7 recession-proof places to retire

By SmartMoney

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, the 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 ramifications.

"If you don't have a healthy local economy, it's like a cancer," says Bert Sperling, the founder of Sperling's Best Places, 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."

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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," Sperling warns, "where everyone else has fled" or been forced out.

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 eggs intact.

Areas with a track record of slow, steady economic growth and home price appreciation are ones that will hold on to 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 Gator fans.

"Because colleges are relatively immune from recession, they provide a very stable local economy," Sperling says.

The local AARP Senior Community Service 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 was the No. 1 place to live in "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," Bland says. 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.

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.

Though 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%, 2 percentage points 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.

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.

Though 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 film and television companies.

Seniors don'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 & World Report. Its neurology department treats more stroke patients than any other hospital in the state.

4. Pittsburgh

"Pittsburgh has this reputation for being a smoky, industrial city, but that's just not the case anymore," Bland says.

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 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 city's cost of living is 5% lower than the national average. And though the median sales price of existing homes nationwide fell 1.4% last year to $218,900, Pittsburgh's increased 1% to $120,700, according to the National Association of Realtors.

Continued: Portland, San Antonio and Tucson

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