Plenty of folks are aware of the best states for retirees. But what are the 10 worst states in which to spend your golden years?

People of Illinois, California, New York, Rhode Island, New Jersey, Ohio, Wisconsin, Massachusetts, Connecticut and Nevada — you probably already know the answer. The list, with Illinois leading the pack, comes from website TopRetirements.com.

According to John Brady, president of TopRetirements.com, the 10 states earn this dubious distinction largely because of three factors: fiscal health, taxation and climate.

As for fiscal health, six of the 10 worst states for retirees on TopRetirements.com’s list were among those just identified by a Pew Center for States report as being in “fiscal peril.”

The report, “Beyond California: States in Fiscal Peril,” showed that “some of the same pressures that have pushed California toward economic disaster are wreaking havoc in a number of other states, with potentially damaging consequences for the entire country.”

Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin joined California as the 10 most troubled states, according to Pew’s analysis.

Of note, TopRetirements’s Brady suggested that retirees and would-be retirees might want to avoid states in fiscal peril because these locales might face decreasing services and increasing taxation. States Of Disunion

Topping his website’s list, Brady noted that Illinois’s fiscal health could be the worst of any state. “It even borrowed money to fund its pension obligations,” he said. (However, Brady noted later on that Illinois does not tax pension or social security income, a “definite plus” for state retirees.)

As for California, he said the Golden State–though it does have a warm climate–is expensive and its finances are in disarray. What is more, he added, it has paid some bills with vouchers.

New York wasn’t mentioned as being in fiscal trouble by the Pew Center on States, but it does have “very high taxes, including property taxes.” In fact, Brady said New York has the second-highest tax burden and fifth-highest per-capita property taxes.

Plus, he said, the Empire State has a “dysfunctional state legislature.” As if that wasn’t bad enough, it is terrifically expensive to live in New York. The only benefit to living in New York, he said, is that pensions are exempt from income tax.

As for Rhode Island, Brady said it is probably the worst-off state in the Northeast from a financial viewpoint. It also has high taxes, though he noted that the state does have some great places to live.

New Jersey, according to Brady’s analysis, has the highest property taxes in the U.S., as well as the highest total tax burden of any state, as reported in a 2008 Tax Foundation report. Plus, New Jersey has serious pension funding issues, Brady noted. States with the greatest tax burden after New Jersey were New York, Connecticut, Maryland, Hawaii, California, Ohio, Vermont, District of Columbia, Wisconsin and Rhode Island.

According to Brady, Ohio has high taxes and high unemployment (It was 9.9 percent in October.) Plus, it has cold winters. Of the 40 largest cities in U.S., Milwaukee has the coldest winter weather, based on normal daily temperatures, according to the Current Results, a website that tracks weather. Milwaukee’s daily winter mean temperature is 24.1 degrees Fahrenheit. But Cleveland is the fourth-coldest U.S. city, with a daily winter mean temperature of 28.4 degrees Fahrenheit.

Wisconsin, as noted, is doubly cursed as being a high tax state with cold weather. Plus, it has high property taxes. The only good news, at least for those for whom it applies, is that the Badger State doesn’t tax military pensions.

In a related survey, USAA and Military.com announced this week that Waco, Texas, tops the first-ever “Best Places for Military Retirement” list. In its report, USAA and Military.com focused on U.S. communities that offer “a high quality of life and help maximize military retiree benefits as servicemembers manage their ‘first retirement’ from the armed forces and begin planning their ‘second retirement’ from civilian life.” Other places on that list included, in order: Oklahoma City, Okla.; Austin, Texas; College Station, Texas; Harrisburg, Pa.; San Angelo, Texas; Madison, Wis.; Pittsburgh, Pa.; New Orleans, and Syracuse, N.Y.

New England had two other states on Brady’s list of worst places for retirees: Massachusetts, which has high taxes including high property taxes and a very high cost of living; and Connecticut, which has the third-highest tax burden of any state and high property taxes.

“It has some terrific places to live, but the cost of living is very high,” he said about Connecticut. What is worse, the Nutmeg state taxes Social Security. (States with the highest cost of living in the third quarter of 2010 in order were Hawaii, District of Columbia, Alaska, California, New Jersey, New York, Connecticut, Rhode Island, Maryland, Vermont and New Hampshire, according to a Missouri Economic Research and Information Center analysis.)

Ironically, the 10th worst place to retire is one state where it is easy to find a cheap place to live, Nevada. As many know, Nevada is presently the home-foreclosure capital of the world. In fact, the Silver State continued to lead the nation in terms of filings per household, with one filing for every 79 homes, according to RealtyTrac. Yes, the state is having financial problems, said Brady. But the good news for retirees living there or contemplating a move there is that it doesn’t have an income tax, at least not yet.

Of course, not everyone is smitten with Nevada as a place to retire. Money-Rates.com published in September its list of the 10 worst states for retirees. That site, which examined such factors as crime rate, climate, longevity and economic conditions, including taxes, job opportunities and cost of living, found the worst states for retirees were, in order, Nevada, Michigan, Alaska, South Carolina, Maryland, Tennessee, Ohio, North Carolina, Missouri, and Arkansas. States Of Mind

Does any of this mean that you shouldn’t retire to these states? According to Brady, the answer is no. “Every individual has to consider his or her own criteria for selecting a list of the worst or best states to retire,” he said. “The best way to start your individual list of best or worst states is to rank, or at least think about, your most important criteria.”

In his study, Brady focused mostly on fiscal health, taxation, and climate. But according to Brady, the full list to consider when searching for a state to which to retire includes: taxes; climate and topography; crime; fiscal health of the state; recreation; transportation; health care; cost of living, including housing; education, including college; cultural resources; susceptibility to natural disasters; proximity to friends and family, and fitting in socially, politically, and religiously.

And of those, taxes might be the most important factor for all. Retirees are affected in different ways by taxes, he said. For instance, the taxation of pensions and Social Security might be better or worse in different states. Ditto sales taxes.

Property taxes can vary widely as well. For instance, Brady said, property tax can be one of the biggest tax bills for retirees and is not progressive. You might not have any income, but you will still get taxed on the full value of your house, he said. Of note, some states do have programs to help seniors control their property taxes. Inheritance and estate taxes are also to be considered, though he said such taxes might be viewed as the tax tail wagging the state-of-residence dog.

Choosing the best state to which to retire depends on many individual factors, according to Brady. And in truth, said Brady: “For any two people the 10 worst states for retirees list might be a good list for one person, but not for another.”