What Are the 10 Cheapest States to Retire in the US?

Posted at 14:37h in Retirement by Level 0 Comments

The choice of the state where you will spend your retirement years can significantly impact your personal finances. This is due to the different living costs, health care costs, and tax burdens across the country.

When analyzing the available options, you should consider both financial aspects and liveability factors.

To help you with this search, we have selected some of the cheapest states to retire in. We included states that are both affordable and attractive in terms of overall quality of life. At the end of the article, you will also find the links to the sources we gathered data from.

1. Michigan

Michigan is not only the hub of the US auto industry but also a state with beautiful shorelines and lovely countryside. Both its general cost of living and health care spending per person is below the national average. Tax-wise, it’s quite retiree-friendly, with no taxes on your social security income and only partial taxation on your pension and withdrawals from your retirement accounts. While some of Michigan’s major cities don’t enjoy the best reputation for crime, many smaller towns are remarkably safe and enjoyable. Examples include Sterling Heights and Rochester Hills.

Affordability

Cost of living index: 91.6 (15th lowest in the US)
Median home price: $172,277
Average monthly apartment rent: $1,093
Health spending per capita: $9,987

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: Partial
Taxation on public and private pensions: Partial
Marginal state income tax: 4.25%
Average property tax rate: 1.31%

Liveability, Weather, and Safety

Quality of life ranking: 38th highest in the US
Average winter temperature: 21.7 °F
Average spring temperature: 42.6 °F
Average summer temperature: 66.2 °F
Average fall temperature: 47.3 °F
Safety index: 17th highest in the US

2. Ohio

This is another Great Lake state that retirees may find ideal to live in. Housing (including rental apartments) can be very affordable if you know how to search. The overall cost of living is the 17th lowest among US states. While the state has full taxation on retirement account withdrawals, there is neither a marginal income state tax nor taxation on social security income.

Affordability

Cost of living index: 92.0 (17th lowest in the US)
Median home price: $150,374
Average monthly apartment rent: $988
Health spending per capita: $10,478

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: Full
Taxation on public and private pensions: Partial
Marginal state income tax: 0%
Average property tax rate: 1.52%

Liveability, Weather, and Safety

Quality of life ranking: 36th in the US
Average winter temperature: 29.5 °F
Average spring temperature: 49.7 °F
Average summer temperature: 70.9 °F
Average fall temperature: 52.9 °F
Safety index: 33rd highest in the US

3. Oklahoma

Rich in agriculture and with strong links to Native American culture, Oklahoma is probably not the state you think of when planning your retirement. While the state also applies partial taxation on pensions and retirement account withdrawals, it has very low property taxes. Its general cost of living is the second lowest in the country, making your retirement dollars last longer. Housing and healthcare costs are also quite low compared to most states.

Affordability

Cost of living index: 85.7 (2nd lowest in the US)
Median home price: $128,934
Average monthly apartment rent: $1,006
Health spending per capita: $9,444

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: Partial
Taxation on public and private pensions: Partial
Marginal state income tax: 5%
Average property tax rate: 0.83%

Liveability, Weather, and Safety

Quality of life ranking: 43rd in the US
Average winter temperature: 39.1 °F
Average spring temperature: 59.1 °F
Average summer temperature: 79.6 °F
Average fall temperature: 60.6 °F
Safety index: 46th highest in the US

4. Missouri

With a culture that combines elements from both the South and the Midwest, Missouri is a mountainous state with great scenery and many relaxing locations. While its tax system is not the most retiree-friendly in the country, its cost of living is the 7th lowest in the country. The state also ranks in the top 30 states for quality of life in the US. Small towns, such as Glendale, Maryville, and Greenwood, tend to be quite safe on average and only major cities tend to have higher crime rates.

Affordability

Cost of living index: 88.6 (7th lowest in the US)
Median home price: $162,464
Average monthly apartment rent: $1,011
Health spending per capita: $9,921

Taxation

Taxation on social security income: Partial
Taxation on withdrawals from retirement accounts: Full
Taxation on public and private pensions: Full
Marginal state income tax: 0.96%
Average property tax rate: 5.40%

Liveability, Weather, and Safety

Quality of life ranking: 28th highest in the US
Average winter temperature: 32.2 °F
Average spring temperature: 54.4 °F
Average summer temperature: 75.4 °F
Average fall temperature: 56.6 °F
Safety index: 42nd highest in the US

5. Georgia

Famous for its peaches, subtropical climate, and warm hospitality, Georgia is also a very affordable state to retire and live in. Health spending per person is particularly low compared to most states, and the general cost of living is among the 5 lowest in the country. While Georgia has a relatively high marginal state income tax, it doesn’t tax social security income and imposes only partial taxes on pensions and withdrawals from retirement accounts.

Affordability

Cost of living index: 87.8 (5th lowest in the US)
Median home price: $201,294
Average monthly apartment rent: $1,365
Health spending per capita: $8,758

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: Partial
Taxation on public and private pensions: Partial
Marginal state income tax: 5.75%
Average property tax rate: 0.87%

Liveability, Weather, and Safety

Quality of life ranking: 18th in the US
Average winter temperature: 47.8 °F
Average spring temperature: 63.1 °F
Average summer temperature: 78.7 °F
Average fall temperature: 64.6 °F
Safety index: 39th highest in the US

6. Texas

Currently one of the fastest-growing states in the country, The Lone Star State offers numerous benefits to people looking for a place to retire. These include the 12th lowest cost of living in the US, a very low health spending per capita, and a particularly retiree-friendly tax system with no state taxes whatsoever on income, pensions, and retirement account withdrawals.

Affordability

Cost of living index: 90.9 (12th lowest in the US)
Median home price: 207,301
Average monthly apartment rent: $1,278
Health spending per capita: $8,406

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: None
Taxation on public and private pensions: None
Marginal state income tax: 0%
Average property tax rate: 1.6%

Liveability, Weather, and Safety

Quality of life ranking: 31th in the US
Average winter temperature: 47.9 °F
Average spring temperature: 65.1 °F
Average summer temperature: 81.1 °F
Average fall temperature: 65.5 °F
Safety index: 48th highest in the US

7. Florida

It’s not just because of its weather and beaches that Florida is such a popular state among retirees and people moving from other states. While general living is a bit more expensive than the national average and home prices are higher than in many states, Florida’s tax system is very advantageous for retirees. There is no state taxation on pensions or income, and average property taxes are quite low.

Affordability

Cost of living index: 103 (31st lowest in the US)
Median home price: $245,169
Average monthly apartment rent: $1,779
Health spending per capita: $9,865

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: None
Taxation on public and private pensions: None
Marginal state income tax: 0%
Average property tax rate: 0.86%

Liveability, Weather, and Safety

Quality of life ranking: 10th highest in the US
Average winter temperature: 59.4 °F
Average spring temperature: 69.9 °F
Average summer temperature: 81.0 °F
Average fall temperature: 72.7 °F
Safety index: 43rd highest in the US

8. North Carolina

A pleasantly mild climate, 300 miles of coastline, and great rural scenery are only some of the reasons that make North Carolina attractive to retirees. Its tax system may not be the most inviting for retirees, but the state makes up for it with a low cost of living and affordable health care. Not to mention its quality of life index, which ranks in the top 15 nationwide.

Affordability

Cost of living index: 95.0 (23rd lowest in the US)
Median home price: $202,215
Average monthly apartment rent: $1,234
Health spending per capita: $8,917

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: Full
Taxation on public and private pensions: Full
Marginal state income tax: 0%
Average property tax rate: 5.25%

Liveability, Weather, and Safety

Quality of life ranking: 13th in the US
Average winter temperature: 42.1 °F
Average spring temperature: 58.2 °F
Average summer temperature: 75.7 °F
Average fall temperature: 60.2 °F
Safety index: 19th highest in the US

9. Indiana

Also known as the state at the crossroads of America, Indiana is an uncrowded and relaxing state in which to enjoy your years as a retiree. While the state has full taxation on both pensions and retirement account withdrawals, the general cost of living is the 8th lowest in the country, and housing tends to be quite affordable.

Affordability

Cost of living index: 88.9 (8th lowest in the US)
Median home price: $185,749
Average monthly apartment rent: $1,031
Health spending per capita: $10,517

Taxation

Taxation on social security income: Partial
Taxation on withdrawals from retirement accounts: Full
Taxation on public and private pensions: Full
Marginal state income tax: 3.23%
Average property tax rate: 0.81%

Liveability, Weather, and Safety

Quality of life ranking: 32nd highest in the US
Average winter temperature: 29.4 °F
Average spring temperature: 51.1 °F
Average summer temperature: 72.4 °F
Average fall temperature: 53.8 °F
Safety index: 12th highest in the US

10. South Dakota

With its lakes, parks, and trails, South Dakota is a great choice if you love spending a lot of time outdoors. This state combines a low cost of living with a very attractive tax system. You won’t be taxed by South Dakota on your pension, income, retirement account withdrawal, and social security income. Its crime rate is only slightly higher than the national average, and many small towns are remarkably safe.

Affordability

Cost of living index: 93.8 (20th lowest in the US)
Median home price: $205,567
Average monthly apartment rent: $959
Health spending per capita: $12,495

Taxation

Taxation on social security income: None
Taxation on withdrawals from retirement accounts: None
Taxation on public and private pensions: None
Marginal state income tax: 0%
Average property tax rate: 1.14%

Liveability, Weather, and Safety

Quality of life ranking: 15th highest in the US
Average winter temperature: 19.5 °F
Average spring temperature: 44.8 °F
Average summer temperature: 69.9 °F
Average fall temperature: 46.4 °F
Safety index: 36th highest in the US

Data Sources

Cost of living index: Missouri Economic Research and Data Center
Median home price: Wikipedia
Average monthly apartment rent: Statista
Health spending per capita: Kaiser Family Foundation
Marginal state income tax & other taxation info: SmartAsset
Average property tax rate: Stessa
Quality of life index & safety index: World Population Review
Temperatures: Current Results

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