Joseph Peters wants to retire in New Jersey, but instead he plans to move elsewhere.

The 65-year-old Middletown resident wants two things when he retires in another three to four years: open space and low costs.

Certainly, Peters could find plenty of open space somewhere in the diverse landscape of New Jersey. He will not, however, find low costs, as the Garden State remains an increasingly difficult state in which to retire.

Given that, Peters wants to sell his Middletown home, and use the money either to build a home or buy an existing house near the Pocono Mountains in Pennsylvania. Meanwhile, he plans to keep the seasonal residence that he owns in Maine.

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"It hurts," said Peters, an architect and builder, who works full time for the federal government and part time for his own company, Joseph Peters Architect PC. "I'm fourth generation in Middletown. My daughter is fifth generation. We have roots here, but it just isn't making financial sense any longer, and add to that the fact that I want to be a little more secluded."

Many may move

Similar to Peters, half of New Jerseyans would like to retire elsewhere, according to a Monmouth University/Asbury Park Press poll, which surveyed 802 adult residents from Sept. 17 to 21. More than a quarter of those surveyed consider it very likely that they will actually move. Cost of living and taxes remain the driving factors for those wanting to flee upon retirement, with more than a third of participants concerned about their savings.

"Taxes are considerably less in Pennsylvania and areas that I'm looking at," said Peters, who will rely on his savings in his employer's 401(k) plan, a federal pension and Social Security in retirement. "My federal pension will not have a state tax on it in Pennsylvania, and the property costs are considerably less for buying a raw piece of land and building a new house, or even buying an existing house."

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If more retirees follow Peters' footsteps, then New Jersey will gradually experience a difficult time making economic ends meet. An exodus of retirees would mean the loss of income taxes from their pensions and sales taxes from their spending at businesses within the Garden State. Combined, those factors paint a grim picture for those left behind.

"That means less state revenues for other programs that may be valuable to New Jersey citizens," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University in New Brunswick.

But New Jersey's options to fix the situation remain scarce. The Garden State's budget fell short by $800 million last year. The state only balanced its budget this year after Gov. Chris Christie slashed the Garden State's contribution to a pension fund for public workers.

"We don't have a lot of wiggle room to adjust our tax system as it is since we're short of revenues," Hughes said. New Jersey's "not going to change that destiny very much. We are going to lose some affluent seniors, middle-income seniors and the like."

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Getting worse

New Jersey ranks as an increasingly worsening state in which to retire, according to a recent study by the National Institute on Retirement Security, a Washington, D.C.-based nonprofit research and education organization.

The Garden State scored an overall four out of 10 for financial security, down from five in 2007 and six in 2000. The study examined the potential economic pressures facing future retirees, including market conditions for older adults, retiree costs and retirement income.

"One of the key challenges is the unemployment rate for those 55 and older," said Sarah Gill, a senior legislative representative at AARP, the Washington, D.C.-based nonprofit and nonpartisan organization formerly known as the American Association of Retired Persons. "Folks are increasingly working through their retirement years."

New Jersey's unemployment rate among older workers, however, skyrocketed to 7.7 percent in 2012, up from 2.9 percent in 2007 and 2.1 percent in 2000, according to the study. That stands as the fourth-worst in the nation behind Nevada, California and North Carolina.

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Some retirees seek part-time work "to keep busy or because ... they might need it," said Artie Bernaducci, a founder and partner at Retirement Income Advisors LLC, a Woodbridge-based financial-planning firm. "Depending upon how they did their planning, they may not have enough income to maintain their lifestyle and that's what it's really about. When you go into retirement, you're trying to maintain you're pre-retirement lifestyle."

Rising expenses

But while sources of supplemental income grow scarcer, New Jersey's retirees must combat rising expenses compounded by hefty taxes across the board.

The Garden State's housing costs for those 65 and older rank as the most expensive in the nation. More than 48 percent of that age group spent more than 30 percent of their income on housing in 2012, up from 47 percent in 2007 and 39 percent in 2000.

New Jersey's retirees also face the third-highest health-care costs in the nation behind Florida and Washington, D.C. The Garden State's Medicare beneficiaries paid an average of $2,009 in out-of-pocket costs in 2012, a 4 percent increase from $1,934 in 2007 and a nearly 19 percent jump from $1,691 in 2000.

And the going also gets tougher for New Jersey's retired public workers. The Garden State's tax rate on pensions stood at 3.6 percent in 2012, up from 3.4 percent in 2007 and 3.1 percent in 2000. That ranks as the 21st highest in the nation, but nine states do not tax pensions, so New Jersey's rate technically ranks as the 12th highest among the 41 states (and Washington, D.C.) that do.

"With taxes and health care costs and all that, it's affecting the fact that they're on a set paycheck now," Bernaducci said. "When you have expenses going up, but you're on a fixed paycheck, it kind of speaks for itself in terms of you have to pull back on your spending and watch every nickel and dime."

What retirees should do with their 401(k)s

Anthony Panissidi; 732-643-4284; apanissidi@app.com

10 RETIREMENT PREPARATION TIPS

--Start saving, keep saving, and stick to your goals

--Know your retirement needs

--Contribute to your employer's retirement savings plan

--Learn about your employer's pension plan, if one is available

--Consider basic investment principles

--Don't touch your retirement savings

--Ask your employer to start a plan if they don't offer one

--Put money into an Individual Retirement Account

--Find out about your Social Security benefits

--Ask questions

Source: U.S. Department of Labor

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