During your working years, you’re generally locked down to a specific state, since many employers require workers to live nearby. Once you hit retirement, though, those limitations disappear, and you can move wherever you want. There are plenty of considerations when you’re choosing a place to live, but since retirement often means a reduction in income, cost of living is important. Fortunately, you can check into what you can expect to pay long before you pack up the moving van.
Top Ten States to Retire
If you’ve checked out the top 10 lists for affordable retirement, you’ve no doubt noticed that these lists can vary. But you’ll also see that many of them have a few states in common. Based on factors like taxes, housing costs and prices on products and services, here are 10 states that seem to consistently appear on lists of the cheapest state to live in for retirees.
- South Dakota
- South Carolina
But even with this list in place, what’s inexpensive for you will differ from what’s the most affordable for someone else. When choosing the cheapest state to live in for retirees, these lists often prioritize health care costs and retiree-specific tax breaks. It’s important to know exactly what your biggest concerns are before you settle on a state.
Finding the Best Retirement Taxes
After retirement, chances are you won’t have the same income you had before. That means you won’t have the same income tax burden you had when you were working. This will have you looking at states with the lowest cost of living. You still may pay taxes, though, especially if you continue to work part-time after you begin collecting your pension or taking Social Security payments. If you keep bringing in earned income after retirement, you could owe taxes on that money plus up to 85 percent of your Social Security earnings, depending on the amount you make.
In addition to your federal tax liability, though, you’ll also face state income taxes if you choose a state that has them. The tax-friendliest states for retirees, considering income tax, sales tax, property tax and estate tax, are Alaska, Florida, Georgia, Mississippi, Nevada, South Dakota and Wyoming. However, there’s more to consider in cost of living than taxes. Some states have lower prices on housing and groceries than other states, and you’ll also find that in some areas, small expenses like a higher cost to renew your vehicle tags each year can add up over time.
Cheapest State to Buy Property
No matter what your age, the cost of housing is an important consideration when relocating. You may be able to combine the proceeds from selling your existing home with your savings to pay cash for your retirement home. But whether you’re paying cash or you expect to make a mortgage payment, one top consideration in the states with the lowest cost of living is the price of housing. With some areas seeing completely unmanageable housing prices, this is more important than ever. Here are 10 states showing up on lists of those that have the most affordable housing prices.
- West Virginia
- New Mexico
If you’re currently in an area with extremely high housing costs, such as San Francisco or New York City, you’ll likely find the money you make on your existing home will more than pay for a cozy retirement home in your state of choice. However, there are factors that can boost that price. If you’re one of many retirees who hopes to enjoy your golden years in a home on the beach or in the mountains, for instance, it’s important to compare costs of those types of homes in various states to find where you’ll get the best bargain.
States With the Best Health Care
When considering states with the lowest cost of living, you should also make sure you’ll get the amenities you need if you move there. Medical care costs are a huge consideration for any retiree, especially if you have a current insurance provider you like. Check to make sure your new city of choice accepts your insurance and that you’ll have the best health care.
Minnesota and Colorado ranked among the top 10 best states to retire based on health care alone. New Hampshire, Hawaii and Massachusetts rounded out the top five. Maryland, Minnesota, Massachusetts, Michigan and Vermont recently ranked as the top five states for access to health care, so if the quality of care is just as important as cost, that might be an important consideration. Maryland not only ranked high for its cost of insurance, but also for physician access.
States With the Best Weather
While you’re thinking about states with the lowest cost of living, you’re probably also mulling over the type of state you would want to live in after retirement. If you choose Michigan or Massachusetts, for instance, you know you’ll spend a great deal of the winter dealing with snow. In a warmer climate, you’ll be encouraged to get outside and move, which will keep you active and healthy. You may also find the cold weather simply isn’t as comfortable as you get older, pushing you toward warmer climates. Here are the top 10 states for year-round good weather.
- South Carolina
- Puerto Rico
The biggest factor in many of these states is warm weather. Areas like Arizona may be too hot for you, though, and you may find the annual hurricane threats make Florida less palatable. Still, if you’re searching for year-round warm weather free from the hassle of shoveling snow, southern states are the way to go.
States with Senior Amenities
Although researching the cheapest state to live in for retirees can definitely help you narrow down your options, it’s also important to consider other factors. If you want to stay active in your later years, it’s important to move to a place that can help you with that. Some cities have more seniors than others, which means you won’t find yourself home at 10 a.m. with all of your neighbors at work. You’ll find the most seniors in Florida, which has become a haven for retirees over the years. Pennsylvania and West Virginia also skew older, as do Iowa and North Dakota. You’ll probably want to stay away from Alaska, Utah, Georgia, Colorado and Texas if you’re looking for peers, since those states have the lowest proportional share of elderly residents.
When you look at the list of top 10 states to retire, you’ll often find that one commonality between them is that they have plenty of active adult communities. Those communities generally require all members to be at least 55 years of age or older, and the monthly homeowner’s association fees include access to amenities like a clubhouse or recreation center. Depending on the community you choose, you could have a wide range of amenities. The Villages in Central Florida, for instance, has three squares with live music every night and more than 50,000 residents, most of whom are retired. Living in a community like this could keep you active long after you might have otherwise become more of a loner.
- Kiplinger: The 26 Cheapest States for Retirement
- TheStreet: The Cheapest Places to Retire in America
- WalletHub: 2018’s Best & Worst States to Retire
- Business Insider: All 50 states ranked for retirement from worst to best
- Business Insider: The most expensive and affordable states to buy a house, ranked
- Cheap Land For Sale | Buy Cheap Land | Buy Land | Land for Sale
- Current Results: Top 10 US States With the Best Weather All Year Round
- Cheat Sheet: Retirees, These 15 Cities Have the Best Weather Year-Round
- SSA: Benefits Planner | Income Taxes And Your Social Security Benefit
- SmartAsset: The Best States for Healthcare Access
- PRB: Which U.S. States Are the ‘Oldest’?
- Suburban Stats: Current The Villages, Florida Population, Demographics and stats in 2017, 2018.
Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.