7 recession-proof places to retire

Seniors can save on taxes as well. The average state and local tax is 8.9%, versus 9.7% nationwide.

Other bonuses: a low crime rate (compared with other cities its size) and more than 20 quality hospitals. U.S. News & World Report named the University of Pittsburgh Medical Center among its "Best of the Best" in 2007 and awarded its geriatric division the No. 8 spot.

5. Portland, Ore.

"Hip. Unaffected, yet cosmopolitan. Portland is on everyone's shortlist of hot cities these days," Sperling says.

Careful land-use planning rescued the city from economic decline in the 1960s, and today Portland is known for its burgeoning arts and music scene, and its eco-friendly vibe.

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Compared with other West Coast metropolitan areas, Portland is affordable but by no means cheap. The cost of living there is 14% above the national average. And the credit crunch has put many residential areas out of reach for retirees with less-than-stellar finances, cautions Molony. Though the National Association of Realtors reports that the average sales price for an existing home was up 5% to $295,200 in 2007, properties in popular areas like Irvington and Alameda Ridge can sell for well more than $600,000.

Those who can afford to buy there, however, will find the city packed with retiree-friendly amenities, including public transportation and 30 senior centers.

There are also plenty of jobs, both paid and volunteer. Nike and Intel call Portland home, as do plenty of other technology and health-care companies.

6. San Antonio

Stroll along San Antonio's River Walk and it's clear the city's economy is booming. The walkways feed into an expansive downtown district of restaurants, museums and boutiques adored by tourists and locals alike.

Though the city relies heavily on tourism to the Alamo and other attractions, industries such as financial services, health care and national defense have kept the unemployment rate fairly steady at 4%, a percentage point lower than the current national average.

San Antonio's cost of living, 7% below the national average, makes it one of the more affordable retirement destinations. Groceries, for example, are an incredible 22% cheaper than in other metropolitan areas, notes Bland. "For a city with more than 2.5 million people living in the metropolitan area, that's really unusual."

Continued development has kept housing prices in San Antonio 10% lower than the national average. The average sale price for an existing home was $153,200 in 2007, according to the National Association of Realtors. Yet despite the nationwide housing slump, home values here have increased 8% since 2006. Retirees will find the lower taxes an added relief, adds Peguero. Like Florida, Texas doesn't tax income. The average state and local tax burden is 7.8%, almost 2 percentage points lower than the national average.

7. Tucson, Ariz.

A warm, sunny climate and rich cultural heritage have long kept Tucson at the top of retirees' list of winter vacation destinations. However, with a cost of living that's 3% below the national average, a strong job market and steady home prices, there's plenty to enjoy about this city all year.

"Tucson is a dynamic, growing retirement spot, so there are plenty of job opportunities, although the pay is often low," Bland says.

Though it's not quite a college town, Tucson relies heavily on the University of Arizona as its second-largest employer. Technology and tourism (mostly from snowbirds) also provide plenty of jobs.

Steady expansion and new developments have kept housing relatively affordable, with costs at about 20% below the national average. The average sale price for existing homes dropped just 0.01% in 2007, to $244,800. Expect real-state prices to remain solid, thanks to increasing interest in the area as a retirement destination.

The most popular areas are planned communities (retirement-specific and otherwise) northwest of the city, including Oro Valley and other towns in the foothills of the Santa Catalina Mountains.

This article was reported and written by Kelli B. Grant for SmartMoney.com.

Published April 10, 2008

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