Annual Housing Costs: $6,864  Average Effective Property Tax Rate: 0.6%  Average State and Local Sales Tax Rate: 6.2%  Average Effective Tax Rate: 3.3%  Annual Health Insurance Cost: $6,547  Non-Housing Cost of Living: 94  Median Annual Housing Costs: $10,056  Average Effective Property Tax Rate: 1.4%  Average State and Local Sales Tax Rate: 8.6%  Average Effective Tax Rate: 3.5%  Annual Health Insurance Cost: $7,409  Non-Housing Cost of Living: 96  Median Annual Housing Costs: $8,172  Average Effective Property Tax Rate: 0.6%  Average State and Local Sales Tax Rate: 9.3%  Average Effective Tax Rate: 3.4%  Annual Health Insurance Cost: $7,390  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $14,520  Average Effective Property Tax Rate: 0.8%  Average State and Local Sales Tax Rate: 5.6%  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $6,766  Non-Housing Cost of Living: 99  Median Annual Housing Costs: $12,624  Average Effective Property Tax Rate: 2.3%  Average State and Local Sales Tax Rate: 8.6%  Average Effective Tax Rate: 4.6%  Annual Health Insurance Cost: $6,163  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $12,576  Average Effective Property Tax Rate: 0.7%  Average State and Local Sales Tax Rate: 6.7%  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $6,166  Non-Housing Cost of Living: 106  Median Annual Housing Costs: $14,400  Average Effective Property Tax Rate: 1.0%  Average State and Local Sales Tax Rate: 8.9%  Average Effective Tax Rate: 2.5%  Annual Health Insurance Cost: $7,054  Non-Housing Cost of Living: 98  Median Annual Housing Costs: $11,436  Average Effective Property Tax Rate: 0.7%  Average State and Local Sales Tax Rate: 8.3%  Average Effective Tax Rate: 3.2%  Annual Health Insurance Cost: $7,375  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $9,324  Average Effective Property Tax Rate: 1.5%  Average State and Local Sales Tax Rate: 6.8%  Average Effective Tax Rate: 4.0%  Annual Health Insurance Cost: $8,239  Non-Housing Cost of Living: 98  Median Annual Housing Costs: $9,540  Average Effective Property Tax Rate: 0.8%  Average State and Local Sales Tax Rate: 0.0%  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $18,300  Non-Housing Cost of Living: 127  Median Annual Housing Costs: $15,012  Average Effective Property Tax Rate: 1.1%  Average State and Local Sales Tax Rate: 1.8%  Average Effective Tax Rate: 3.1%  Annual Health Insurance Cost: $9,060  Non-Housing Cost of Living: 106  Median Annual Housing Costs: $13,176  Average Effective Property Tax Rate: 0.5%  Average State and Local Sales Tax Rate: 0.0%  Average Effective Tax Rate: 1.0%  Annual Health Insurance Cost: $8,340  Non-Housing Cost of Living: 102  Median Annual Housing Costs: $9,276  Average Effective Property Tax Rate: 1.0%  Average State and Local Sales Tax Rate: 6.8%  Average Effective Tax Rate: 2.4%  Annual Health Insurance Cost: $7,166  Non-Housing Cost of Living: 97  Median Annual Housing Costs: $14,340  Average Effective Property Tax Rate: 0.5%  Average State and Local Sales Tax Rate: 7.5%  Average Effective Tax Rate: 3.2%  Annual Health Insurance Cost: $6,622  Non-Housing Cost of Living: 96  Median Annual Housing Costs: $10,152  Average Effective Property Tax Rate: 1.6%  Average State and Local Sales Tax Rate: 6.0%  Average Effective Tax Rate: 1.7%  Annual Health Insurance Cost: $6,494  Non-Housing Cost of Living: 97  Median Annual Housing Costs: $9,912  Average Effective Property Tax Rate: 1.6%  Average State and Local Sales Tax Rate: 7.1%  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $6,792  Non-Housing Cost of Living: 115  Median Annual Housing Costs: $15,168  Average Effective Property Tax Rate: 2.2%  Average State and Local Sales Tax Rate: 0.0%  New Mexico is tied with Nevada as the 10th best state for an early retirement. New Mexico ranks well in the cost of living measures. It has the second-lowest average healthcare expense at $5,200 per year, as well as the 10th-lowest average housing cost at $9,300 per year. A potential drawback to retiring early in New Mexico is the lack of doctors’ offices. According to data from the Census Bureau, New Mexico has only 4.7 doctors’ offices per 10,000 residents, which ranks 43rd in the nation.  Average Effective Tax Rate: 2.9%  Annual Health Insurance Cost: $5,244  Non-Housing Cost of Living: 99  Median Annual Housing Costs: $9,324  Average Effective Property Tax Rate: 0.8%  Average State and Local Sales Tax Rate: 7.5%  High rollers may be pleased to see Nevada crack our top 10. Nevada offers a 0% effective tax rate on income and has the sixth-most doctors’ offices per resident, meaning help is never far away. Living costs in the Silver State can be fairly steep though, including a combined $20,000 per year on housing and healthcare costs on average.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $8,016  Non-Housing Cost of Living: 110  Median Annual Housing Costs: $12,312  Average Effective Property Tax Rate: 0.7%  Average State and Local Sales Tax Rate: 8.0%  Louisiana has a lot to offer as a state for an early retirement. The third-lowest property taxes, seventh-lowest housing cost, ninth-lowest non-housing cost of living and eighth-highest rate of doctors’ offices in the country are all on offer for people looking to retire in Louisiana. Unfortunately, Louisiana is not a utopia for early retirees. There are relatively few arts, entertainment and recreation establishments per 100,000 residents and it has one of the highest sales tax rates in the country.  Average Effective Tax Rate: 1.9%  Annual Health Insurance Cost: $9,002  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $9,060  Average Effective Property Tax Rate: 0.5%  Average State and Local Sales Tax Rate: 9.0%  Texas has a little bit of everything, meaning just about anyone can find themselves at home there. The Lone Star State has no income tax and the non-housing cost of living is low. The average cost of an annual silver healthcare plan in Texas is $6,626. That’s the 14th-lowest. However housing costs can get pretty high relative to everything else. The average Texan pays $11,600 per year in housing costs.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $6,626  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $11,616  Average Effective Property Tax Rate: 1.8%  Average State and Local Sales Tax Rate: 8.2%  Like many in the top 10, Pennsylvania is another state which does not tax retirement income which makes it a great option for an early retirement. Pennsylvania also has the 10th-lowest average healthcare costs in the country. The average cost of a silver healthcare plan in Pennsylvania is only $6,500 per year.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $6,547  Non-Housing Cost of Living: 103  Median Annual Housing Costs: $11,184  Average Effective Property Tax Rate: 1.6%  Average State and Local Sales Tax Rate: 6.3%  The state that is famous for its retirees and bad drivers comes in sixth place for best states for an early retirement. Florida ranks well because of its 0% income tax rate and the 9.15 doctors’ offices per 10,000 residents. But living costs in Florida can get pretty high. Average housing costs are almost $12,000 per year and the non-housing cost of living sits at 102 which rank 30th and 31st respectively.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $7,243  Non-Housing Cost of Living: 102  Median Annual Housing Costs: $11,976  Average Effective Property Tax Rate: 1.0%  Average State and Local Sales Tax Rate: 6.7%  The Southern theme continues with Tennessee claiming the fifth spot for best states for an early retirement. Tennessee is another state with a 0% effective income tax which is only partly offset by the nation’s highest average state and local sales taxes at 9.5%. Tennessee also has 6.55 doctors’ offices per 10,000 residents and 36 arts, entertainment and recreation establishments per 100,000 residents.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $7,447  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $9,576  Average Effective Property Tax Rate: 0.7%  Average State and Local Sales Tax Rate: 9.5%  The Mount Rushmore State is another great option for an early retirement. Other than the gorgeous scenery, South Dakota can offer potential early retirees a 0% effective income tax and some of the lowest housing costs in the country at $8,900 per year on average. Besides gazing at Mount Rushmore, there are plenty of things to do. There are 79 arts, entertainment and recreation establishments per 100,000 residents – the second-highest in the nation.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $8,208  Non-Housing Cost of Living: 95  Median Annual Housing Costs: $8,964  Average Effective Property Tax Rate: 1.3%  Average State and Local Sales Tax Rate: 5.8%  Mississippi is the second-highest-rated Southern state and third-highest overall for best states for an early retirement. Mississippi is similar to Kentucky in that it is a cheap place to retire. It has a 0% effective tax on retirement income. It also has the lowest non-housing cost of living as well as the second-lowest housing costs in the nation. So why isn’t it first or second? There are only 22 arts, entertainment and recreation establishments per 100,000 people – the lowest in the nation. There are also not as many doctors’ offices in Mississippi as there are in other states. Our data shows that it ranks 33rd in this measure.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $6,922  Non-Housing Cost of Living: 89  Median Annual Housing Costs: $8,136  Average Effective Property Tax Rate: 0.8%  Average State and Local Sales Tax Rate: 7.1%  The Bluegrass State comes in a close second, thanks to six metrics scoring in the top 20 and its tax-friendly environment. Particularly attractive for prospective early retirees are the low costs of living. Kentucky ranks fourth in average housing costs per year at $8,600 and fifth in non-housing cost of living. But early retirees in Kentucky may need to develop some personal hobbies. According to data from the Census, there are only 28 arts, entertainment and recreation establishments per 100,000 residents, 44th best in the country.  Average Effective Tax Rate: 1.0%  Annual Health Insurance Cost: $6,593  Non-Housing Cost of Living: 94  Median Annual Housing Costs: $8,628  Average Effective Property Tax Rate: 0.8%  Average State and Local Sales Tax Rate: 6.0%  Wyoming jumps two places from last year to take the top spot in our study of best places for an early retirement. This state offers an effective tax rate of 0% on retirement income and has the third-lowest non-housing cost of living. To go with the relatively cheap living costs, Wyoming also has 73 arts, entertainment and recreation establishments per 100,000 people. That score ranks fifth in that metric. What hurt Wyoming (although not enough to prevent it from snagging first place) is the relatively high average healthcare costs. Wyoming ranks second to last in this measure paying an average of $11,000 per year. Only Alaskans pay more.  Average Effective Tax Rate: 0.0%  Annual Health Insurance Cost: $11,705  Non-Housing Cost of Living: 93  Median Annual Housing Costs: $10,296  Average Effective Property Tax Rate: 0.6%  Average State and Local Sales Tax Rate: 5.4%  In order to rank best states for an early retirement, we focused on eight different metrics:  We ranked every state, plus D.C. in each of these eight metrics. We then averaged those rankings, giving double-weight to the effective income tax rates and half weight to doctor's offices per 10,000 residents and to arts, entertainment and recreation establishments per 100,000 residents. All other factors were given a weighting of one. Finally we gave each state, plus D.C. a score between 0-100 based on the average of those rankings. The state with the best score received 100 while the worst scoring state received a 0.  Questions about our study? Contact us at press@smartasset.com. Photo credit: ©iStock.com/mrsmuckers  The post The Best States for an Early Retirement – 2016 Edition appeared first on SmartAsset Blog.
Retirees will love the No. 1 state's low taxes, low cost of living -- and the great outdoors as a bonus!