How we calculated the cheapest states
To determine the cheapest states to retire in, we looked at the typical home value of Zillow’s home value index for August 2023, the Missouri Economic Research and Information Center’s Cost of Living Index for the second quarter of 2023, per capita personal consumer expenditures, and the average cost of Medicare. We also looked at the national population of people 65 years and over, using data from the U.S. Census Bureau.
Here are five of the cheapest states to retire in, where you can make your hard earned retirement money go further.
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5. West Virginia
- Cost of living index: 10.7% less than national average
- Personal expenditures: $44,460
- Typical house cost: $158,103
- Average medicare premiums: $59.74
- Percent of population 65+: 21.2%
The Mountain State offers a low average combined sales tax of 6.55%, and starting in 2022, the state tax on Social Security benefits for seniors was eliminated. West Virginia has the lowest typical house cost in the nation, but just misses the top 10 of lowest cost of living.
The state's newest national park, New River Gorge, offers everything from hiking trails to fishing, hunting, rafting, and rock climbing. It’s the perfect place to visit either for a day-trip or a camping vacation.
According to the state’s website, West Virginia also boasts a homeownership rate that is 11% higher than the national average, as ranks ninth for lowest property tax, according to Rocket Mortgage.
4. Arkansas
- Cost of living index: 9.9% less than national average
- Personal expenditures: $42,245
- Typical house cost: $200,795
- Average medicare premiums: $141.51
- Percent of population 65+: 17.8%
In Arkansas, social security benefits are tax-exempt, as well as the first $6,000 of your IRA distribution if you received this after turning 59 ½ years old.
It ranks in the top-ten of the lowest cost living index, but it does have one of the highest average combined local and state sales tax rate at 9.46%.
The Natural State offers over 250 days of sunshine a year, and there’s always something to do outdoors. With the lower-than-average cost of living, you’ll be able to maximize your retirement dollar while always finding a new adventure. Outdoor lovers can experience the vistas of the Ozark Mountains or visit one of the 47 thermal-water springs in the resort city of Hot Springs.
If you prefer arts and culture, Crystal Bridges Museum of American Art features works from over five centuries of American Art in its permanent collection, or you can visit the birthplace of Johnny Cash in Kingsland.
More: Social Security COLA in 2022
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3. Iowa
- Cost of living index: 10.1% below national average
- Personal expenditures: $45,455
- Typical house cost: $212,062
- Average medicare premiums: $102.87
- Percent of population 65+: 18.3%
Beginning in 2026, Iowa will establish a 3.9% flat income tax rate, which will bring the state from having the sixth highest individual tax rate to the fourth lowest.
To further sweeten the deal, residents aged 55 and over are exempt from state tax on their retirement income from their taxable pensions, annuities, and IRAs, as of 2023.
Additionally, the AARP places Iowa in the top half of communities in the states, and voted Cedar Falls one of the best places to retire in the U.S.
2. Oklahoma
- Cost of living index: 13.1% below national average
- Personal expenditures: $42,046
- Typical house cost: $199,221
- Average medicare premiums: $47.49
- Percent of population 65+: 16.4%
If you’re looking for a budget-friendly state to retire in, Oklahoma may be for you. The Sooner State has the second-lowest cost of living in the U.S., so your hard-earned retirement money will take you further.
Social security income is entirely tax-deductible. Oklahoma also provides a $10,000 deduction toward other types of retirement income such as income from a 401(k) or a pension.
Many cities in Oklahoma offer easy-access to hospitals and shopping, and the state is also home to some outstanding public golf courses.
1. Mississippi
- Cost of living index: 14% below national average
- Personal expenditures: $48,613
- Typical house cost: $176,568
- Average medicare premiums: $48.87
- Percent of population 65+: 17.3%
With the lowest cost-of-living, along with the lowest rate of personal expenditures in the nation, retirement life in the Magnolia state offers plenty.
The birthplace of the blues, the historic state offers plenty of museums to explore along the Blues Trail. You can take advantage of the great fishing along the Gulf Coast or spend time at the famous Beau Rivage Resort & Casino.
Not only does Mississippi offer a wide range of activities, but you can also enjoy greater flexibility with the low cost-of-living and excellent property tax incentives.
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Meet Your Retirement Goals Effortlessly
The road to retirement may seem long, but with WiserAdvisor, you can find a trusted partner to guide you every step of the way
WiserAdvisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.
