The Most Affordable States to Retire In
Ready to call it a career but fear you may be financially unprepared for retirement? You’re not alone. Studies tell us that many baby boomers have nothing saved for retirement and upwards of 36% of them plan to use Social Security as their sole source of income. Even more alarming is the fact that most Americans have no idea how much they need to retire. The bottom line is that for many of us, retiring for less is absolutely essential.
So if you’ve crunched the numbers and determined that retirement is feasible—but with practical spending to ensure your money lasts longer—there are several retirement friendly states that may put your mind at ease. When it comes to the most affordable places to retire, consider this list that factors in low cost of living, tax-friendliness, healthcare costs, affordable homes, and more.
Alabama
Population: 4.8 million
Share of population 65+: 15.3%
Cost of living: 13% below the U.S. average
Average income for 65+ households: $44,934
State Income Tax: 2% to 5%
State Sales Tax: 4%
Average health care costs for a retired couple: Below average at $404,922
When it comes to retirement friendly states, there are plenty of reasons to put Alabama near the top of many lists. You’ll enjoy much of what makes Florida so appealing to retirees—nice weather, golf, water—all at much lower living expenses that extend to healthcare and taxes. Carrington Lakes in Trussville, AL, gives active retirees everything on their wish lists for costs well below the national average.
Georgia
Population: 10.1 million
Share of population 65+: 12.3%
Cost of living: 7% below the U.S. average
Average income for 65+ households: $50,607
State Income Tax: 1% to 6%
State Sales Tax: 4%
Average health care costs for a retired couple: Below average at $404,460 Southern hospitality, balmy weather, and low living costs make the Peach State among the most affordable states to retire. With the sixth lowest average healthcare costs for retired couples and a tax friendly reputation as one of the 10 best states for taxes on retirees, Georgia retirement communities can be as affordable as they are charming.
Idaho
Population: 1.6 million
Share of population 65+: 14.3%
Cost of living: 5% below the U.S. average
Average income for 65+ households: $40,248
State Income Tax: 1.6% to 7.4%
State Sales Tax: 6%
Average health care costs for a retired couple: Below average at $407,942
Dramatic mountain views. Crystal clear lakes. Thousands of acres of unspoiled high country wilderness. That’s all part of retiring in Idaho, which makes it almost too good to be true that it’s also one of the more affordable places to retire. The state’s overall affordability and a cost of living that’s 5% below national average will have your retirement savings going further and lasting longer.
Pennsylvania
Population: 12.8 million
Share of population 65+: 16.7%
Cost of living: 3% below U.S. average
Average income for 65+ households: $48,706
State Income Tax: 3.07%
State Sales Tax: 6%
Average health care costs for a retired couple: Below average at $411,414
Pennsylvania is among the top 10 tax-friendly states and boasts health care costs that are 2.9% below the national average. As an added bonus, your Social Security benefits won’t be taxed, allowing you even more bang for your buck when you search for the most affordable places to retire in the Keystone State.
South Carolina
Population: 4.8 million
Share of population 65+: 15.8%
Cost of living: 7% below the U.S. average
Average income for 65+ households: $43,340
State Income Tax: 3% to 7%
State Sales Tax: 6%
Average health care costs for a retired couple: Below average at $408,343
The many affordable retirement communities in South Carolina feature superb golf courses, iconic beaches, natural beauty, and so much more. And by so much more, we’re talking below-average living costs, low property taxes, and a desirable tax situation with generous exemptions on retirement and fixed incomes.
Tennessee
Population: 6.5 million
Share of population 65+: 15.0%
Cost of living: 12% below the U.S. average
Average income for 65+ households: $47,891
State Income Tax: None (on earned income; dividends and interest are taxed at 6%)
State Sales Tax: 7%
Average health care costs for a retired couple: Below average at $411,617
Volunteer State retirees enjoy the sixth lowest cost of living in the U.S., no state income tax on retirement funds, and below-average health care costs. For budget-conscious baby boomers considering the best states to retire in financially, Tennessee retirement communities offer a lot of options to stretch your retirement income.
Texas
Population: 27.0 million
Share of population 65+: 11.5%
Cost of living: 10% below U.S. average
Average income for 65+ households: $55,383
State Income Tax: None
State Sales Tax: 6.25%
Average health care costs for a retired couple: Above average at $430,561
If you retire in Texas, you’ll enjoy low living expenses. There’s also no state income tax, so Social Security and other retirement income will be all yours. On the flip side, health care costs and state and local property taxes are relatively high. All things considered, though, there is no shortage of affordable retirement communities in the Lone Star State.
