By Rob Silverblatt

In the aftermath of a recession that wiped out 8 million jobs and crippled even more portfolios, Americans are still struggling to rebuild their nest eggs. So far, the results have been far from encouraging, and a quick glance at the economy and financial markets reveals a host of factors holding Americans back from their retirement goals. The housing market, for instance, is still weak, a persistent unemployment rate continues to stand in the way of a sustainable recovery, and many Americans' long-term investments are back to where they were a decade ago.

A number of recent studies confirm the bleak outlook. For example, one survey, conducted by the human resources consulting firm MetLife says that just 35 percent of workers who are between 45 and 49 years old report feeling ready for retirement.

Still, even as workers throughout the country struggle to regain their footing, it's clear that not all states are created equal. With that in mind, U.S. News created an index to measure which states are the best for Americans who are saving for retirement. We've looked at each state's housing market, unemployment rate, per capita income, and taxes to get a sense of where Americans are most likely to be able to tuck away money for their nest eggs.

All state-by-state income figures are from 2010. The numbers are nominal, meaning that they're not adjusted for inflation. Tax burdens are from a 2008 study by the Tax Foundation. Unemployment rates are from June 2010. What follows is a list of the five best -- and five worst -- performers. The highest possible score that a state can earn is 42 points.

The best states:

Wyoming (Score: 40).

Wyoming's loose tax code helped propel it to the front of the pack. Notably, residents don't pay taxes on wages or on capital gains. Both of these exemptions allow workers to save noticeably more of their earnings -- both from investments and jobs -- for use in retirement. What's more, even before the tax breaks, Wyoming residents have well-above-average incomes. In 2010, the state's per capita income is $45,584. Only five states and the District of Columbia have higher incomes. Wyoming's 6.8 percent unemployment rate is also well below the national average. Meanwhile, home prices there are expected to grow by 4.5 percent annually between 2010 and 2013, according to Moody's Analytics. Since many Americans choose to sell their homes to downsize before retirement, price appreciation helps them grow the size of their next eggs.

New Hampshire (Score: 39).

New Hampshire's unemployment rate, which is currently 5.9 percent, is the country's fourth lowest. Meanwhile, the state's state and local tax burden, expressed in terms of taxes as a percentage of income, is just 7.6 percent. Only four states sport better numbers in that category. All told, the Granite State performs well across all categories, but its housing market keeps it out of first place. Between 2010 and 2013, home prices there are expected to appreciate by 1.1 percent per year, according to Moody's Analytics. While that's still a healthy amount, it's not good enough to catch Wyoming.

Alaska (Score: 38).

Taxes also figure prominently into the equation in Alaska. Like Wyoming, the state has no taxes on wages or capital gains. The state's state and local tax burden, expressed in terms of taxes as a percentage of income, is just 6.4 percent. Nationally, that figure is 9.7 percent. Meanwhile, Alaskan real estate is also a good investment: Between 2010 and 2013, home prices there are expected to grow by 3.5 percent per year, according to Moody's Analytics. The state's per capita income, which is $43,369, is also healthy.

Washington (Score: 32).

In the near term, Washington has the country's most promising real estate market. Home prices there are expected to surge by a whopping 6.6 percent per year between 2010 and 2013, according to Moody's Analytics, providing residents who are downsizing for retirement with opportunities to put away some extra cash. Still, for new home buyers, getting a foot in the door can be hard given how expensive the Evergreen State's housing market is. The median home price there is upwards of $235,000. Another bright spot: Washington doesn't tax capital gains or wages. One of the state's bigger problems is its unemployment rate. At 8.9 percent, it's still below the national average, but it's high nonetheless.

North Dakota (Score: 30).

Nationally, the unemployment rate sits at 9.5 percent. But in North Dakota, which boasts the country's lowest joblessness rate, it's just 3.6 percent. And as other states struggle to grow their labor markets, North Dakota's is healthier than ever. Notably, as of last month, more North Dakotans had jobs than ever before -- even in the pre-recession years. North Dakota's biggest soft spot is its housing market. Between 2010 and 2013, home prices there are expected to grow at 0.2 percent per year, according to Moody's Analytics. That puts the state right in the middle of the pack.

The worst states:

Ohio (Score: 9).

Not much is going right for Ohio residents. In the near term, their home prices are expected to take a huge hit. Between 2010 and 2013, home prices there are projected to drop by 3.5 percent per year, according to Moody's Analytics. Only in Florida, where prices are expected to fall by 5 percent, is the outlook worse. Don't expect great tax treatment in Ohio, either. Notably, the state's state and local tax burden, expressed in terms of taxes as a percentage of income, is 10.4 percent, the seventh highest in the country. Meanwhile, the state's 10.5 percent unemployment rate exceeds the national average.

California (Score: 11).

California's swelling budget gaps and overall fiscal mess have grabbed no shortage of national headlines. But it's not just the state government that's struggling to rebuild its finances. Notably, the state has a staggering 12.3 percent unemployment rate. Only Michigan (13.2 percent) and Nevada (14.2 percent) have worse labor markets. In terms of home prices and tax burdens, California is in the same position as Ohio. The state's most redeeming quality for those looking to build a nest egg is its salaries. The per capita income there is $42,346.

Kentucky (Score: 12).

Wages in Kentucky are among the worst in the country. The per capita income there is $32,476. Nationally, the equivalent number is $39,423. The real estate market is also discouraging. Between 2010 and 2013, home prices in Kentucky are expected to decline by an average of 0.9 percent per year, according to Moody's Analytics. The silver lining is that for people looking to save money on mortgages, houses there are relatively inexpensive to start with. Notably, the median home price is under $120,000.

Indiana (Score: 14).

While not at the bottom of the pack in any of the categories, Indiana is decidedly below average in nearly all of them. In particular, Hoosier State residents shouldn't count on home sales to fund their retirements. Between 2010 and 2013, home prices there are expected to tumble by an average of 2 percent per year, according to Moody's Analytics. At the same time, wages won't pick up the slack from the souring real estate market. Currently, the per capita income in Indiana is $34,196, which is solidly below the national level of $39,423.

Georgia (Score: 16).

The Peach State's unemployment rate, which is currently 10 percent, is above the national average of 9.5 percent. Wages are also subpar: The per capita income there is $33,708, a tad worse than Indiana and well below the national level. The state's state and local tax burden, expressed in terms of taxes as a percentage of income, is 9.9 percent, which is a tad above the national average of 9.7 percent. Georgia's saving grace is its housing market. Home prices are expected to grow there by an average of 0.5 percent per year between 2010 and 2013, according to Moody's Analytics.

Data Sources:

The Tax Foundation, Case Shiller, Moody's Analytics, the National Association of Realtors, Equifax, the Bureau of Economic Analysis, the Bureau of Labor Statistics, and the Census Bureau.

Methodology:

For home prices, income, tax burdens, and unemployment, states were divided up into 10 brackets based on their relative performance. For each category, states in the bottom bracket received 1 point, while states in the top bracket received 10 points. States with preferential tax treatment for capital gains got a two-point bonus. The maximum total score that a state could receive is 42 points.

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Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard--Today and When You Retire

 

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