Financial Myths: "Go West, Young Man"

Michael McTague  |

This famous comment attributed to Horace Greeley galvanized many during the nineteenth century. At that time the West was the modern Mid-West. Over time, the center of US population shifted westward. (Note, however, that the geographical center of North America has not changed!) The majority of Americans acted on this myth even if they weren’t conscious that someone had made the statement. But, does the myth still retain its power?

Wealth, Western Style

Is the West a fruitful place for business? Bill Gates, Warren Buffett and Larry Ellison, respectively number 1, 2 and 3 in wealth in the US are firmly planted in the western half of the country. Warren Buffett, the dean of this affluent trio, affirms the myth. After spectacular early success, the Oracle of Omaha bought Burlington Northern Railroad,  headquartered in Texas, and is involved in “clean coal,” which carries less sulphur. At a time when people worry about clean air and toxic emissions, coal, which generates about half the electricity in the US, retains a gritty image. But “clean coal,” if you will pardon the oxymoron, appeals to many. Where does this power-producing elixir hail from? The coal deposits with the lowest carbon content are found in the western half of the US. Texas, North Dakota and Wyoming stand out for their stockpile and for mining a good deal of it. Buffett has added to his fortune by shipping it to power plants.

Go West, Old Man?

The young man part of the myth begs the question, what about old men? If you subscribe to the Wall Street Journal or check out Yahoo Finance regularly, you will be inundated with articles about retirement. Everyone seems to have a list of the best and worst states in which to retire. The good and bad list may be sandwiched between a raft of articles about retirement savings. For example, have you saved enough? Should you try a Roth IRA? Will Social Security go bankrupt? You might wonder if the go west adage still applies. Let’s see what the myth buster can do.

Here are AARP’s top ten states for retirees:

  • Hawaii
  • Idaho
  • Utah
  • Arizona
  • Virginia
  • Colorado
  • Florida
  • South Dakota
  • California
  • Texas

The list rests in part on how these states treat retirement income. Eight are in the western half of the country; the east coast fares poorly. From the tax viewpoint, the unhospitable states include California, Rhode Island, Vermont, Connecticut and Nebraska. This makes you wonder how a state could be on one’s top list and another’s bottom list.

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Let’s take a look at Hawaii, a frequent number one pick. For starters, Hawaii  confirms the “Go West” part of the myth. But, is Hawaii a retirement haven? The birthplace of big wave surfing, the Aloha State Hawaii sports spectacular beaches. Have you ever heard a prospective retiree say, “When I retire, I want to ride the biggest %^&*$# wave I can find?” Neither have I. With all of the articles about whether people can afford to retire, note that Hawaii also carries the highest cost of living of the 50 states (ranked no. 1 in a CNBC survey for 2011), in part because so many things have to be shipped there from outside. People living in Hawaii are less burdened by this because they have made purchases over a period of time. New arrivals – retirees following this sage advice -- would be hit even harder by the tidal wave of expenses in the westernmost state.

Warm beaches and coastlines hold traction in these surveys, so Hawaii, California and Florida do well. What about other top picks such as Idaho and Utah (numbers 2 and 3 on the AARP survey)? Great places, underappreciated and so on and they do confirm the “Go west” myth. But how did they get onto such a list? Are millions of baby boomers in New York, Los Angeles and Chicago checking off Idaho and Utah on a survey form? What attracts the 65+ crowd to these locales?

What Retirees Want to Do

Few retirees list tax savings as a major goal for the golden years. Access to clean coal gets few nods. If surfing is also not a hot topic for retirees, what exactly do retired people want to do? “More time for the family and grandchildren” pops up frequently. For those on the east coast, that suggests New York, New Jersey, Rhode Island or Maryland to be close to their families. East coast states offer good fishing too, another passion of many retirees. Hawaii, Idaho and Utah call  for a long trek. But, Rhode Island, Maryland and New York are not tax friendly according to surveys and fall to the bottom. This shows that Horace Greeley was right – at least about taxes.

Suppose a retired couple from New York or New Jersey took the advice of the surveys and moved to Wyoming, Hawaii, Idaho or Utah. It would be difficult to spend more time with the family that lives back east. So, grandma and grandpa would have to fly east or the children and grandchildren would have to fly west. The grandchildren would love to visit the beaches in Hawaii – the expensive beaches, following the long, costly flight that the retirees forced their offspring to take because grandma and grandpa followed the financial advice of the surveys.

Florida, the gold standard of retirement, came in only seventh on the AARP survey. The Sunshine State boasts the highest percent of people over 65 years. Utah came in number 4 on the AARP list, easily beating out “Heaven’s Waiting Room,” another nickname for Florida. But, in one census summary Utah ranked last in residents over 65.

It appears AARP has bought into the “Go West” myth while millions of retirees have not. This means that Arizona, New Mexico, Alaska, Hawaii and Wyoming, a mix of tax friendly western states, where retirees can fish, camp, hang ten, ski, shoot bears and moose, but maybe spend a lot of money, have not won the hearts and minds of older men as the Horace Greeley quote once won the hearts of younger men.

Next month another myth will be busted. Please comment on this myth and let us know which myths need exposure.


Michael McTague, Ph.D. is Executive Senior Vice President at Able Global Partners in New York.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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