Is Alaska a haven for retirees? Yes, but not for the reasons you think

Audrey Malo for The Washington Post

Recently, we here at the Department of Data were perplexed to discover that Alaska ranks near the top of our list of states where people choose to spend their retirement years. By which we mean: An unusual share of the retirement-age population in Alaska comes from out of state.

Is Alaska an under-the-radar spot to spend your golden years, an arctic Arizona? Or is the Alaska Gray Rush a demographic mirage?

We asked, and you answered: Scores of theories rolled in from our super-smart, super-responsive readers. Most of you coalesced around a few explanations.

The first and simplest? Alaska may be cold, but it’s beautiful.

Reader Sandy Winfree and her spouse moved to Alaska for work and, after considering Florida and Arizona, decided to remain in Anchorage. The scenery is the best in the United States, she wrote, “with no comparison. It has mild summers in Anchorage, and reasonably mild winters,” and “sometimes the distance from family in Lower 48 is nice, for drama control.”

Like many who wrote in, Winfree noted that the Last Frontier also has some financial appeal: By almost every measure, Alaskans pay the lowest taxes in America. There’s no state income, sales or estate tax, and seniors get a healthy break on property taxes.

Even before those tax breaks, Alaska has the highest average retirement income of any state, according to our analysis of Census Bureau data — only D.C. is higher. And that’s just counting income such as 401(K) disbursements and pensions. Alaska residents can also qualify for annual checks from the state permanent fund, a $77 billion investment behemoth created to preserve the state’s oil wealth for future generations. Annual fund dividends vary based on how well its investments are doing, but they typically top $1,000. Last year the fund paid each qualifying resident a record $3,284 — not bad considering the average U.S. Social Security check was $1,656 a month.

And though Alaska has a reputation as an expensive place to live, reader Ronald Bates of Anchorage notes that living costs have been falling as big chain stores pop up in Alaska’s larger cities. “I was in California last week,” Bates wrote. “The prices in Pavilions — a Safeway brand — were consistently higher than our local Safeways.”

And sure enough, data from the Bureau of Economic Analysis shows that Alaska’s cost of living has fallen relative to the rest of country. Seven states and D.C. are now more expensive.

Of course, Alaskans still pay more for goods, from gallons of milk to gallons of gasoline, than residents of anywhere but Washington state and Hawaii. But as Bates points out, the highest prices are confined to rural areas. On a metro level, Anchorage is the 23rd-most-expensive city in the nation, cheaper than D.C., New York, Miami and Los Angeles.

Alaska’s falling cost of living has one primary progenitor: home prices. Over the past decade, Alaska’s home-value appreciation has trailed that of every other state. And prices largely avoided the pandemic boom, gaining less value there than anywhere but D.C., according to Zillow.

In the end, none of our Alaska correspondents said they chose the state solely for financial reasons. That tracks with economic research. For at least 15 years, economists Karen Conway of the University of New Hampshire and Jon Rork of Reed College in Oregon have been looking for evidence that senior-friendly tax policies attract measurable numbers of retirees. In 2017, Conway wrote that there was “no consistent evidence that these tax breaks influence migration decisions in a meaningful way.” That’s still true, she and Rork told us.

Instead, the most common reason for moving to Alaska among those who wrote in was military service. The state’s Army and Air Force bases drag tens of thousands of young Americans to the state once derided as Walrussia, and many of them develop a taste for the outdoor lifestyle and frontier culture. California-born reader Dick Morris wrote that he retired from the Air Force in Alaska and stayed there for his second career and retirement.

“For those like me who have been able to live in a number of other places and can make a comparison,” Morris wrote, “Alaska is just a better place to live.”

And he’d probably find plenty of company down at the VFW. Almost a quarter of Alaskans over 65 served in the armed forces, according to our analysis of Census Bureau data. That’s easily the largest share in the country.

And unlike some other states where retired veterans dominate — i.e., Wyoming, Montana and Idaho — a mighty majority of Alaska’s veterans come from out of state. Alaska also has the highest share of all adults who are veterans.

Veterans have a reputation among researchers as “the most footloose and fancy free of the elderly,” Conway said. They’re used to hopscotching around the country after decades of hopping from base to base. “They have nice, big pensions,” she said. “And they might want to move where they might not be taxed.”

But while the veteran thesis seemed convincing, it was only the second-most-common theory we heard from readers. Which makes sense: Even if every veteran brought a non-veteran spouse along to Alaska, it would still leave a bit over half of Alaska’s out-of-state retirees unaccounted for.

The most popular theory? Those retirees have been in Alaska for a very long time.

“I don’t think anyone seriously believes people move to Alaska to retire,” reader Susan Lakatos wrote from New York City. “What you’re seeing … is the slowdown in Alaska’s oil boom economy: There was a huge influx of out-of-staters when Alaska was the hottest job market in the United States during its oil boom, they became residents, and now many of them are old enough to retire.”

Since the nearby Klondike gold rush, Alaska’s demographics have been distorted by an intense boom-and-bust cycle. From the 1940s to 1980s, the territory, and later the state, grew faster than almost any other. More recently, it has slipped to a meager 37th.

It’s not just crude. Alaska was one of the fastest-growing states long before drillers hit pay dirt in America’s greatest oil field, Prudhoe Bay, in 1968.

The boom started with location, specifically Alaska’s proximity to two of America’s greatest foes in the 20th century, the Empire of Japan and the Soviet Union. From World War II through the Cold War, Alaska experienced a military buildup so vast and enduring that it would power the local economy straight through to statehood, according to a fascinating history by Eric Sandberg, a demographer with the state of Alaska.

But the North Slope oil boom lifted that growth to a new level. The state’s population almost doubled in just 15 years, according to Sandberg. At its peak in the late ’80s, Alaska produced about a quarter of America’s oil. Today that figure has fallen to just 3.6 percent, according to the Energy Information Administration. And as the Prudhoe Bay field dries up, so has Alaska’s population growth.

This gives Alaska a unique population profile. In the 1960s and ’70s, it had the most out-of-staters under age 25 of any state. They stayed put, and now, that bulge of outsiders has aged into retirement.

That aging wave of out-of-staters is what makes it look like outsiders are choosing to retire in Alaska. We can support that thesis by looking at how long retirees have lived in their current residence.

In most states, retirement-age people who were born there are substantially more likely to have lived in their homes for 20-plus years than people who moved in from elsewhere. But in Alaska, natives are only 4 percentage points more likely than newcomers to have lived in their homes for 20-plus years. That’s the smallest gap of any state (D.C. is smaller) and a sign that Alaska’s retirees were well established in the state before they turned 65.

It’s not quite a smoking gun, but we don’t need one: We have Sandberg, the demographer who wrote that remarkable article about Alaska’s history. He points his finger squarely at the aging oil boomers.

“It’s true that there was a large rush of the people who are now seniors to Alaska,” Sandberg told us via email. “But they rushed here 40-50 years ago when they were in their 20s.”

Hi friends! The Department of Data exists to answer quantitative queries. What are you curious about: Likeliest career paths for veterans? The college majors most likely to lead to a job in a coffee shop? The fastest-growing (or shrinking) religious denominations? Just ask!

If your question inspires a column, we’ll mail an official Department of Data button and ID card. To get every question, answer and factoid in your inbox as soon as we publish, sign up here. This week’s buttons go to readers Sandy Winfree, Ronald Bates, Dick Morris and Susan Lakatos, whom you’ll remember from earlier in the column. Also to readers Jay Edgerton, Susan Brown, Sandy Harbanuk, Marc Rosenberg, K. Knudsen and Judy Jessee, whose suggestions helped shape our research.