Best Places for Military Retirees

The list includes some expected winners, but also some surprises.

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After an adult lifetime being sent, at government expense, to wherever the government tells you to live, military retirees can face especially challenging decisions about where to start the next chapter of their lives. Usually in their 40s, with pensions averaging half of their pay, nearly all military retirees need to find new careers. Many also have families and growing children to consider.

Steve Keim retired in 2008 after a 30-year career in the Marines as an aviator, electronic warfare expert, and finally, as a colonel and commanding officer of the Naval ROTC unit at Texas A&M University in College Station, Texas. His four-year A&M stint came nearly 30 years after he graduated as an Aggie, and his fondness for the town and area deepened during his last duty tour.

"I could have gone other places, and the wife and I did enjoy some of the other areas" that were candidates for relocation, he says. But College Station just had too much going for it—proximity to family members and military facilities with post privileges and VA medical care, and continued teaching and contact with Texas A&M. Most of all, Keim says, he loves the people and the town. Moral fabric is important, and he believes College Station has the right stuff.

[In Pictures: Best Places for Military Retirees.]

Keim says his military pension gave him enough of a financial cushion to look for work he really loved, even if it did not provide the largest paycheck. Service to country motivated him for 30 years, and still does. He now travels the country giving disaster preparedness seminars for a locally-based program overseen by the Department of Homeland Security.

As it turns out, Keim has made nearly all of the right choices. But other veterans haven't always landed so well. USAA, the big insurer that specializes in covering military families, decided to help remedy this by commissioning research in partnership with Military.com, a free membership website that provides 10 million subscribers with a range of military news, communications, and advisory services. They worked with Sperling's BestPlaces to review about 380 U.S. metropolitan areas with an eye toward places with special suitability for military retirees.

[See the World's Top Retirement Havens for 2011.]

The review included indicators such as climate, health resources, health indicators, crime levels, local school performance, recreational resources, arts and culture, airport and mass transit resources, and susceptibility to natural disasters. Sperling's also judged how the markets lined up in terms of nearby military facilities and base amenities, VA medical services, tax policies affecting military pensions, area unemployment trends, higher education resources, overall affordability, housing costs, home price trends, and economic stability.

The results include some expected winners, but also some surprises. Places like San Diego and Honolulu, for example, are often considered nirvana for military folks. But they were excluded from the USAA-military.com list because of high living costs.

Here are the 10 best places for military retirees:

1. Waco, Texas

2. Oklahoma City

3. Austin-Round Rock, Texas

4. College Station-Bryan, Texas

5. Harrisburg-Carlisle, Pa.

6. San Angelo, Texas

7. Madison, Wis.

8. Pittsburgh, Pa.

9. New Orleans-Metairie-Kenner, La.

10. Syracuse, N.Y.

"I was in the Navy for 20 years as a Tomcat back-seater [F-14 navigator]," says Military.com editor Ward Carroll. "You're immersed in a culture" that provides a lot of support and makes many key life-event decisions for you, he says. "So, when you face retirement, it comes with some anxiety that you appreciate, and some that you don't."

"You start to realize that you do what you do, and you know what you know," he explains, "and that this is approximately 25 percent of what you need to know" after retiring from military service.

[See How to Find Your Best Place to Retire.]

"You know for several years before you're really going to retire," adds June Walbert, a Lt. Col. in the Army Reserves and a financial planner with USAA. "You may think you have a great idea of what you're going to do" but conditions in the private economy can change quickly, says Walbert. "The military told you where to go, but now you have to strike out on your own."

Walbert and Ward agreed that finding a new career tends to drive retiree relocation decisions. While many veterans have solid technical and leadership skills that employers find attractive, there are often no jobs directly comparable to what a vet had been doing. For example, fighter pilots used to have a near-automatic opportunity for airline jobs, Ward says, but those have largely dried up in recent years. Of course, he notes, "there is no civilian job for being a navigator in a jet fighter ... When you realize that you're going to have to find another job, all of this hits you at once."

Because retraining can rank high as a post-retirement need, places with strong colleges and universities ranked well on the list. So did markets with relatively strong and stable economies. "The State of Texas dominated the list," says Walbert , who works at USAA headquarters in San Antonio. "One of the reasons is that we don't have a state income tax ... And the second thing is housing expenses," which are relatively affordable, he says.

Walbert advises service members contemplating retirement to do their homework carefully, especially about where they want to live. "When you retire, they give you one more [fully paid] move, and I think you have a year to make that decision," she says. "That is a very valuable benefit—one that you don't want to waste."

Twitter: @PhilMoeller

Corrected on 12/8/10: A previous version of this story gave the incorrect headquarters for USAA, which is based in San Antonio.