Waco earns its No. 1 ranking with high scores in a number of categories. Its reasonably priced housing helps military retirees find an affordable home, and Waco boasts a number of picturesque older neighborhoods. The area has low unemployment and a strong economic base consisting of small to mid-sized manufacturers in a variety of industries offering solid opportunities to start a new career. Fort Hood is within an hour's drive, offering excellent commissaries and base exchanges. In addition, a VA medical center is also located in Waco, as is Baylor University which provides all the sports, artistic events, lectures and resources of a well-respected college. Dallas is 100 miles to the north, offering all the attractions of a world-class city, while Waco's numerous lakes in and around the area provide enjoyment during the summer. An added benefit is that the state of Texas does not tax federal pensions.

Oklahoma City also has much to offer the military retiree. Homes are affordable and the economy is solid, even in these challenging times. The nearby city of Norman is home to the University of Oklahoma, with many educational, recreational and cultural resources. Tinker Air Force Base is located within the metro area offering a large commissary and exchange, plus there is a VA hospital center located in Oklahoma City. However, Oklahoma is the only state in our list of top 10 places which taxes federal pensions.

The metro area of Austin is hot these days and it's not just the weather. Austin has the reputation as a hip and quirky place, due in part to the 50,000 students at the University of Texas, located in the heart of the city. Like other Texas metros in our top 10 rankings, federal pensions aren't taxed, and Austin housing has managed to remain fairly affordable. As a larger metro area, Austin offers the retiree more arts and culture, trendy restaurants and mass transit. It has a reputation as one of the most progressive cities in the U.S., with "green" initiatives and thoughtful urban design. One drawback for the military retiree is that access to benefits and amenities such as base exchanges, commissaries and a VA medical center are all 60 miles away.

The College Station-Bryan metro area has a low cost of living and has avoided the housing issues seen in much of the United States. In addition to no taxes on federal pensions, the local economy is stable, due in part to the presence of Texas A&M University, with 45,000 students. Sports are a huge part of Texas A&M's culture and their teams are some of the best in the nation. And, as with any large university, there is a steady selection of lectures and concerts by world leaders, famous personalities and performers. There are no military bases in the College Station metro area, but excellent commissary and exchange amenities are available to the military retiree at Fort Hood, which is 90 miles away. The nearest VA medical center is in Temple, which is a 66-mile drive. College Station is centrally located with easy access to major Texas cities like Austin (85 miles), Houston (100 miles) and Dallas (150 miles) for big-city amenities like shopping, fine dining and museums.

The Harrisburg-Carlisle metro area is about 100 miles west of Philadelphia, which offers a wide variety of resources to military retirees with its big-city amenities and cultural opportunities. Carlisle is home to a small military installation — the Carlisle Barracks. While it offers a medium-size commissary and modest exchange, the installation is conveniently located. The Harrisburg metro area also boasts a low crime rate, quality health resources and affordable home prices. In addition, Pennsylvania doesn't tax federal pensions and the nearest VA medical center is about 30 miles away in Lebanon. One downside is the lack of a major university, though the area has a number of smaller colleges and a system of two-year community colleges.

Originally a frontier fort, the city retains that western character along with a Spanish/Mexican influence. The city is a commercial, health and cultural center for the surrounding region and is home to Goodfellow Air Force Base, which offers high-quality amenities for military retirees such as a commissary and base exchange. While there is a VA clinic on the base, the nearest VA medical center is more than 125 miles away in Kerrville. Like other metros in central Texas, federal pensions are not taxed, home prices are low and the economy is stable with low unemployment. Local industries include light manufacturing, with some oil and gas development. San Angelo also is home to Angelo State University, which has 6,000 students and is included in The Princeton Review's list of Best Colleges in the U.S.

Madison has a lot in its favor with low unemployment, a healthy lifestyle, recreation and cultural opportunities and all the benefits from being home to the University of Wisconsin. Home prices are the most expensive of the places in our top 10, but are still generally affordable and have held their value well during the recent downturn. There is a local VA medical center, but military retirees will need to travel a few hours (90 miles) to Fort McCoy in Sparta to shop at their commissary and exchange. Federal pensions are not taxed in Wisconsin.

Pittsburgh has met the challenge of transitioning from an aging steel town to a modern community, with the benefit of all the infrastructure from its former life as an important industrial hub. It is home to the University of Pittsburgh and Carnegie Mellon University, and its mature, affordable neighborhoods provide plenty of affordable choices for the retiree. There is a strong cultural scene and Pittsburgh has no less than three professional sports teams to cheer. One downside is that the nearest military base with a commissary and exchange is 150 miles away, but there is a local VA medical center.

While some areas of New Orleans continue to recover from Hurricane Katrina, there are many housing options available, and the overall economy is stable. New Orleans is home to well-respected Tulane University, as well as two professional sports teams. And, everyone will agree that the culture of New Orleans is one of the most interesting and unique in the world. Military retirees also will enjoy no taxation on their federal pensions and the commissary and exchange at New Orleans Naval Air Station. In addition, they can access health care at the VA medical center in Biloxi, which is about 90 miles away, as well as at the local VA medical center when it is scheduled to reopen in 2013.

The large metro area of Syracuse has a low cost of living, with a stable economy and affordable housing that has avoided the national meltdown of home prices. The city is home to well-known Syracuse University, which provides the local residents with educational, sports and cultural activities. The nearest shopping resources for the military retiree is 80 miles away at Fort Drum, but there is a local VA medical center. And New York has no state tax on federal pensions.