The Garden State vs. the Sunshine State: Retirement Math

This begs the questions, are Floridians less expensive to support? Are they operating with economies of scale not available in the smaller, congested states of the Northeast? Or is the Garden State offering better services?

Let’s look at where all the money is going.

1. Education

Florida allocates 28% of its budget to education, spending $7,408 per pupil, below the national average of $11,762, and well below New Jersey, at $18,235. Teachers in Florida average a $47,267 salary (54% higher than the state’s median income), vs. New Jersey’s teachers, who average a $76,430 salary (46% over their median income).

Nevertheless, Florida is ranked seventh overall in education and first in higher education by US News & World Report. New Jersey ranks second in terms of overall education and 28th in terms of higher education.

2. Law Enforcement

A cop can expect to earn a $49,085 average salary in Florida, and $87,490 in New Jersey, according to U.S. News & World Report. New Jersey ranks fourth in terms of public safety, and Florida ranks 35th.

3. Government Workers Pension and Post-Retirement Benefits

Florida has $20.2 billion of unfunded liabilities in this category, which pales in comparison to New Jersey’s over $150 billion deficit. New Jersey’s pension and post-retirement benefits obligations amount to four times the state budget. In 2001 New Jersey’s public unions successfully lobbied the legislature for a 9% pension increase, and a reduction in employee pension contributions, from a suggested 5.5% down to 3.5% of salary. The unions also won the right for workers to retire five years earlier at full pension.

Florida has $11.6 billion in debt. New Jersey has $195.5 billion in debt.

Consideration of these statistics and others has led Truth in Accounting to give Florida a “C” for fiscal responsibility and New Jersey an “F.”

In conclusion, maybe Florida is right for some, and New Jersey is right for others.

You could go through a similar process to compare Florida with your state.

It doesn’t take an economist to realize that retiring on a lofty pension from a high-tax state in a low-tax state like Florida makes sense, especially if primary education is not a major concern.

Unless there is an upheaval of the system, I project more government workers will strive to make their fortune in the Garden State, send their kids away for college, and eventually reap their post-retirement rewards in the Sunshine State.

A word of caution: The cost of providing health care for one person over age 65 is three to five times higher than providing care for someone under age 65.

That raises questions about whether Florida’s strategy of using low taxes to attract senior citizens will have staying power.

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Bryan Kuderna, CFP, is the founder of Kuderna Financial and the author of Millennial Millionaire — A Guide to Become a Millionaire by 30. He is a member of the Million Dollar Round Table.